Ripplewood gives Twinkies-maker new life

The New York private equity firm, currently raising $4bn, has agreed to commit $130m to Interstate Bakery, maker of iconic US food brands including Wonder Bread and Twinkies. Three investment firms have agreed to loan the company $339m.

Interstate Bakery, producer of Twinkies and Wonder Bread, has received $469 million (€330 million) in funding commitments which would allow the company to emerge from Chapter 11 bankruptcy protection.

New York private equity firm Ripplewood Holdings has committed $130 million of capital to the commercial baking company while Credit-focused investor Silver Point Finance, distressed investment firm Monarch Alternative Capital and private investment firm McDonnell Investment Management have committed a combined $339 million to a secured term loan. The three lenders hold approximately 53 percent of Interstate’s pre-petition secured debt.

All commitments are dependent on Interstate’s two major labour unions ratifying agreed modifications to their labour agreements. The two labour unions represent a total of 17,000 Interstate employees.

The commitments also require that Interstate emerge from Chapter 11 by 9 February 2009.

Interstate’s lenders that have been providing debtor-in-possession financing have extended their arrangement until 9 February and agreed to provide up to $329 million in financing to provide operating capital during the company’s reorganisation.

Interstate filed for Chapter 11 in 2004. In 2007, the company received investment interest from The Yucaipa Companies. However, a plan of reorganisation was not filed. Yucaipa, owned by billionaire supermarket mogul Ron Burkle, is a mid-market private equity firm often conducting deals involving labour unions.

Ripplewood, best-known for the Shinsei bank deal it did with JC Flowers, is currently raising a US-focused fund targeting $4 billion, according to the Probitas Partners’ 2008 Private Equity Deskbook. In August 2007, a source told PEO that Ripplewood was targeting a $2.5 billion main fund supplemented by a co-investment fund to draw on for larger transactions.

The previous US-focused Ripplewood fund, Ripplewood Partners II, closed in 2000 on $1.2 billion.