Plan Requires Ratification of Labor Agreement Modifications

IBC Working with All Parties to Implement New Accord and Gain Its Approval Through Bankruptcy Process

Interstate Bakeries Corporation (IBC) (OTC:IBCIQ) announced today that it has received plan funding commitments from an affiliate of Ripplewood Holdings L.L.C. and from Silver Point Finance, LLC, Monarch Alternative Capital L.P. and McDonnell Investment Management LLC, lenders holding approximately 53% of IBC’s pre-petition secured debt, that form a basis for IBC to emerge from Chapter 11 as a stand-alone company. National representatives of IBC’s two major labor unions, which, together, represent nearly 17,000 IBC employees, have agreed to important modifications to their labor agreements that are an essential component of the plan funding commitments. The plan funding commitments do require that labor agreement modifications agreed to by national representatives must be ratified by the union locals before plan funding will be provided and IBC can emerge from Chapter 11.

The foundation for the revised plan of reorganization contemplated by the plan funding commitments emerged from intensive discussions that have been under way in recent weeks among IBC and its existing secured lenders, including Silver Point Finance, LLC, Monarch Alternative Capital L.P. and McDonnell Investment Management LLC, which have committed $339 million pursuant to a new secured term loan, Ripplewood Holdings L.L.C., an affiliate of which has committed $130 million of new capital to the reorganized IBC, and national representatives of two unions – the International Brotherhood of Teamsters (IBT), which represents about 8,500 IBC employees, and The Bakery, Confectionery, Tobacco Workers, and Grain Millers International Union (BCTGM), which represents about 8,200 IBC employees.

Craig Jung, CEO of Interstate Bakeries, said, “We believe that emergence from Chapter 11 as a stand-alone company is the best possible outcome for IBC’s constituents, employees, customers, and vendors. We are deeply appreciative of the willingness to compromise and sacrifice that our major unions and plan sponsors have shown, and the ongoing support that customers and vendors have extended to IBC. I am also grateful to and look forward to working with Ripplewood.”

“This agreement provides the cornerstone for a revised plan of reorganization that will preserve the jobs of more than 22,000 IBC employees,” Mr. Jung said. “It has the support of approximately 53% in amount of IBC’s pre-petition senior secured creditors, provides a fully underwritten exit financing commitment, and has the support of national representatives of IBC’s major labor unions for modifications to IBC’s existing labor contracts that will lower the Company’s cost structure and enable us to create sustainable competitive advantage to secure the Company’s future,” he said.

John Cahill and Greg Murphy, Industrial Partners of Ripplewood Holdings L.L.C., a leading private equity firm, said, “We are very pleased to have reached this agreement under which Ripplewood has committed new capital that will enable the company to look confidently to its future. IBC has outstanding brands in the major bread and snack cake categories that we believe best position the Company for future success.”

Upon completion of the reorganization, Mr. Cahill and Mr. Murphy will serve on IBC’s Board of Directors as Ripplewood representatives. Mr. Cahill was previously Chairman, President and CEO of The Pepsi Bottling Group and Mr. Murphy had been President and CEO of Kraft Food Bakery Companies. Both executives have had extensive food and beverage industry experience during their careers. “I have previously worked with Mr. Cahill and have come to know Mr. Murphy, and I have deep respect for both individuals,” Mr. Jung said.

IBC said it will work closely with all parties involved in these commitments and other key constituents to develop and submit to the bankruptcy court a revised plan of reorganization and a revised disclosure statement that incorporate the terms of the new plan funding commitments.