The Joplin Globe, Joplin, MO

Business

December 21, 2012

Hostess expects to split up snack cakes in sale

Twinkies, Wonder Bread and Devil Dogs are likely to return to shelves in coming months, but probably not under the same owners.

Hostess Brands Inc. said in bankruptcy court Friday that it’s narrowing down the bids it received for its brands and expects to sell off its snack cakes and bread to separate buyers. The testimony came from an investment banker for Hostess, which is in the process of liquidating.

A likely suitor has emerged for the namesake Hostess brand, which includes Twinkies, Ding Dongs and Ho Hos, along with Dolly Madison cakes, which includes Coffee Cakes and Zingers, said Joshua Scherer of Perella Weinberg Partners. He said another viable bid was made for Drake’s cakes, which includes Devil Dogs, Funny Bones and Yodels. That bidder also wants to buy the Drake’s plant in Wayne, N.J., which Scherer said is the country’s only kosher bakery plant.

Additional bids have been submitted for its bread brands, which include Wonder and Home Pride. Hostess expects to file binding “stalking horse” bids for many of its brands in January. Those filings would be followed by a four-week auction process to allow competing bids. Scherer said the auctions could be very active for some of the brands, given the number of parties that have expressed interest. Sales could be completed by as early as mid-March.

About 30 plants could also be sold with the brands, Scherer said, with six plants, several warehouses and a fleet of trucks likely to be closed or scrapped.

Hostess has hired a firm Hilco to act as a sales agent for those additional assets; the firm will also give Hostess a $30 million loan to maintain operations during its liquidation, which is expected to take about a year.

Hostess, based in Irving, Texas, has said potential buyers include major packaged food companies and national retailers, such as big-box retailers and supermarkets. The company has stressed it needs to move quickly in the sale process to capitalize on the outpouring of nostalgia sparked by its bankruptcy.  

To begin winding down its operations late last month, Hostess had said it would retain about 3,000 workers to shutter plants and perform other tasks. On Friday, an attorney for Hostess said in court that figure was down to about 1,100 employees. The liquidation of Hostess ultimately means the loss of about 18,000 jobs, not including those shed in the years leading to the company’s failure. CEO Greg Rayburn, who was hired as a restructuring expert earlier this year, is earning $125,000 a month.

The company’s demise came after years of management turmoil and turnover, with workers saying the company failed to invest in updating its snack cakes and breads. Hostess filed for its second Chapter 11 bankruptcy in less than a decade this January, citing steep costs associated with its unionized workforce.

The company was able to reach a new contract agreement with its largest union, the Teamsters, the bakers union rejected the terms and went on strike Nov. 9.  A week later, Hostess announced its plans to liquidate, saying the strike crippled its ability to maintain normal production.  Although Hostess sales have been declining over the years, they still clock in at between $2.3 billion and $2.4 billion a year.

When asked how much the brands are expected to fetch from buyers, Scherer said he would rather not say.

 

 

1
Text Only
Business
  • Business US stocks close higher for third day in a row

    Investors drove stock prices to their highest level in a week Wednesday,

    April 16, 2014 1 Photo

  • China’s growth slows to 7.4 percent in 1Q

    China’s economic growth slowed further in the latest quarter but appeared strong enough to satisfy Chinese leaders who are trying to put the country on a more sustainable path without politically dangerous job losses.

    April 16, 2014

  • A look at 3 minority business mentoring programs

    A look at minority business mentoring programs, called accelerators, in three metropolitan areas.

    April 16, 2014

  • Why high oil prices are actually good for airlines

    Airline executives frequently complain about fuel costs. But the truth is higher prices actually have been good for business.

    April 16, 2014

  • Business US stocks open higher; Yahoo soars in early trade

    U.S. stocks moved higher in early trading on Wednesday, extending their gains into a third day. Investors welcomed solid earnings from Yahoo as well as some encouraging news about China’s economy and U.S. factory production.

    April 16, 2014 1 Photo

  • Detroit strikes second deal with its other retirees

    The city of Detroit reached tentative agreements to preserve pensions for retired police office and firefighters but cut monthly payments for other former employees, key deals that could accelerate the largest public bankruptcy in U.S. history, officials said Tuesday.

    April 16, 2014

  • Missouri court expands legal rights for injured workers

    The Missouri Supreme Court has overturned 30 years of precedent with a ruling that gives greater legal protections to injured workers who are fired from their jobs.

    April 15, 2014

  • Immigration activists urge Obama to act boldly

    Latinos and immigration activists are warning of political peril for President Barack Obama and Democrats in the fall election unless the president acts boldly and soon to curb deportations and allow more immigrants to remain legally in the U.S.

    April 15, 2014

  • Farmers off to slow start planting corn crop

    Spring planting across the nation’s Corn Belt is sputtering because the soil remains too soggy or cold for effective seeding.

    April 15, 2014

  • Schreiber Foods schedules Carthage plant expansion

    Plans to expand a Schreiber Foods plant to eventually add 160 new jobs have been endorsed by a Carthage committee working with the company. Andrew Tobish, director of combinations for Schreiber, which is based in Green Bay, Wis., confirmed the project, which he said would be complete by late spring or early summer in 2015.

    April 15, 2014

Poll

The Supreme Court may take up a challenge to an Ohio law that bars false statements about political candidates during a campaign. Do you think false accusations made in the heat of an election should be punished as a crime?

A. Yes.
B. No.
     View Results
Facebook
Twitter Updates
Follow us on twitter
NDN Video
Disbanding Muslim Surveillance Draws Praise Hundreds Missing After South Korean Ferry Sinks Passengers Abuzz After Plane Hits Swarm of Bees Boston Bomb Scare Defendant Appears in Court Pistorius Trial: Adjourned Until May 5 Diaz Gets Physical for New Comedy Raw: Ferry Sinks Off South Korean Coast Town, Victims Remember Texas Blast Freeze Leaves Florida Panhandle With Dead Trees At Boston Marathon, a Chance to Finally Finish Are School Dress Codes Too Strict? Raw: Fatal Ferry Boat Accident Suspicious Bags Found Near Marathon Finish Line Boston Marks the 1st Anniversary of Bombing NYPD Ends Muslim Surveillance Program 8-year-old Boy Gets His Wish: Fly Like Iron Man Sex Offenders Arrested in Slayings of CA Women India's Transgenders Celebrate Historic Ruling Tributes Mark Boston Bombing Anniversary Raw: Kan. Shooting Suspect Faces Judge