US: Flowers extends loan facility amid link to Twinkies

By Dean Best | 19 November 2012

BMO Capital Markets believes Flowers Foods could be suitor for Hostess brands like Twinkies

BMO Capital Markets believes Flowers Foods could be suitor for Hostess brands like Twinkies

US baker Flowers Foods has extended a US$500m loan facility, news that emerged as it was being linked as possible buyer of brands and assets owned by failed Twinkies owner Hostess Brands.

Flowers said the agreement with its lenders "provides for a new five-year term" and allows the company to request extra cash up to $700m "upon the satisfaction of certain conditions".

The company, which owns brands including Tastykake and Sunbeam Bread, has been touted as a possible suitor for assets Hostess's management looks to sell as it winds up the business.

Hostess announced on Friday it would end operations after a nationwide strike that it claimed "crippled" the company. Workers affiliated to the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on industrial action in protest at company demands for pay cuts.

Hostess said it expects there to be interest in its brands but concedes some of its bakeries will not find a buyer.

BMO Capital Markets analyst Amit Sharma said Flowers would be "one of the most eligible acquirers" of Hostess's assets. He pointed to Flowers' "strong balance sheet, and "relatively small overlap with Hostess in key markets and segments" as two factors behind his belief the company would be among the front runners for brands like Twinkies.

Announcing the new loan agreement, Flowers did not comment directly on the Hostess situation but said the funds could be used in areas of the business including "acquisition financing".

CFO Steve Kinsey said: "This amendment to our credit facility positions us to take advantage of an assortment of opportunities as we work to achieve our expansion goals."

Officials at Flowers could not be reached for further comment.

Sectors: Bakery, Mergers & acquisitions

Companies: Flowers Foods, Hostess Brands

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