NEW YORK (AP) - 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.
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