Milling & Baking News - January 11, 2011 - 10

Editorial 

Continued from Page 7

were completely re-designed and re-engineered in the
past year. The goal is to provide expanded capabilities
while easing access. Use of the web sites for advertising
posted exponential growth, but still was only a fraction
of the print media total. In a companion effort, videos
were introduced, primarily for the retail marketplace
via the launch of what is named the Bakery Channel.
Our staff is dedicated to helping advertisers develop
the right marketing tools for managing what has become an increasingly complex media mix, even in an
industry as clearly structured as is grain-based foods.
Equal in importance to the steps taken to enhance
the news and information we provide to our readers
in grain-based foods and associated industries is what

we did not do. We resisted following the example of an
increasing number of print media companies that are
beginning to erect a paywall in front of their on-line
content. While we, along with others in the print media business, have had to face pressures from the faltering economy and on-line competition, we seek to avoid
barring readers from accessing articles without paying.
How this situation evolves is unpredictable at this time,
but so far at least, readership of our magazines has continued at a level high enough not to dictate the need for
immediate change. We hope those conditions persist.
It is in that spirit that we once again declare our belief
in the future of grain-based foods. We also repeat our
faith in what we strive to tell you as a way of fostering
the industry's continuing prosperity. MBN

Business 

Facing further challenges, Tasty
cites possibility of merger, sale
PHILADELPHIA - Production difficulties during the optimization of a
new Philadelphia bakery prevented
Tasty Baking Co. from achieving expected operational cash savings during the fourth quarter ended Dec. 25
and, along with extremely tight liquidity, have the company exploring
several strategic actions, including a
potential merger or sale of the company, Tasty Baking said Jan. 5.
"As of Nov. 1, 2010, our expectation
was that a run rate of $13 million in
annualized pre-tax cash savings, net of
facility leases but before debt service,
would be achieved by the end of the
fourth quarter of 2010," said Charles
P. Pizzi, president and chief executive officer of Tasty Baking. "Due to
unanticipated operational challenges,
the run-rate savings at the end of the
fourth quarter of 2010 is now expected
to be approximately $10 million."
Given the operational volatility experienced to date, Tasty Baking said it
expects to report only the company's
run-rate savings at the time of each future quarterly earnings release.

Additionally, Tasty Baking said it is
experiencing extremely tight liquidity
as a result of lower-than-expected cost
savings as well as a number of other factors, including the impact of the recent
bankruptcy filing by The Great Atlantic

& Pacific Tea Company, Inc. (A&P) and
the sharp rise in commodity costs.
In response to these circumstances,
the company is pursuing two parallel processes. First, Tasty Baking has
entered into discussions with its bank
group led by Citizens Bank to explore
various alternatives to address current
liquidity needs, including increasing
the amount of funds available under the
company's bank line of credit, as well as
addressing the current and future covenant requirements under the company's
credit agreement. While discussions are
ongoing, Tasty Baking said the bank

Gavilon completes acquisition of DeBruce Companies
OMAHA - Gavilon, L.L.C. has completed
the acquisition of the DeBruce Companies,
expanding the company's agricultural assets in the United States and Mexico. The
transaction, which was first announced in
October 2010, increases Gavilon's licensed
grain storage capacity to more than 300
million bus, making it the third-largest
grain storage network in North America.
10 / January 11, 2011 Milling & Baking News

Paul DeBruce will continue as chief executive officer of the DeBruce Companies,
a wholly owned subsidiary of Gavilon,
and will join Gavilon's board of directors.
Larry Kittoe also will continue as chief operating officer of the DeBruce Companies.
Upon the closing of the transaction, Mr.
DeBruce and Mr. Kittoe also were named
executive vice-presidents of Gavilon.

group has agreed to defer until Jan. 14,
2011, all principal payments and credit
facility reductions, while the lenders for
the company's loans have agreed to defer until Jan. 31, 2011, certain payments
due under their loans and leases.
Second, Tasty Baking has retained Janney Montgomery Scott L.L.C. as its financial adviser to assist the company in its
evaluation of various possible financial
and strategic options, including refinancing the company's long-term debt due in
September 2012, raising additional capital, a potential combination with another
company as part of the consolidation occurring in the baked goods industry or a
potential sale of the company.
As the company considers possible
financial and strategic actions, Mr. Pizzi
said Tasty Baking will continue to operate its two modern bakeries and produce,
distribute and sell Tastykake products to
its customers and consumers.
"While this has been a challenging
period for us operationally, we remain
focused on growing the business,"
he said. "To that end we continue to
partner with new grocery and convenience store customers within our core
markets, increase penetration with
key customers, and launch new products into the marketplace." MBN

"The addition of the DeBruce Companies' grain, ingredient and fertilizer facilities
and distribution network will complement
Gavilon's North American footprint and
position the company to meet the rapidly
growing demand for agricultural resources
worldwide," Gavilon said. "The combined
company will leverage best practices across
the organization to enhance its ability to
compete as one of the leading commodity
management firms." MBN
bakingbusiness.com / world-grain.com

http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - January 11, 2011

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