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.