Jung will replace Tony Alvarez II, co-founder and co-chief executive of Alvarez & Marsal (A&M), the corporate advisory and turnaround management services firm. Mr. Alvarez has served as chief executive officer of IBC since the Company filed Chapter 11 in September 2004.
Michael Anderson, a long-time member of IBC's Board of Directors, who was elected Board Chairman on January 24, 2007, said, "Craig Jung is the right choice to lead the Company going forward. He is a highly respected executive with prior CEO and COO experience and a proven track record in leading performance turnarounds."
Anderson thanked Tony Alvarez for his stewardship of the Company: "Tony Alvarez's leadership contributions have been invaluable in bringing IBC to this critical point, and the Board is extremely appreciative of his efforts."
Jung previously served as CEO of Panamerican Beverages, formerly the third-largest Coca-Cola bottler in the world with $2.6 billion of revenues. In May 2003, Mr. Jung led the sale of Panamco, Panamerican Beverages' successor, to Coca-Cola FEMSA, S.A. de C.V. in a transaction valued at $3.6 billion. He also served as founding chief operating officer of Pepsi Bottling Group, helping take that firm public in a $5.0 billion IPO in 1999. In 11 years at PepsiCo, Mr. Jung served in a variety of senior executive assignments in general management, marketing and sales. His assignments at PepsiCo included successfully turning around revenue and profit performances at Frito-Lay's Canadian operations, and leading a successful turnaround of Pepsi-Cola's South American operations.
Jung graduated in 1975 from West Point and received his master's degree in public administration from Harvard University in 2004.
Under terms of a three-year employment agreement, Mr. Jung will receive an annual base salary of $900,000 and a signing bonus of $1.2 million. Beginning with the 2009 fiscal year, he will be eligible to participate in the Company's annual performance bonus plan. In the event Company performance objectives are met, he will be entitled to receive an annual bonus equal to 100 percent of his base salary. Mr. Jung will be entitled to receive additional cash awards for enterprise value created during the bankruptcy period, as well as equity once the Company emerges from Chapter 11. During the term of his employment, Mr. Jung will participate in all employee and executive benefit programs.
Extension of DIP Financing
The Company also announced that it has filed a motion with the Bankruptcy Court seeking approval of, among other things, an extension of the maturity date of its post-petition debtor-in-possession (DIP) financing facility to February 9, 2008. The DIP financing facility is currently set to expire on June 2, 2007. The hearing on the amendment is scheduled for February 16, in conjunction with the hearing to approve Mr. Jung's employment agreement.
To date, IBC has not borrowed under its $200 million DIP financing facility, although it has issued letters of credit under the facility in the amount of $109.1 million, primarily in support of the Company's insurance programs. Availability under the DIP facility is currently $69.3 million.
J.P. Morgan Chase Bank (JPM Chase), agent for the DIP financing facility during the bankruptcy cases, will continue to act as agent and syndicate the extended financing facility. IBC said that it is optimistic that it will receive the support of the lenders that are party to the DIP financing facility to extend the facility through February 9, 2008, as well as the consent of the pre-petition lenders to such transactions; however, there can be no assurances that such lenders will agree to the extended DIP financing facility on the terms and conditions currently contemplated by the proposed amendment or that alternative lenders or sources of financing will be available in the event no agreement to extend is reached with such lenders.
Terms of the proposed DIP financing facility extension will be attached to a Form 8-K that the Company will file today with the Securities and Exchange Commission and include, among other proposed terms and conditions, financial covenants requiring IBC to achieve minimum financial performance targets. The minimum financial performance targets resulted from a negotiation process and are not necessarily indicative of the expected operating performance of IBC in future fiscal periods, especially periods beyond fiscal 2007.
Resignation of a Director
In a separate announcement, IBC said that David Weinstein, a member of its Board of Directors who had been serving as lead director, has resigned effective immediately. No timetable has been established for filling the vacancy created as a result of Mr. Weinstein's resignation.
CONTACT: Sandra Sternberg, +1-212-573-6100, +1-213-709-2158; or Maya Pogoda, +1-310-788-2850, both of Sitrick and Company
January 31, 2007