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Wednesday, January 5, 2011

Tastykake faces sale as new plant fails to deliver savings

Tasty Baking Co. boss Charles Pizzi says here that a $3 million shortfall in savings from its new South Philadelphia bakery, higher flour prices and grocer bankruptcies have created an "extremely tight" cash situation.

He said the Commonwealth of Pennsylvania and Tastykake's bankers led by Citizens Bank have agreed to temporary delays in loan payments while investment bankers at Janney Montgomery Scott to sell the company or refinance its debt. Janney analyst Mitchell Pinheiro said he's suspending coverage and past reports on Tastykake's prospects "should not be relied on."

Pizzi, a well-connected former Philadelphia city commerce official and chamber of commerce leader and the current chairman of the Federal Reserve Bank of Philadelphia, whose board includes prominent Philadelphians like Republican investment manager James Nevels and corporate headhunter Judith von Seldeneck but not a lot of manufacturers, has faced declining junk food sales for Tasty's snack cakes.

He bet the company on a state-aided move last year from its old factory near East Falls to the "state-of-the-art" site at the old Navy Yard, with Pennsylvania taxpayers on the hook for $31 million in financing.

The company's failure, combined with the threatened closure of the much more heavily state-subsidized Aker (ex-Kvaerner) shipyard nearby, would raise big questions about Pennsylvania's policy of picking industries to preserve with taxpayer help.
Posted by Joseph N. DiStefano @ 8:46 AM  Permalink | 12 comments
Comments   
  • 0 like this / 0 don't   •   Posted 9:31 AM, 01/05/2011
    Uh Oh! Charlie couldn't cut the mustard. Who thought he could? I certainly didn't.
    — FJG JR
  • 0 like this / 0 don't   •   Posted 9:33 AM, 01/05/2011
    Hopefully they don't sell the company. Tastykake is one of the few manufacturing this city has left.....
    — Vote for Dickie
  • 0 like this / 0 don't   •   Posted 9:56 AM, 01/05/2011
    Wonder who projected the savings that would occur at the new site? A real shame if Tastykake disappears; almost a historical landmark in Philadelphia! I wish them well!!!
    — ox
  • 0 like this / 0 don't   •   Posted 10:01 AM, 01/05/2011
    "Say BIMBO"
    — syddan26
  • 0 like this / 0 don't   •   Posted 11:39 AM, 01/05/2011
    If they didn't change the packaging there wouldn't be any problems. I quit buying them when they added that stupid tin and you had to open them from the top!
    — Ray I
  • 0 like this / 0 don't   •   Posted 1:11 PM, 01/05/2011
    TastyKake needs to do more than trim costs, it did that by dropping payroll and moving to a modern, open on one floor production facility. Tastykake needs to grow the top line. More sales. Powerbars, granola bars, granola/trail mix, Cliff bars. I might have eaten 30 of their products a month up until I was 20, but at 54, my wife will have my head if she see one Cherry Pie box, every 6 months. Not a sugar loaded, icing smothered raisin bar either. A better quality product in addition to the treats that are for kids a lot of the time and less so for adults as we age. They can produce these products in their modern food processing facility. They need to build on the legacy of quality sweets with quality nutrition.
    — Fernando08
  • 0 like this / 0 don't   •   Posted 3:49 PM, 01/05/2011
    TastyKake going the way Breyer's did.... The ice cream stayed the same and even got cheaper.... we shall see what happens to the TastyPie....
    — LouDawan
  • 0 like this / 0 don't   •   Posted 4:17 PM, 01/05/2011
    Yes, let's ask these questions. Who is deciding what companies should get these tax breaks? And what are the criteria? Transparency, please.
    — NotADoneDeal
  • 0 like this / 0 don't   •   Posted 11:59 AM, 01/09/2011
    So now Governor Rendell wants bailout Tastykake huh? Don't you think there are more people who need to be bailed out more than Tastykake? What about the police and firemen who are facing cuts in the city. Aren't people's safety more important than a F**ckin lemon pie? oh thats right the good ol' boys network.Was Rendell the mayor when Pizzi was the head of the Chamber of Commerce? just wondering!!!!
    — tastyduck2
  • 0 like this / 0 don't   •   Posted 11:59 AM, 01/09/2011
    So now Governor Rendell wants bailout Tastykake huh? Don't you think there are more people who need to be bailed out more than Tastykake? What about the police and firemen who are facing cuts in the city. Aren't people's safety more important than a F**ckin lemon pie? oh thats right the good ol' boys network.Was Rendell the mayor when Pizzi was the head of the Chamber of Commerce? just wondering!!!!
    — tastyduck2
  • 0 like this / 0 don't   •   Posted 11:59 AM, 01/09/2011
    So now Governor Rendell wants bailout Tastykake huh? Don't you think there are more people who need to be bailed out more than Tastykake? What about the police and firemen who are facing cuts in the city. Aren't people's safety more important than a F**ckin lemon pie? oh thats right the good ol' boys network.Was Rendell the mayor when Pizzi was the head of the Chamber of Commerce? just wondering!!!!
    — tastyduck2
  • 0 like this / 0 don't   •   Posted 12:13 PM, 01/09/2011
    WHAT ABOUT THE INDEPENDENT DISTRIBUTORS WHO INVESTED IN THE COMPANY? WHAT HAPPENS TO THEM? OH YEAH. YOU REALLY GOING TO BAILOUT A COMPANY WHOSE CEO MAKE ABOUT1.3 MILLION A YEAR IN SALARY AND BONUSES HUH? SAME OLD SAME OLD. ITS A SHAME NO ONE AT THE TOP ACCEPTS RESPONSIBBILITY. THEY JUST LOOK FOR HELP TO BAIL THEM OUT. MAYBE THE MANAGEMENT TEAM SHOULDN'T TAKE ANY SALARY FOR A YEAR OR TWTO HELP THE COMPANY GET BACK ON ITS FEET! YEAH RIGHT!
    — tastyduck2


12 comments
About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column in the Philadelphia Inquirer. Joe has been a member of Bloomberg LP’s New York Finance Team, wrote the book “Comcasted,” taught writing at St. Joseph’s University, and studied economics and history at Penn. Reach Joe at 215-854-5194 and JoeD@phillynews.com
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