Apollo Seeks $450 Million Loan for Hostess Snack-Cake Unit

Apollo Global Management LLC and C. Dean Metropoulos & Co. are seeking a $450 million covenant-light term loan to back their purchase of Hostess Brands Inc.’s snack-cake business, according to a person with knowledge of the transaction.

Apollo and Metropoulos are buying the unit, which includes Ding Dongs and Ho Hos, five bakeries and equipment, for $410 million, according to data compiled by Bloomberg.

Credit Suisse Group AG and UBS AG arranging the financing, which also includes a $60 million asset-based revolving line of credit, said the person, who asked not to be identified because the information is private. The bank will host a lender meeting Feb. 27 and commitments will be due March 8, according to the person.

Melissa Mandel Kvitko, a spokeswoman for Apollo, declined to comment.

Hostess, founded in 1930, is liquidating after failing to reach an agreement with striking bakers on concessions to help the company emerge from its second bankruptcy. Initial bids for assets total about $858 million with about $100 million more for sale, Chief Executive Officer Greg Rayburn said Jan. 31.

“Hostess continues to proceed with a process to sell its assets,” Thomas Becker, a spokesman for Hostess, said today in an e-mailed statement.

Flowers Foods Inc. based in Thomasville, Georgia, made the lead bid for Hostess’s Wonder, Butternut, Home Pride, Merita and Nature’s Pride brands, 20 bread plants, 38 depots and other assets. Flowers offered $360 million, plus $30 million for the Beefsteak brand. An auction is set for Feb. 28.

Covenant-light debt doesn’t carry typical lender protection such as financial-maintenance requirements.

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