Milling & Baking News - August 26, 2008 - 9

Business

Mrs. Fields takes steps toward
bankruptcy filing
NEW YORK - Mrs. Fields Famous
Brands L.L.C. said it plans to file for
Chapter 11 bankruptcy protection, according to an Aug. 15 filing with the U.S.
Securities and Exchange Commission.
The company, which through its
franchisees' retail stores is one of the
largest retailers of freshly baked, onpremises specialty cookies and brownies in the United States and the largest retailer of soft-serve frozen yogurt
with live active cultures in the United
States, has begun soliciting votes from
creditors for a "prepackaged" bankruptcy reorganization plan.
Under such a plan, a debtor seeks
approval of a plan of reorganization
from affected creditors before filing
for bankruptcy. Because solicitation
of acceptances takes place before the
bankruptcy filing, the amount of time
required for the bankruptcy case is often shorter than in more conventional
bankruptcy cases. Other benefits of a
"prepackaged" plan are greater certainty of results and reduced costs.
Mrs. Fields said the primary purpose of the plan of reorganization "is
to effectuate the restructuring of the
company's capital structure in order to
bring it into alignment with the company's present and future operating
prospects and to provide the company
with greater liquidity.
"We are highly leveraged relative to
our cash flow, our liquidity position
has been steadily deteriorating and is
currently severely restricted and we
will not be in a position to make the interest payment due on the old notes on
Sept. 15, 2008. The company believes
that the restructuring will reduce uncertainty with respect to its future and
better position it to develop and maintain new customers."
In its S.E.C. filing, Mrs. Fields listed
total debt as of June 28 at $202.2 million
and total cash at $97.8 million for a net
debt of $104.4 million. After factoring in
members'/shareholders' deficit of $120.4
million, the company had a negative total book capitalization of $16 million.
Mrs. Fields also noted in the filing
that after a careful review of operations it determined that reorganization
would be preferred to selling its assets.
"The company believes that its businesses and assets have significant value
that would not be realized in a liquidation, either in whole or in substantial
part," Mrs. Fields said. "Consistent
with the liquidation analysis described
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herein and other analyses prepared
by the company and its advisers, the
value of the company's assets would
be considerably greater if the company
operates as a going concern instead of

liquidating. Moreover, the company
believes that any alternative to confirmation of the plan, such as an out-ofcourt restructuring, liquidation, or attempts by another party in interest to
file a plan of reorganization, would result in significant delays, litigation, and
additional costs, and ultimately would
lower the recoveries for holders of allowed claims and interests."
Mrs. Fields was established in Palo
Alto, Calif., in 1977 by Debbi Fields, a

young mother with no business experience. The company grew rapidly and
began franchising stores in 1990. It has
expanded since then through several
acquisitions. Mrs. Fields was sold to its
current owners in 1996. Debbi Fields
resigned as a director and consultant in
2000, and in an Aug. 19 statement said
she hopes the reorganization "will allow Mrs. Fields Cookies to do what it
was built to do: make the best cookies
in the world, serve happy and loyal customers, and never compromise on the
quality of its product or its people."
Earlier this year, Mrs. Fields sold
Great American Cookie Company
Franchising L.L.C. to NexCen Brands,
Inc. for $89 million and 1.1 million
shares of NexCen stock valued at $4.23
per share at the time (currently worth
about 45c per share).
More recently, the company's president and chief executive officer, Stephen Russo, resigned from the company and was succeeded by Michael
R. Ward and John Lauck as interim
co-chief executive officers.
As of June 28, the company's franchise system operated through a network of 1,268 retail locations in the
United States and 21 foreign countries.
The company operates two principal
business units, Mrs. Fields (including
Mrs. Fields Gifts, Mrs. Fields Branded
Retail, Mrs. Fields Franchising and Mrs.
Fields Licensing) and TCBY (Dairy). MBN

Flowers finalizes Holsum Bakery purchase
THOMASVILLE, GA. - Flowers Foods, Inc.
announced the completion of its merger with
Holsum Bakery, Inc. Holsum, which has annual sales of $146 million, will operate as a
subsidiary of Flowers under its current name
and with its existing management team.
The cash and stock transaction is valued at
$150 million, half to be paid in cash and half
in newly issued Flowers common stock.
Founded in 1881, Holsum employs 580

at two baking plants in Arizona and sells its
products through independent distributors
who serve retail and food service customers
in Arizona, New Mexico, Southern California
and southern Nevada. The company's fresh
bread and rolls are marketed under the Holsum, Aunt Hattie's and Roman Meal brands.
The announcement comes a week after Flowers completed the acquisition of
ButterKrust Bakery. MBN

Hiestand shareholders approve merger with IAWS
ZURICH, SWITZERLAND - The board of
A. Hiestand Holding AG has approved the
merger of Hiestand and IAWS Group P.L.C.
to create Aryzta A.G., the world's largest frozen baked foods maker. The merger, which
in July was approved by 99.7% of IAWS
shareholders, was supported by 91.3% of
Hiestand shareholders on Aug. 19.
"We are delighted with the support received by both the Hiestand and IAWS
shareholders to create Aryzta," said
Owen Killian, chief executive officer of
IAWS. "This truly transformational event
is the culmination of five years of part-

nership between IAWS and Hiestand."
On a combined basis, IAWS and Hiestand
have annual net income of approximately
€145 million and net sales of €2.3 billion.
Aryzta will be chaired by Denis Lucey,
chairman of IAWS, and deputy chaired
by Wolfgang Werle, chairman of Hiestand. The new merged company will be
managed by Mr. Killian as c.e.o. In addition, Hugo Kane, chief operating officer
of IAWS, will be c.o.o. of Aryzta, while
Patrick McEniff, chief financial officer
of IAWS, will hold the same post with
Aryzta. MBN
Milling & Baking News

August 26, 2008 / 9

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Milling & Baking News - August 26, 2008

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