Tasty Baking Company (NasdaqGM: TSTY) announced today that it reached agreement for new public and private debt financing comprised of $2 million from the PIDC Local Development Corporation (“PIDC”), $1 million from the Department of Community and Economic Development of Pennsylvania (“DCED”) and $3.5 million from a group of accredited investors. Additionally, the Company entered into an amendment to its Credit Agreement with its bank group led by Citizens Bank pursuant to which the bank group agreed to defer until June 30, 2011 all principal payments and credit facility reductions. This amendment also waived certain defaults, changed the maturity date to June 30, 2011, amended certain financial covenants and established additional covenants, including, among other things, imposing until June 30, 2011 minimum cash balances and prohibiting the payment of any dividends on the Company’s common stock. It also requires the Company pursue consummating the sale or merger of the Company by June 30, 2011. In addition, the lenders for the Company's loans from the PIDC and DCED, along with the landlords for the Company's leases at the new bakery and its office headquarters in Philadelphia, have also agreed to defer until June 30, 2011 certain payments due under their loans and leases.
Charles P. Pizzi, president and chief executive officer of Tasty Baking Company, said, “We are pleased that we have secured this new financing and the amendments. We believe that the new funds will enable the Company to manage cash flow and deal with its tight liquidity situation as the Company continues its evaluation of possible financial and strategic alternatives which, in addition to a possible sale or merger of the Company, include the possibility of refinancing the Company’s long term debt or raising additional capital. As we pursue our options, we remain focused on operational efficiencies, growing the business and continuing to produce, distribute and sell Tastykake products to our customers and consumers.”
At this time, there can be no assurance that any of these possible transactions will occur or, if undertaken, their terms or timing.
The promissory notes issued to accredited investors (as defined in Rule 501 under the Securities Act of 1933) have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release does not constitute an offer to sell or the solicitation of an offer to buy these promissory notes or any of the Company's securities.