Burkle’s Twinkie Fix Could Help Deal

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Ron Burkle, the billionaire who favors unions over shareholders, is roiling company management and giving creditors a chance of higher returns with his effort to rescue bankrupt Interstate Bakeries Corp., Bloomberg News reports.


Interstate, the maker of the once iconic and now nutritionally incorrect Twinkies and Wonder Bread, has become more than a food fight between a Burkle-Teamster alliance and company Chief Executive Officer Craig Jung. Traders say the battle between the 55-year-old Burkle and Jung, who is backed by hedge-fund manager Silver Point Capital LP, will sweeten returns for creditors owed almost $1 billion.


“Competition is great,” said Kirk Ruddy, senior vice president and director of claims trading at Tejas Inc., an Austin, Texas, brokerage. “I think we are going in the right direction.”


After three years of reorganization efforts, Interstate last month outlined a bankruptcy plan that would cancel the company’s stock and pay creditors with new shares. The plan favors Interstate’s bank lenders over unsecured bondholders and other creditors. Those groups are counting on Burkle’s Yucaipa Cos. to make a better offer, sparking a bidding war for their support.


Prices on some of the Kansas City, Missouri-based company’s unsecured debt have risen, indicating creditors are betting on higher recoveries.


Susan Watson, a bankruptcy adviser, said she recently sold a $10,000 claim that Eagle Food Centers held against Interstate for 77 cents on the dollar.


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