By Jacqueline Palank
Hostess Brands Inc. will send its first group of brands,
including Wonder Bread, to the auction block next week as part of
its bankruptcy liquidation.
Flowers Foods Inc. (FLO), which makes Tastykakes snacks and
Nature's Own bread, is set to lead off the bidding for the Hostess
assets.
The Thomasville, Ga., company is offering up to $360 million for
five Hostess bread brands, including Wonder Bread and Nature's
Pride, as well as 20 plants and 38 depots.
In a separate bid, Flowers Foods has offered $30 million for
Hostess's Beefsteak rye bread brand.
If Flowers loses the Wonder Bread assets to a rival, it would
get a $10.8 million breakup fee. A loss at the Beefsteak auction
would award it a $900,000 breakup fee.
A White Plains, N.Y., bankruptcy judge will consider approving
the winning bids at a March 5 sale hearing.
Hostess will return to the auction block again in March, when it
will seek to sell its cake brands, like Twinkie and Ho Hos, as well
as such other bread brands as Sweetheart and Grandma Emilie's.
The Irving, Texas, company in November switched tracks to a
liquidation from a restructuring after it failed to reach a crucial
cost-cutting deal with the union representing its bakers.
School Specialty Inc. (SCHSQ) next week will seek final approval
of financing to keep it operating in Chapter 11, although some
creditors are floating a rival loan.
The seller of classroom supplies, curriculum and furniture
sought Chapter 11 protection last month after negotiating two
financing deals with its existing lenders: Bayside Capital offered
a $50 million loan, while lenders led by Wells Fargo Capital
Finance LLC provided a $175 million loan.
The loans require the company to sell itself by mid-April, and
Bayside has offered to kick off the bidding at a March 27 auction
with its offer to forgive $95 million in debt.
But School Specialty's unsecured creditors say the fast sale all
but ensures Bayside will emerge the winner in a deal that won't
raise the funds to pay off their claims. So some of those unsecured
creditors, the company's bondholders, are working on a rival
bankruptcy loan that wouldn't require a sale. Instead, the
bondholders say they'll give School Specialty the time to determine
whether a sale or standalone restructuring is the best option for
the company and its creditors.
On Wednesday, defunct law firm Dewey & LeBoeuf LLP will seek
the Manhattan court's approval of its plan to pay its
creditors.
The plan, which Dewey negotiated with its secured and unsecured
creditors, will distribute the proceeds of the wind-down Dewey
began upon its collapse last May. Since then, the firm has worked
to sell off its assets, collect outstanding legal bills and settle
litigation.
One landmark deal, struck with several hundred former partners,
will bring in more than $70 million.
Under the Chapter 11 plan, Dewey's secured lenders--J.P. Morgan
Chase Bank (JPM), Citibank (C) and Bank of America (BAC)--are
expected to recover between 46.8% and 76.7% of their $261.9 million
in claims.
General unsecured creditors, whose exact claims currently aren't
known, would receive a maximum recovery of 14.1% and a minimum of
5.25%.
Dewey filed for Chapter 11 bankruptcy liquidation last May 28
following a mass partner exodus and failure to find a partner to
rescue the storied law firm.
-Write to Jacqueline Palank at
jacqueline.palank@dowjones.com
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