Pressured by declining sales and the failure to produce projected savings from a new production facility, the maker of Tastykakes said Wednesday it is looking at several options, including a merger or sale.
Tasty Baking Co. president and chief executive Charles Pizzi said in a statement that “unanticipated operational challenges” related to its new bakery in Philadelphia's Navy Yard had lowered projected savings for the fourth quarter of 2010 by $3 million to $10 million.
The company's shares plunged more than any other on the Nasdaq, giving up 36 percent of their value before noon Wednesday. Shares fell $2.43 to $4, but hit a 52-week low of $3.83 earlier in the day.
The company cited a bankruptcy filing by the owner of the A&P, Super Fresh and Pathmark grocery chains and rising commodity costs as contributing factors to the financial squeeze and said it was looking at all options.
The company, whose products include Kandy Kakes and Krimpets, said that some of its lenders agreed to defer some payments related to the construction of its $78 million bakery and warehouse. The company has a second production facility in Oxford, Pa.
It has also retained an outside financial adviser to examine options ranging from refinancing existing debt to “a potential combination with another company as part of the consolidation occurring in the baking goods industry or a potential sale of the company,” Tasty Basking said in a statement.
Pizzi said that while Tasty Baking, founded in 1914, has faced “a challenging period” it remained focused on expanding its business.
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“To that end, we continue to partner with new grocery and convenience store customers within our core markets, increase penetration with key customers, and launch new products into the marketplace,” he said. “Finally, despite the challenges we have faced, we have continued to outpace the category and grow our overall market share.”
