Hostess Says It's Going Out of Business

Hostess says it's going out of businessBy CANDICE CHOI and TOM MURPHY

Hostess Brands Inc. says it's going out of business after striking workers across the country crippled its ability to make its Twinkies, Ding Dongs and other snacks.

The company had warned employees that it would file a motion with U.S. Bankruptcy Court Friday seeking permission to shutter its operations and sell its brands if plants hadn't resumed normal operations by a Thursday evening deadline. The deadline passed without a deal.

The closing would mean the loss of about 18,500 jobs.

"I don't know if they thought that was a bluff," CEO Gregory Rayburn said on CNBC Friday. He said the financial impact of the strike makes it "too late" to save the company even if workers have a change of heart. That's because the clients such as retailers decide to stop carrying products when supplies aren't adequate.

Rayburn said he's hopeful that the company will find buyers for its roster of about 30 brands, which include Ho Hos, Dolly Madison, Drake's and Nature's Pride snacks. The company books about $2.5 billion in sales a year.

Hostess, based in Irving, Texas, said its stores will remain open for several days to sell remaining products. Operations at its 33 factories were suspended Friday. The privately held company filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade.

The move comes after thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike last week after rejecting a contract offer that slashed wages and benefits in September. The bakers union represents about 30 percent of the company's workforce.

Rayburn said the union's leadership had misled members into believing there was a buyer in the wings who would rescue the company. He said the union hadn't returned the company's calls for the past month.

A union representative did not immediately return a call seeking comment.

Hostess had said earlier this week that production at about a dozen of its plants were seriously affected by the strike. Although many workers decided to cross picket lines, the company said it wasn't enough to keep operations at normal levels. Three plants were closed earlier this week.

Hostess had already reached a contract agreement with its largest union, the International Brotherhood of Teamsters. The Teamsters had urged the bakery union this week to hold a secret ballot on whether to continue striking.

Hostess said the company is unprofitable under its current cost structure, in large part because of union wages and pension costs. Rayburn said in a statement on the company website that all employees will eventually lose their jobs, "some sooner than others."

"Unfortunately, because we are in bankruptcy, there are severe limits on the assistance the (company) can offer you at this time," Rayburn wrote.

Hostess, founded in 1930, was fighting battles beyond labor costs. Competition is increasing in the snack space and Americans are increasingly conscious about healthy eating.

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Eric OccupyChicago R

Blaming the Unions? How about blaming the executive vampires ******* life out of the company. When the CEO is making 125,000 a MONTH (yes a MONTH...not a year)...that is the source of the lack of profitability. What can anyone do in a job to warrant making that much a month? The guy is making this much and then claims that high (LOL) union wages made the company unprofitable? WTF kinds of drugs are you righties doing that you fall for this crap? Seriously. If minimum wage went up at the same rate as executive eages has since 1990, minimum wage with be $24/hr, not $8. Time to wake the Hel up folks. They are stealing our country's economic power while the right keep making excuses for the thieves.

November 29 2012 at 11:53 AM Report abuse rate up rate down Reply
tommie20h

Ohhh NOOOOOOOOOOOOO!!!! What will The Blue Man Group do now!!!!! As far as ding-dongs go's...we have enough of them sitting in both parties to last forever...

November 17 2012 at 4:23 PM Report abuse rate up rate down Reply
Cindy

I just went to the store and there was a big sign saying there were no more twinkies. What a sad end unless some other company buys them out.
As a kid, I had either twinkies or cupcakes in my lunch box.
My grandson is 6 and he won't have these happy memories.

November 17 2012 at 4:05 PM Report abuse rate up rate down Reply
Marc

Per the Hostess website, no cashing out for unused vacation pay, no severance pay, and for those that were on strike, no unemployment benefits in some states (depending on the if your state considers going out on strike disqualifies you from getting unemployment). So for some people, they have nothing to fall back on.

November 17 2012 at 2:23 PM Report abuse rate up rate down Reply
1 reply to Marc's comment
t_trevor2

Hopefully, none of the slugs get unemployment.

They were offered a job and refused it. That's supposed to be a disqualification.

November 17 2012 at 5:47 PM Report abuse rate up rate down Reply
wsnowbird

blah blah

November 17 2012 at 2:13 PM Report abuse rate up rate down Reply
wsnowbird

How's that healthcare law looking now?

November 17 2012 at 2:13 PM Report abuse rate up rate down Reply
wsnowbird

How's that healthcare law looking now? If the the president wants to piss in these businesses wheaties I think he can expect For them to **** in his corn flakes!

November 17 2012 at 2:11 PM Report abuse rate up rate down Reply
amulet7

Where's "The Donald" when you need him?

November 17 2012 at 1:37 PM Report abuse rate up rate down Reply
wguill

No need to worry. We have President Obama.

November 17 2012 at 1:03 PM Report abuse rate up rate down Reply
capdan9270

All you people out there putting all the blame on the Unions need to get your heard of of your butt. This compnay was bought out by a private equity firm who's sole intention was to steal as much money from the company and then get rid of it. The Unions in the past had given huge concessions and the company stilled wanted more. Management raided the retirement accounts, paid their top people top dollars and gave them huge bonsus all the while demanding that the Unions give more back. The Unions did not cause this closing, it was the greed of the equity firm. Maybe if somone would show the books, people might actually understand what is going on. You can be rest assured that the CEO will walk away with a real nice chunck of change in his pocket. Wake up America, the corporate thieves would have all of you back working long days, no breaks, benefits or safe working conditions, if it wasn't for the Unions. And yes I know that all union leaders are not honest and are thieves themselves.

November 17 2012 at 12:52 PM Report abuse -1 rate up rate down Reply
2 replies to capdan9270's comment
t_trevor2

The CEO is working for $1/year under a contract that runs through the end of 2013.

The primary private equity investor is Ripplewood Holdings, who will almost certainly lose their entire equity stake in Hostess.

They don't make 'em any dumber than capdan!

November 17 2012 at 1:08 PM Report abuse -1 rate up rate down Reply
1 reply to t_trevor2's comment
Eric OccupyChicago R

try he was making 125k/month...

November 29 2012 at 11:49 AM Report abuse rate up rate down
Eric OccupyChicago R

When the CEO was making 125,000 a MONTH...the problem wasn't the unions...it was the executive vampires ******* the lifeblood out of the company. WTF does ANYONE do to warrant making 125k/month? They got Bain Capital'ed. Don't blame the unions...blame the corporate raiders.

November 29 2012 at 11:48 AM Report abuse rate up rate down Reply