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The Daily Wildcat

The Daily Wildcat


Hostess puts off liquidation, agrees to mediation

Andy Wagar loads Twinkies, Ho-Hos and cupcakes into a van outside the Wonder Bakery Thrift Shop in Bellingham, Washington, on Friday, November 16, 2012, after Hostess filed a motion to liquidate the company's holdings. (Philip A. Dwyer/Bellingham Herald/MCT)

There may be hope for Twinkies after all: Hostess Brands Inc. and its striking union agreed to a mediation that will forestall the company’s planned liquidation for the time being.

At a bankruptcy court hearing Monday in New York, 82-year-old Hostess had planned to ask permission to start shutting down its business. Instead, Judge Robert Drain urged the company and the Bakery, Confectionery, Tobacco Workers and Grain Millers International union to consider mediation.

Both sides agreed to try to work through their conflict, which would preserve more than 18,000 jobs that will otherwise disappear if the Irving, Texas-based company closes its doors. Mediation hearings will begin in private on Tuesday.

The hearing to consider Hostess’ motion to wind itself down is adjourned until Wednesday morning, according to the company. Production “remains shut down,” it said.

Hostess has 565 distribution centers around the country, as well as 33 bakeries and 570 bakery outlets.

On Friday, Hostess said it would go out of business, blaming a strike by members of the BCTGM union. Workers who walked out accused the company of slashing benefits and wages while rewarding managers with substantial pay raises.

Within days, a suite of suitors emerged, vying to control brands such as Ho Ho’s and Ding Dongs.
“There’s a whole host of huge food companies out there that have the financial wherewithal to take over the Twinkies brand and make money off of it,” said Anthony Michael Sabino, a business professor at St. John’s University. “There could be very spirited bidding.”

Florida-based private equity firm Sun Capital Partners said it hoped to buy the company with a more union-friendly deal, according to Fortune.

Flowers Foods, parent to the Nature’s Own brand, is also in the mix. The Georgia-based baking company said Monday that it has extended its loan agreements, allowing it to access more funds for “acquisition financing” and “expansion goals,” among other purposes. To analysts, the move signaled that Flowers is interested in picking up Hostess.

Hurst Capital filed a letter of intent in bankruptcy court Monday to buy Hostess’ assets — including intellectual property and office supplies — in a “multimillion dollar” offer.

Reports over the weekend also named Bimbo Group, the Mexican company that owns Sara Lee and Entenmann’s.

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