Rendell: 'A little more' dough for Tasty

January 5, 2011
By Harold Brubaker and Amy Worden
Philadelphia Inquirer

Gov. Rendell, with less than two weeks left in office, is determined to help Philadelphia's Tasty Baking Co. out of its cash squeeze.

"We are trying to find a way to keep Tastykake on its feet," Rendell said in an interview Thursday in the Capitol. "It's an important Pennsylvania company and a significant employer. We'd like them to stay out of bankruptcy."

Tasty, which disclosed dire financial problems Wednesday, moved last year from Philadelphia's Nicetown neighborhood to a new headquarters and $78 million bakery at the Philadelphia Navy Yard, with the help of $32 million in publicly subsidized loans. In March, the company employed 315 at the bakery.

The state is prepared to offer "them a little more" as a short-term loan, Rendell said. With the company appearing to be headed for a merger or sale, he said he envisioned the loan's being repaid quickly.

Asked if chief executive Charles P. Pizzi had spoken to Rendell, Tasty Baking spokesman Timothy N. Spreitzer said: "Yes, Charlie has briefed the governor on the news release issued yesterday. As for the governor's remarks today, we just can't comment."

The news of Tasty's woes unleashed stinging criticism of Rendell's economic policies, including the effort to provide $42 million to support the Navy Yard's Aker Philadelphia Shipyard and, possibly, additional support for Tasty.

"This is pouring money down a rat hole for cronies," said Mark D. Schwartz, a lawyer and former investment banker, who lives in Bryn Mawr and worked on state economic-development programs in the 1970s.

"The nice thing is that Corbett will not have the luxury of doing this," he said.

Rendell acknowledged that Gov.-elect Tom Corbett could undo any Tasty deal when he took office Jan. 18.

"Anything that Gov. Rendell does between now and Jan. 18 that is not a completed and signed contract will be reviewed when Gov.-elect Corbett takes office," Corbett spokesman Kevin Harley said.

Tasty Baking skipped a loan payment due Saturday and is negotiating with Citizens Bank and other creditors for further relief on $81.5 million in debt. The lenders gave Tasty until next Friday to work out a deal to avoid default.

Tasty's landlord at the new bakery, Liberty Property Trust, agreed to defer payments due before Jan. 31, as did the Philadelphia Industrial Development Corp. and the Pennsylvania Department of Community and Economic Development.

Among Tasty's state-subsidized loans is $10 million from the Machinery and Equipment Loan Fund. Tasty was the biggest borrower under that program, according to state data.

The company also has a $12 million loan from the Philadelphia Industrial Development Corp. and a $10 million Jobs Bank loan from Citizens in partnership with the state, according to a company filing with the Securities and Exchange Commission.

In addition, the company received a $600,000 Opportunity Grant from the state to help pay for the relocation.