Cash-strapped Tastykake maker gets reprieve

January 14, 2011 3:33:56 PM PST
The Tasty Baking Company, maker of Tastykake, has announced a new financing deal that will bring in $6.5 million in loans to the cash-strapped company.

In a news release issued Friday afternoon, Tasty Baking said it had secured 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.

The company also said it was able to reach an agreement with Citizens Bank to defer certain payments until June 30th.

However, the deal also requires the company pursue a sale or merger by June 30th unless it can perform a complete turnaround of its finances.

Tasty Baking was facing a deadline with its creditors on Friday.

In a statement, the president and chief executive officer of Tasty Baking, Charles Pizzi, said the loans will allow the company to deal with the financial situation while they continue to produce, distribute and sell Tastykake products.

The company announced last week that several factors led it to consider its options, including a potential merger or sale.