A US bankruptcy court will decide on Wednesday (7 November) whether Grupo Bimbo, the Mexico-based bakery firm, can proceed with its plan to acquire ailing US baker Interstate Bakeries Corp (IBC).
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Grupo Bimbo’s US arm, Bimbo Bakeries USA, has joined forces with US investment fund Yucaipa Companies and the Teamsters trade union to bail out the Twinkies bread maker.
However, IBC has set out its own plan to revive the business and has looked to secure financing of around US$400m to breathe life into the company.
On Wednesday, the bankruptcy court will rule whether IBC can press ahead with its financing deal, which it signed with private equity firm Sliver Point Finance two weeks ago.
The court will also decide whether to grant IBC the sole right to turn around the business – or whether to accept alternative strategies from third parties.
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By GlobalDataGrupo Bimbo must wait for court approval before it can approach IBC to ask to begin due diligence on the company.
A spokesman for Grupo Bimbo told just-food that acquiring IBC was “a good opportunity to strengthen our business in the US”.
“If we find in our due diligence that [IBC] is a good company, we feel that it will complement our operations in the US,” the spokesman said.
Under plans drawn up by Grupo Bimbo and Yucaipa Companies, the Mexican firm would run IBC, with the fund providing financial backing.
The Teamsters union has provided enthusiastic support for the plan after trying to fight IBC’s own revival strategy.
“Our plan is in direct contrast to IBC’s proposed financing plan with Silver Point,” said Richard Volpe, director of the Teamsters Bakery and Laundry Conference. “We have low expectations in IBC’s plan to sustain the company for any length of time. Our main goal was to find an investor and a management team that would honour our sacrifices, deal with us with respect, and create a viable business that provides ongoing goods and services to its creditors and vendors.
Volpe added: “This plan calls for our members to make sacrifices, which is never easy, but given our alternatives this is a home run.”
