The management of Tasty Baking Co. has admitted it is considering selling the US baker as financial pressures linked to commodity costs and its new bakery hit the company.
Tasty Baking has appointed advisors to weigh up a number of “financial and strategic options” to help the company through what president and CEO Charles Pizzi called “a challenging period for us operationally”.
Advisors from Janney Montgomery Scott will consider whether Tasty Baking can refinance its long-term debt through raising more capital or whether the business should seek to combine with another baker in the sector. Tasty Baking also raised the possibility of a sale of the business although it insisted there could be “no assurance” that any transactions would occur.
The company said today (5 January) that production problems at its new plant in Philadelphia had meant the site missed its target for cost savings during the last quarter of 2010.
Tasty Baking said the “sharp rise” in commodity costs and the fall into bankruptcy of US retailer A&P, a key customer, meant the baker was “currently experiencing extremely tight liquidity”.
As well as its discussions with Janney Montgomery Scott, Tasty Baking is also in talks with its lenders to possibly increase the amount of funds available to the business and to change its lending agreements.
Pizzi said Tasty Baking’s management would remain “focused on growing the business”. He added: “To that end we continue to partner with new grocery and convenience store customers within our core markets, increase penetration with key customers, and launch new products into the marketplace. Finally, despite the challenges we have faced, we have continued to outpace the category and grow our overall market share.”