KANSAS CITY, Mo. (AP) – Interstate Bakeries Corp., the bankrupt maker of Hostess Twinkies and Wonder Bread, said late Friday it had worked out contract modifications with one of the two unions representing a majority of its 25,000 employees.

Interstate owns the J.J. Nissen bakery in Biddeford, Maine.

The Kansas City-based company said the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union had begun having its members vote to ratify the changes, which included health and welfare concessions and changes to the company’s distribution network.

A phone call to the union’s headquarters in Kensington, Md., Friday night wasn’t immediately returned.

Interstate Bakeries has until Oct. 5 to file a plan with court officials for reorganizing itself and ending its three-year-old bankruptcy case. If it doesn’t meet that deadline, other parties, including its lenders and creditors, can propose reorganization plans of their own.

The company faces a self-imposed deadline today to reach new agreements with its union workers or it said it would ask the court for a 30-day extension to consider it options, including possible liquidation.

If it can work out agreements, it plans to ask the court on Wednesday to extend the deadline for its reorganization plan to Jan. 15.

While it has had progress with the bakery union, Interstate Bakeries has had less luck with the International Brotherhood of Teamsters, which represents around 10,000 employees.

The union objects to additional health care concessions, as well as the company’s plan to separate the job functions of many drivers who currently sell and deliver the company’s products.

The union says the distribution changes would reduce the pay for many of its members, but Interstate Bakeries said the effect would be smaller than the union is claiming.

The Teamsters earlier this week asked the bankruptcy court to deny Interstate Bakeries’ request for more time, saying three years has been more than enough to work out a plan.

JP Morgan Chase Bank, which represents the company’s pre-bankruptcy lenders, made a similar request this week, saying the deadline should be pushed back no further than Oct. 31.

A committee of unsecured creditors has also filed motions, seeking to force Interstate Bakeries to talk with potential buyers and allow creditors to be part of those negotiations.

AP-ES-09-29-07 0746EDT

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