Alvarez & Marsal

Interstate Bakeries (IBC), one of the largest wholesale bread and snack distributors in the U.S., hired A&M to improve its financial and operational performance.  As part of the Chapter 11 bankruptcy process, A&M REAS was called upon to lead the sale of a surplus bakery in San Pedro, California (greater Los Angeles area), and two former bakery properties in the high-value San Francisco area. A&M’s insightful approach produced a results that significantly exceeded IBC’s expectations.

Two Little League baseball fields that had occupied a third of the San Pedro site for over 40 years, presented a significant challenge to the A&M team, since there was considerable uncertainty with buyers over tenure, as well as public relations concerns and political pressures. Working with the Company’s legal counsel, A&M REAS successfully negotiated an exit agreement with the Little League, removing the uncertainty surrounding the length of tenure. A&M REAS also worked closely with a strategic communications firm to proactively manage public relations risk, and retained a lobbyist to manage political pressures from several government and quasi-government groups. A&M REAS also provided strategic advice related to the overall sales and auction process.

After several rounds of spirited bidding in a Board approved auction conducted in accordance with Chapter 11 bankruptcy procedures, the property was sold for $18.7 million. The transaction was subsequently approved by the bankruptcy court and closed in early July 2005.

For the San Francisco properties, the A&M REAS team determined that the Internet would be the most effective marketing tool. The A&M team created web pages for the Evans Avenue and Bryant Street properties, listing details about the location, information about potential uses, and a virtual due diligence room. More than 2,000 principals and select real estate brokers were identified and targeted through the online marketing effort, generating significant interest in the properties. These direct communications were further supported by print advertising in key national and local publications.

An auction was conducted in accordance with Chapter 11 procedures, the 185,710 sq. ft. Bryant Street location, situated on 2.62 acres of land, was sold to AMERCO, the parent of U-Haul Corp., for $16.0 million. A private investor purchased the 33,500 sq. ft. Evans Avenue property, situated on 2.05 acres, for $7.2 million.  Both deals closed by the end of 2005.