Twinkies maker facing end, but life seen for brands
Hostess Brands Inc. on Wednesday appeared headed toward a liquidation, though its lawyers and advisers expressed optimism that they will find homes for many of its iconic brands, which include Twinkies, Drake's cakes and Wonder Bread.
U.S. Bankruptcy Judge Robert Drain in White Plains, N.Y., held a hearing to consider initial approval of the 82-year-old company's plan to wind down during the next year.
Drain's last-ditch mediation to resolve Hostess' differences with its striking bakers' union broke down on Tuesday.
“Unfortunately, we're faced now with the matters that were originally scheduled for Monday and were adjourned to today, to deal with the issues facing the debtor in their need to preserve and ... maintain their value in a liquidation scenario,” Drain said.
Heather Lennox, a lawyer for Hostess, told the judge that the company has received a “flood of inquiries” from potential buyers for several brands that could be sold at auction and expects initial bidders to surface within a few weeks.
Joshua Scherer, a partner at Perella Weinberg Partners, which is advising Hostess, said the company was in “active dialogue” over its Drake's brand with one “very interested” party that had toured a New Jersey plant on Tuesday.
He said regional bakeries, national rivals, private equity firms and others have expressed interest in various brands and that more than 50 nondisclosure agreements have been signed.
“These are iconic brands that people love,” Scherer said.
As for the value of the company, Scherer said Hostess could be worth $2.3 billion to $2.4 billion in a normal bankruptcy, an amount equal to its annual revenue. It has about $900 million of secured debt and faces administrative claims of as much as $150 million.
But Scherer expects a discount in this case because plants have already been closed and Hostess' value could fall further if the liquidation is dragged out.
“I've had buyers tell me, ‘Josh, the longer it takes ... the less value I'm going to be able to pay you,'” he said.
Hostess decided to liquidate on Nov. 16, saying it was losing about $1 million per day as a result of the Bakery, Confectionery, Tobacco and Grain Millers Union — representing nearly one-third of its 18,000 workers — going on strike a week earlier.
The bakers union walked out after Drain authorized Hostess to impose pay and benefit cuts, which the International Brotherhood of Teamsters, Hostess' largest union, had accepted.
Hostess has about 33 plants, plus three it decided to close when the strike began, 565 distribution centers and 570 bakery outlet stores.
As part of a liquidation, the Irving, Texas-based company would terminate about 15,000 employees.
The company said it expects to keep about 3,200 workers to help shut its properties and prepare them for sale, but that only just a few people would remain employed by late March.
Hostess filed for Chapter 11 protection on Jan. 11, its second bankruptcy filing in less than three years.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Opposing defenses find success against Steelers by eschewing blitz
- Penguins forward Downie becoming a hit with teammates
- Steelers looking for Spence to step up game at inside linebacker
- Shale oil, gas finds put Mon Valley on path to renaissance, leaders say
- Steelers’ Brown made good after leaving PSU in wake of sanctions
- Crash closes road in Dunbar
- Western Pennsylvania residents chill about forecasters’ spat
- Pittsburgh wins Gawker.com ugliest accent tourney n’at
- Snapshot in time: Comparing Cowher, Tomlin drafts
- Pitt’s defense has not rested in post-Donald era
- Large-scale batteries are integral in shift to renewable energy