Hostess Brands is Closed.
We are sorry to announce that Hostess Brands, Inc. has been forced by a Bakers Union strike to shut down all operations and sell all company assets. For more information, go to hostessbrands.info. Thank you for all of your loyalty and support over the years.
HOSTESS BRANDS OBTAINS COURT AUTHORITY TO WIND DOWN ALL OPERATIONS, LIQUIDATE ASSETS
Irving, TX – November 21, 2012 – Hostess Brands Inc. announced that the U.S. Bankruptcy Court for the Southern District of New York today approved its emergency interim motion for the orderly wind down of its business and sale of its assets.
Judge Robert Drain approved the motion after the Company and the Bakery, Confectionary, Tobacco and Grain Millers Union (BCTGM) were unable to reach an agreement during an 11th-hour mediation yesterday.
Hostess Brands is winding down the Company after a nationwide strike initiated by the BCTGM that commenced on November 9th crippled its operations at a time when the Company lacked the financial resources to survive a significant labor action.
Among other provisions, the Court order allows Hostess Brands to return excess ingredients and packaging; provides liquidity through an amended debtor-in-possession financing agreement and consensual use of cash collateral; and authorizes the Company to implement a non-executive employee retention plan to ensure the Company has the necessary personnel to implement the wind down.
Hostess Brands said it intends to retain approximately 3,200 employees to assist with the initial phase of the wind down. Employee headcount is expected to decrease by 94% within the first 16 weeks of the wind down. The entire process is expected to be completed in one year.
The wind down was necessitated by an inflated cost structure that put the Company at a profound competitive disadvantage. The biggest component of the Company’s costs was its collective bargaining agreements that covered 15,000 of 18,500 employees.
Hostess Brands worked tirelessly to complete a reorganization of its business as a going concern, including spending the better part of 18 months negotiating with its key constituents to obtain a consensual agreement to lower costs to a sustainable level. The Company had obtained the support of its largest union, the International Brotherhood of Teamsters, and its lenders. However, the BCTGM leadership chose not to negotiate a new labor contract and instead, when presented with a final offer, launched a campaign to cripple the Company’s operations and force it to liquidate.
The wind down means the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes, 570 bakery outlet stores and the loss of 18,500 jobs.
Prospective bidders for the Company’s assets should contact the following representatives.
Brands: Perella Weinberg at hostess@pwpartners.com
Assets: FTI Consulting at hostess@fticonsulting.com
For employees whose jobs will be immediately eliminated, additional information can be found at www.hostessbrands.info. The website also contains a copy of the Company’s wind down motion and information for customers and vendors.
About Hostess Brands
Founded in 1930 and based in Irving, Texas, Hostess Brands’ products have included iconic brands such as Hostess®, Wonder®, Nature's Pride®, Dolly Madison®, Drake's®, Butternut®, Home Pride® and Merita®. Hostess Brands has approximately 18,500 employees and operates 33 bakeries, 553 distribution centers, approximately 5,500 delivery routes and 527 bakery outlet stores throughout the United States.
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HOSTESS BRANDS STATEMENT ON MEDIATION WITH BAKERS UNION
Irving, TX – November 20, 2012 - Hostess Brands Inc. announced today that a mediation today with the Bakery, Confectionary, Tobacco and Grain Millers Union was unsuccessful. The Company will have no further comment until a hearing scheduled for tomorrow at 11 a.m., EST, before the U.S. Bankruptcy Court for the Southern District of New York.
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HOSTESS BRANDS TO ENTER MEDIATION WITH BAKERS UNION
Irving, TX – November 19, 2012 – Hostess Brands Inc. announced today that it will follow a request from the U.S. Bankruptcy Court for the Southern District of New York to enter a confidential mediation on Tuesday with the Bakery, Confectionary, Tobacco and Grain Millers Union (BCTGM).
Today’s hearing to consider Hostess Brands’ motion to wind down the Company and sell all of its assets has been adjourned until 11 a.m., EST, on Wednesday.
Production remains shut down.
About Hostess Brands
Founded in 1930 and based in Irving, Texas, Hostess Brands’ products have included iconic brands such as Hostess®, Wonder®, Nature's Pride®, Dolly Madison®, Drake's®, Butternut®, Home Pride® and Merita®. Hostess Brands has approximately 18,500 employees and operates 33 bakeries, 553 distribution centers, approximately 5,500 delivery routes and 527 bakery outlet stores throughout the United States.
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HOSTESS BRANDS TO WIND DOWN COMPANY AFTER BCTGM UNION STRIKE CRIPPLES OPERATIONS
Irving, TX – November 16, 2012 – Hostess Brands Inc. today announced that it is winding down operations and has filed a motion with the U.S. Bankruptcy Court seeking permission to close its business and sell its assets, including its iconic brands and facilities. Bakery operations have been suspended at all plants. Delivery of products will continue and Hostess Brands retail stores will remain open for several days in order to sell already-baked products.
The Board of Directors authorized the wind down of Hostess Brands to preserve and maximize the value of the estate after one of the Company’s largest unions, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), initiated a nationwide strike that crippled the Company’s ability to produce and deliver products at multiple facilities.
On Nov. 12, Hostess Brands permanently closed three plants as a result of the work stoppage. On Nov. 14, the Company announced it would be forced to liquidate if sufficient employees did not return to work to restore normal operations by 5 p.m., EST p.m., Nov. 15. The Company determined on the night of Nov. 15 that an insufficient number of employees had returned to work to enable the restoration of normal operations.
The BCTGM in September rejected a last, best and final offer from Hostess Brands designed to lower costs so that the Company could attract new financing and emerge from Chapter 11. Hostess Brands then received Court authority on Oct. 3 to unilaterally impose changes to the BCTGM’s collective bargaining agreements.
Hostess Brands is unprofitable under its current cost structure, much of which is determined by union wages and pension costs. The offer to the BCTGM included wage, benefit and work rule concessions but also gave Hostess Brands’ 12 unions a 25 percent ownership stake in the company, representation on its Board of Directors and $100 million in reorganized Hostess Brands’ debt.
“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” said Gregory F. Rayburn, chief executive officer. “Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders.”
In addition to dozens of baking and distribution facilities around the country, Hostess Brands will sell its popular brands, including Hostess®, Drakes® and Dolly Madison®, which make iconic cake products such as Twinkies®, CupCakes, Ding Dongs®, Ho Ho’s®, Sno Balls® and Donettes®. Bread brands to be sold include Wonder®, Nature’s Pride ®, Merita®, Home Pride®, Butternut®, and Beefsteak®, among others.
The wind down means the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores throughout the United States.
The Company said its debtor-in-possession lenders have agreed to allow the Company to continue to have access to the $75 million financing facility put in place at the start of the bankruptcy cases to fund the sale and wind down process, subject to U.S. Bankruptcy Court approval.
The Company’s motion asks the Court for authority to continue to pay employees whose services are required during the wind-down period.
For employees whose jobs will be eliminated, additional information can be found at hostessbrands.info . The website also contains information for customers and vendors. Most employees who lose their jobs should be eligible for government-provided unemployment benefits.
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