Nashville, Aug. 12 - Interstate Bakeries Corp. sold $100 million of 10-year convertible senior subordinated notes with a 6% coupon and 12.5% initial conversion rate in a private placement.
The bonds will be non-callable for seven years with a put in year seven.
The Kansas City, Mo.-based company, which bills itself as the largest baker and distributor of fresh baked bread and sweets in the United States, said proceeds would be used to repay its senior credit facility over the next year, improving near-term liquidity and financial flexibility, and for general corporate purposes.
Interstate Bakeries also amended its senior secured credit facility, increasing the interest rate by 50 basis points on all loans, modifying the leverage and interest coverage covenants through the first quarter of fiscal 2006 to increase financial flexibility and prohibiting dividend payments until its senior bank debt is rated Ba3/BB- with a stable outlook or better, according to a company news release. As a condition to this amendment becoming effective, the company was required to raise at least $95 million in net proceeds from an offering of securities that are junior to the senior secured credit facility, which will be satisfied by the convertible sale.
Also, the company announced Thursday that it would delay its report for the fiscal year ended May 29 because of its investigation into workers compensation and other reserves, and the need to restate second and third quarter financial statements. The company said it has determined it will record a charge of about $40 million to second quarter pretax income and, in June, said it would deepen its reserve for workers compensation claims by $40 million.
The company is seeking up to a 15-day extension to file its form 10-K with the Securities and Exchange Commission.
Terms of the deal are:
| Issuer: | Interstate Bakeries Corp.
|
| Issue: | Convertible senior subordinated notes
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| Placement agent: | Unknown
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| Amount: | $100 million
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| Greenshoe: | $20 million
|
| Maturity: | Aug. 15, 2014
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| Coupon: | 6.0%
|
| Price: | Par
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| Yield: | 6.0%
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| Conversion premium: | 12.5%
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| Conversion price: | $10.1025
|
| Conversion ratio: | 98.9854
|
| Dividend protection: | Yes, via conversion ratio adjustment
|
| Takeover protection: | Yes, via premium make-whole
|
| Call: | Non-callable for 7 years
|
| Put: | In year 7
|
| Announcement date: | Aug. 12
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| Distribution: | Private placement
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