Interstate negotiating new DIP facility terms, posts $36.41 million operating loss for quarter ended March 8

By Caroline Salls

Pittsburgh, April 17 - Interstate Bakeries Corp. is in negotiations with its debtor-in-possession lenders on a possible refinancing of the DIP facility, according to a 10-Q filed Thursday with the Securities and Exchange Commission.

The company said it expects to finalize the documentation for the new DIP loan before an April 29 hearing previously scheduled for approval of proposed amendments to the company's existing DIP facility.

As under the proposed amendments to the current DIP facility, Interstate said the new loan would mature on Sept. 30 and the total principal amount available for borrowing would be increased to $250 million.

However, the company said the interest rate under the new loan would be increased to Libor plus 300 basis points for $90 million in loan commitments and Libor plus 450 bps for $160 million in loan commitments.

Interstate said it expects to incur $7.8 million in fees under the new DIP facility.

According to the 10-Q, failure to amend the DIP facility would have a material adverse impact on Interstate's liquidity and ability to continue as a going concern.

Interstate said it expects its near-term cash flow to be negative because of continued high fuel and ingredient costs and restructuring costs and fees.

The company said it is not likely to be in a position to emerge from bankruptcy before the current June 2 DIP facility maturity date.

In addition, Interstate Bakeries reported a $36.41 million operating loss for the 16 weeks ended March 8 on $806.28 million in net sales.

The figures showed a decline over a $19.67 million operating loss for the 16 weeks ended March 10, 2007 on $861.64 million in net sales.

The net loss for the period ended March 8 was $67.83 million, widening from a $42.24 million net loss for the period ended March 10, 2007.

Interstate had $22.95 million in cash at March 8, compared with $67.21 million at June 2, 2007.

The Kansas City, Mo., bakery operator filed for bankruptcy on Sept. 22, 2004 in the U.S. Bankruptcy Court for the Western District of Missouri. Its Chapter 11 case number is 04-45814.

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