Interstate Bakeries Corp. has an agreement with specialty lender Silver Point Finance LLC of Greenwich, Conn., that would provide up to $400 million in post-Chapter 11 financing.
Additionally, in a foreshadowing of a plan of reorganization, Interstate said it has an agreement with a group of pre-petition lenders holding 48 percent of pre-bankruptcy debt to convert $218 million of its secured debt into new debt and new stock to be issued upon a successful emergence from Chapter 11.
Interstate Bakeries proposes canceling its current shares and giving unsecured creditors, owed about $291 million, 25.9 percent of newly issued class B stock as well as the opportunity to obtain up to $50 million of the new common stock at a price that would be determined later.
This is the first time that Interstate has suggested that current shareholders will receive nothing under its reorganization. The news sent the company's stock, which has traded as high at $13 since its filing in September 2004, down as much as 85 percent to a low of 6 cents a share before closing at 15 cents a share.
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