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Interstate Bakeries Completes Best Efforts Add-On

01 Jun 2002

Interstate Bakeries has added a new $100 million "C" term loan to its J.P. Morgan-led $800 million credit. The add-on was completed on a best-efforts basis with the institutional market picking up the exposure for the new paper. Paul Yarick, treasurer at the company, declined to name the institutions involved. "We had a pretty stable base of institutions that we have been dealing with and they seem to like our credit and we call them up when we are ready to do something," commented Frank Coffey, company senior v.p. and cfo.

The total facility now comprises a $675 million pro rata piece, priced at LIBOR plus 13/ 4%; a $125 million "B" term loan, priced at LIBOR plus 21/ 4%; and the new $100 million "C" term loan, priced at LIBOR plus 2%. Interstate Bakeries was able to secure cheaper pricing on the new term loan because of better market conditions and the type of business it is in, said Coffey. "We are a defensive company with strong cash flow, recognized brands, good steady business, and as a result of that we were able to get good pricing," he explained. The whole facility will expire in July 2007.

Interstate Bakeries used the funds from the new term loan and $58 million from its revolver to purchase 7,348,154 shares of its common stock from a subsidiary of Nestlé S.A. The purchase was aimed at creating more shareholder value. Coffey said the company was able to negotiate an attractive price from Nestlé and bought 50% of the shares Nestlé offered and helped to market the remaining shares to investors.

01 Jun 2002