Milling & Baking News - January 25, 2011 - 13

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Tasty Baking gains breathing
room with financing agreement
PHILADELPHIA - Tasty Baking Co.
has reached agreement for new public and private debt financing that
includes $2 million from the Philadelphia Industrial Development Corp., $1
million from the Department of Community and Economic Development of
Pennsylvania, and $3.5 million from a
group of accredited investors. Additionally, the company has 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 all principal payments and credit facility reductions.
Before reaching the pact, lenders
had given Tasty until Jan. 31 to gain
access to new and renegotiate terms of
its existing financing.
According to Tasty, the new amendment waived certain defaults, changed
the maturity date to June 30, amended
certain financial covenants and established additional covenants, including, among other things, imposing
until June 30 minimum cash balances

and prohibiting the payment of any
dividends on the company's common
stock. The amendment also requires
Tasty to pursue a sale or merger of the
company by June 30.
In addition, the lenders for the company's loans from the P.I.D.C. and the

D.C.E.D., along with the landlords
for the company's leases at the new
bakery and its office headquarters in
Philadelphia, have agreed to defer until June 30 certain payments due under
their loans and leases.
"We are pleased that we have secured this new financing and the

amendments," said Charles P. Pizzi,
president and chief executive officer of
Tasty Baking. "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."
The new financing agreement
comes a little more than a week after
Tasty disclosed it was exploring strategic options to deal with financial difficulties, and the outgoing governor of
Pennsylvania subsequently expressed
interest in helping the company
weather its problems.
The company's stock, which
plunged from $6.43 on Jan. 4 to $3.83
on Jan. 5, traded at a 52-week low of
$3.78 on Jan. 14. MBN

Kellogg to settle Rice Krispies
immunity case for $5 million
BATTLE CREEK, MICH. - The Kellogg
Co. has agreed to pay $5 million as part
of a class action in the U.S. District Court
Central District of California involving
immunity claims on Rice Krispies and
Cocoa Krispies cereals.
Kellogg originally agreed to remove the
immunity claims from its Rice Krispies
products in late 2009 after the Oregon Department of Justice challenged the claims.
In June 2010, Kellogg settled with the
Federal Trade Commission over the same
claims, though it stood by them. Following the F.T.C. action, several class actions
were raised, which now have been settled.
Under terms of the settlement, Kellogg
has agreed to pay between $5 and $15 to
consumers who submit valid claim forms
to recover the full purchase price of the cereal they purchased, up to a total amount of
$2.5 million. Additionally, Kellogg will distribute $2.5 million worth of Kellogg brand
cereal and food products to charities.
The settlement also notes Kellogg must
discontinue use of the challenged message
regarding immunity benefits of the cereal
unless it has "competent and reliable scientific evidence" that supports the claim.
The immunity claims in question appeared on boxes of Rice Krispies from
bakingbusiness.com / world-grain.com

Business

June 1, 2009, through March 1, 2010, and
included, but were not limited to, the following statements:
 "Now helps support your child's immunity"
 "25% Daily Value of antioxidants &
nutrients vitamins A, B, C & E"
 "With antioxidants and nutrients"
 "Helping to support your family's
immunity"
 "Kellogg's Cocoa Krispies has been
improved to include antioxidants and
nutrients that your family needs to help
them stay healthy"
 "Excellent source of vitamins A, B, C,
and E - antioxidants and nutrients that
help support the body's immune system"

 "Enjoy this wholesome breakfast and
help keep your family healthy"
 "And now each and every box is fortified with vitamins and nutrients that
work together to help support your
child's immunity."
Reached by Milling & Baking News, Kris
Charles, spokesperson for Kellogg, said
the suit pertains to an on-pack claim that
was removed voluntarily from the marketplace more than a year ago.
"Kellogg Co. has a long history of responsible marketing," Ms. Charles said.
In addition to the Rice Krispies settlement,
Kellogg last year agreed to a $10.5 million
settlement in a class action claiming Kellogg
falsely advertised its Frosted Mini-Wheats
cereals as "clinically shown to improve children's attentiveness by nearly 20%." As part
of that suit, class members received $2.75 million and $5.5 million was given to charities. MBN

Pendleton Flour Mills changing name to PFM; new logo coming
CHATTANOOGA, TENN. - Pendleton
Flour Mills is rebranding its look and
changing the name of the company to
PFM. The changes, which will take effect
in March in conjunction with the 27th Annual International Pizza Expo held in Las
Vegas, include a new logo and new company literature.
Pendleton Flour Mills, L.L.C. is a
joint venture between two longstanding

family milling companies, Southeastern
Mills and Kerr Pacific.
"Our new look will help present Pendleton in a more concise and fresh manner," said Pete Frederick, vice-president
of sales at Pendleton.
Pendleton Flour Mills is known in the
industry for its Power and Mondako flour
brands, and it also provides hard and soft
wheat flours for all baking applications. MBN
Milling & Baking News January 25, 2011 / 13

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

Milling & Baking News - January 25, 2011

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