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Interstate Bakeries Nearing Bankruptcy Exit

Maker of Wonder Bread and Hostess Twinkies says it has reached an agreement ‘in principle’ on the remaining issues needed for it to exit more than four years of bankruptcy.

KANSAS CITY, Mo. (AP) -- Interstate Bakeries Corp. says it has reached an agreement "in principle" on the remaining issues needed for it to exit more than four years of bankruptcy.

While the company cautioned that its reorganization plan could still collapse, the Kansas City-based maker of Wonder Bread and Hostess Twinkies said late Monday that it was nearing a deal with General Electric Capital Corp.

"We are now working diligently with GE Capital and our other financing providers to finalize all documentation for our exit financing," Chief Executive Officer Craig Jung said in a statement. "We are optimistic that we will emerge from Chapter 11 in the near future."

A bankruptcy court hearing on the new agreements is scheduled for Thursday.

"There are a few issues to complete, but we're basically at the documentation stage and we're hoping to close, possibly this week," GE Capital spokesman Ned Reynolds said in a telephone interview Tuesday.

Interstate Bakeries, whose holdings include the J.J. Nissen bakery in Biddeford, Maine, has until Feb. 9 to exit bankruptcy or commitments guaranteeing its post-bankruptcy financing expire, an event the company has said would likely require it to begin liquidating its assets.

U.S. Bankruptcy Judge Jerry Venters last month approved a reorganization plan that would have provided almost $600 million in post-bankruptcy financing.

Under the plan, Silver Point Finance and Monarch Master Funding Ltd. would provide a $344 million loan while GE Credit would provide a $125 million revolving loan.

Investment firm Ripplewood Holdings also would invest $44.2 million in cash and $85.8 million in convertible debt in exchange for a 50 percent stake in the new company and an opportunity to later acquire an additional 15 percent.

Interstate Bakeries and GE Capital have continued to negotiate since then and said Monday they have agreed to change some of the terms.

Court documents show the changes include cutting the amount of GE Capital's loan to $105 million and increasing the interest rates on the money from between 2.5 percent and 3.5 percent to between 3 percent and 4 percent. It also increases the amount of underwriting fees and other costs borne by Interstate Bakeries.

The remaining lenders have agreed to increase their commitments to make up half the $20 million reduction in GE Capital's loan, but Interstate Bakeries spokesman Lew Phelps said the company's post-bankruptcy business plan won't be affected by the smaller amount of financing.

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