DETROIT —
Twinkie lovers, relax.
The tasty cream-filled golden spongecakes are likely to survive, even though their maker will be sold in bankruptcy court.
Hostess Brands Inc., baker of Wonder Bread as well as Twinkies, Ding Dongs and Ho Ho’s, will be in a New York bankruptcy courtroom Monday to start the process of selling itself.
The company, weighed down by debt, management turmoil, rising labor costs and the changing tastes of America, decided on Friday that it no longer could make it through a conventional Chapter 11 bankruptcy restructuring. Instead, it’s asking the court for permission to sell assets and go out of business.
But with high brand recognition and $2.5 billion in revenue per year, other companies are interested in bidding for at least pieces of Hostess. Twinkies alone have brought in $68 million in revenue so far this year, which would look good to another snack-maker.
“There’s a huge amount of goodwill with the commercial brand name,” said John Pottow, a University of Michigan Law School professor who specializes in bankruptcy. “It’s quite conceivable that they can sell the name and recipe for Twinkies to a company that wants to make them.”
Hostess has said it’s received inquiries about buying parts of the company. But spokesman Lance Ignon would not comment on analysts’ reports that Thomasville, Ga.-based Flowers Foods Inc. and private equity food investment firm Metropoulos & Co. are likely suitors. Metropoulos owns Pabst Brewing Co., while Flowers Foods makes Nature’s Own bread, Tastykake treats and other baked goods. Messages were left for spokesmen for both companies on Sunday.
“We think there’s a lot of value in the brands, and we’ll certainly be trying to maximize value, both of the brands and the physical assets,” Ignon said Sunday. He said it’s possible some of Hostess’ bakeries will never return to operation because the industry has too much bakery capacity.
Little will be decided at Monday afternoon’s hearing before Bankruptcy Judge Robert Drain, Pottow said. The judge eventually will appoint a company that specializes in liquidation to sell the assets, and the sale probably will take six months to a year to complete, Pottow said.
Irving, Texas-based Hostess filed for Chapter 11 bankruptcy protection in January for the second time in less than a decade. Its predecessor company, Interstate Bakeries, sought bankruptcy protection in 2004 and changed its name to Hostess after emerging in 2009.
The company said it was saddled with costs related to its unionized workforce. The company had been contributing $100 million a year in pension costs for workers; the new contract offer would’ve slashed that to $25 million a year, in addition to wage cuts and a 17 percent reduction in health benefits.
Management missteps were another problem. Hostess came under fire this spring after it was revealed that nearly a dozen executives received pay hikes of up to 80 percent last year even as the company was struggling.
Then last week thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike after rejecting the company’s latest contract offer. The bakers union represents about 30 percent of the company’s workforce.
By that time, the company had reached a contract agreement with its largest union, the International Brotherhood of Teamsters, which this week urged the bakery union to hold a secret ballot on whether to continue striking. Although many bakery workers decided to cross picket lines this week, Hostess said it wasn’t enough to keep operations at normal levels.
The company filed a motion to liquidate Friday. The shuttering means the loss of about 18,500 jobs. Hostess said employees at its 33 factories were sent home and operations suspended. Its roughly 500 bakery outlet stores will stay open for several days to sell remaining products.
News of the decision caused a run on Hostess snacks at many stores around the country, and the snacks started appearing on the Internet at inflated prices.
National, International News
Related Photos
-
FILE - This Tuesday, Jan. 10, 2012, file photo, shows, Hostess Twinkies in a studio in New York. Twinkie lovers, relax. The tasty cream-filled golden spongecakes are likely to survive, even though their maker will be sold in bankruptcy court. Hostess Brands Inc., baker of Wonder Bread as well as Twinkies, Ding Dongs and Ho Ho's, will be in a New York bankruptcy courtroom Monday, Nov. 19, 2012 to start the process of selling itself. (AP Photo/Mark Lennihan, File) The Associated Press
Discussion
Twinkies likely to survive sale of Hostess
- National, International News
-
-
Authorities: Hofstra student was killed by police
A Hofstra University student being held in a headlock at gunpoint by an intruder was accidently shot and killed by a police officer who had responded to the home invasion at an off-campus home, police said Saturday.
-
Last-minute fortune seekers buy Powerball tickets
It’s all about the odds.
With four out of every five possible combinations of Powerball numbers in play, someone is almost sure to win the game’s highest jackpot, a windfall of hundreds of millions of dollars — and that’s after taxes. -
Today in History for Sunday, May 19, 2013
Today is Sunday, May 19, the 139th day of 2013. There are 226 days left in the year.
-
Bombs targeting Sunnis kill at least 76 in Iraq
Bombs ripped through Sunni areas in Baghdad and surrounding areas Friday, killing at least 76 people in the deadliest day in Iraq in more than eight months. The major spike in sectarian bloodshed heightened fears the country could again be veering toward civil war.
-
Tornado-ravaged Texas town to start recovery
Residents whose homes were torn apart or blown away by a North Texas deadly tornado can soon return to retrieve what belongings may be left and start cleaning up, authorities said Friday.
-
Conn. commuter trains collide; 60 go to hospitals
Two commuter trains serving New York City collided in Connecticut during Friday’s evening rush hour, sending 60 people to the hospital, including five with critical injuries, Gov. Dannel Malloy said.
-
Record Powerball jackpot inspires office pools
In workplaces across the nation, Americans are inviting their colleagues to chip in $2 for a Powerball ticket and a shared daydream.
-
Today in History for Saturday, May 18, 2013
Today is Saturday, May 18, the 138th day of 2013. There are 227 days left in the year.
-
Big retailers back safety accord in Bangladesh
Some of the world’s largest retailers have agreed to a first-of-its-kind pact to improve safety at some of Bangladesh’s garment factories following a building collapse that killed more than 1,100 workers in the country last month.
-
Amtrak unveils locomotives to replace aging fleet
Amtrak has unveiled at a plant in California the first of 70 new locomotives, marking what the national passenger railroad service said it hopes will be a new era of better reliability, streamlined maintenance and more energy efficiency.
- More National, International News Headlines
-
