Tasty Baking Bailed Out with State Dough: Report

After missing an $81.5 million payment in January, Philadelphia-based Tasty Baking is on the hot seat.

But an injection of public and private cash Friday has kept the cash-strapped company out of the fire, the Philadelphia Inquirer reported.

The makers of Tastykakes got $2 million from the Philadelphia Industrial Development Corporation and $1 million from the Pennsylvania Department of Community and Economic Development this week, along with an extra $3.5 million from private investors, according to the report.

Part of the food maker's problems stem from its new factory in the South Philadelphia Navy Yard.  The company hoped the modern facility would help cut costs, but the construction, and the cost of materials like flour, have driven up the bakery's expenses.

That new factory has been bankrolled by a group of lenders including Citizen's Bank, Bank of America, and Sovereign Bank.  On Friday, the Inquirer said, the banks agreed to give Tasty until June 30 to make good on its principal payments. 

The lenders also asked Tasty to make plans to sell or merge the company.  The company has been headquartered in Philadelphia since 1914.  The Inquirer said Flower Foods, Inc. of Thomasville, Ga. and Bimbo Bakeries USA in Horsham are possible buyers.

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