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Fri Nov 16, 2012, 04:45 PM

Info about the Hostess Brands (it's not the unions)

This isn't an old established company that has run into trouble after years because of the nasty unions.
It is an overleveraged venture capitol op. that has been in bankruptcy for most of it's existence.

From Wiki:

Bankruptcy (2004)

On September 22, 2004, Interstate Bakeries filed for Chapter 11 bankruptcy. The company also named a new chief executive, Tony Alvarez. Interstate Bakery's stock, which had been at one time $34/share, fell to $2.05/share as they declared bankruptcy. At the time it was the longest bankruptcy in U.S. history. During bankruptcy, Interstate fought a 2007 bid from Mexican baked goods giant Grupo Bimbo and Ron Burkle of the Yucaipa Companies.

With the leadership of Craig Jung, the company emerged from bankruptcy as a private company on February 3, 2009. The plan included a 50 percent equity stake by Ripplewood Holdings and lines/loans by General Electric Capital and GE Capital Markets, Silver Point Finance and Monarch Master Funding. Interstate's union workers made contract concessions in exchange for equity.

During the 20042009 bankruptcy period, Interstate closed nine of its 54 bakeries and more than 300 outlet stores. Interstate's work force declined from 32,000 to 22,000 employees. The company also dropped some regional brands and operating agreements, such as the agreement to produce Sunbeam Bread for the northeastern U.S. (now produced by LePage Bakeries of Auburn, Maine).
Hostess Brands, Inc. (2009)

Effective November 2, 2009, the company was renamed Hostess Brands, Inc. after the cake division that featured Twinkies and cupcakes. Hostess continues its bread lines, including Wonder Bread.
Bankruptcy and liquidation (2012)

By December 2011 it was reported that Hostess Brands was on the verge of filing for bankruptcy a second time after it suspended payments for union pensions and was struggling to remain current on its $700 million loan.

On January 10, 2012, Hostess Brands filed for Chapter 11 Bankruptcy for the second time. In a statement in its filing, the company said it "is not competitive, primarily due to legacy pension and medical benefit obligations and restrictive work rules." The company said it employs 19,000 people and carries more than $860 million in debt. The company said it would continue to operate with $75 million debtor-in-possession financing from Monarch Alternative Capital, Silver Point Capital and other investors.

Television talk show hostess Wendy Williams started a "Save The Twinkie" publicity campaign shortly after the bankruptcy filing. The campaign included promotions on The Wendy Williams Show.

In March 2012, Brian Driscoll resigned from his position as CEO. Gregory Rayburn, who had been hired and named Chief Restructuring Officer only nine days earlier, assumed the leadership position. Fortune reported that unions within the organization had been unhappy with Driscoll's proposed compensation package of $1.5 million, plus cash incentives and a $1.95 million "long term compensation" package. Additionally, the court had discovered that Hostess executives had received raises of up to 80% the year prior. In an effort to restore relations, Rayburn cut the salaries of the four top Hostess executives to $1, to be restored on January 1 the following year.

In July 2012, the New York Post reported that negotiations (lead by Silver Point Capital) with the Teamsters Union were close to a possible agreement that could allow Hostess Brands to cut employee pay and benefits, if the company maintained funding of existing pension plans. In May, all 19,000 workers had been warned (as required by the Worker Adjustment and Retraining Notification Act) that they could face a mass layoff. In an email to the Appeal-Democrat Hostess spokesman Erik Halvorson said that the May notices were to alert employees to possible sale or wind down of the company, but that "our goal is still to emerge from bankruptcy as a growing company with a strong future." These layoff notices listed the dates as July 721, but on July 5 another company spokesman told the Financial News & Daily Record that there were no immediate plans to start laying off Hostess employees.

In November 2012, Hostess employees nationwide went on strike. The Bakery, Confectionery, Tobacco Workers and Grain Millers' International Union, which represents 6,600 Hostess employees, took the strike action after the latest contract proposal from Hostess Brands was rejected by 92 percent of its members. In response, Hostess Brands issued the following statement: "A widespread strike will cause Hostess brands to liquidate if we are unable to produce or deliver products. If that's the case, the company will move promptly to lay off most of its 18,300-member workforce and focus on selling its assets to the highest bidders. We urge our employees to remain on the job to rebuild the company."

On November 16, 2012, Hostess announced that it was ceasing plant operations and laying off most of its 18,500 employees. It stated that it intended to sell off all of its assets, including the well known brand names, and liquidate. The CEO, Gregory F. Rayburn stated, "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."

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Replies to this discussion thread
Arrow 33 replies Author Time Post
Reply Info about the Hostess Brands (it's not the unions) (Original post)
edhopper Nov 2012 OP
GiaGiovanni Nov 2012 #1
Savannahmann Nov 2012 #2
Hugin Nov 2012 #3
Lasher Nov 2012 #12
Teamster Jeff Nov 2012 #4
edhopper Nov 2012 #5
silvershadow Nov 2012 #6
nadinbrzezinski Nov 2012 #7
progressoid Nov 2012 #8
edhopper Nov 2012 #9
Curmudgeoness Nov 2012 #13
Barack_America Nov 2012 #23
Leontius Nov 2012 #10
femrap Nov 2012 #11
edhopper Nov 2012 #25
femrap Nov 2012 #26
edhopper Nov 2012 #28
obxhead Nov 2012 #14
allan01 Nov 2012 #15
alp227 Nov 2012 #16
japple Nov 2012 #17
lib2DaBone Nov 2012 #18
GiaGiovanni Nov 2012 #19
Sherman A1 Nov 2012 #20
tavalon Nov 2012 #21
FailureToCommunicate Nov 2012 #22
Scurrilous Nov 2012 #24
Progression Nov 2012 #27
geckosfeet Nov 2012 #29
dwilso40641 Nov 2012 #30
edhopper Nov 2012 #31
patrice Nov 2012 #32
Iwillnevergiveup Nov 2012 #33

Response to edhopper (Original post)

Fri Nov 16, 2012, 04:49 PM

1. We need to Rec the hell out of this one

 

Venture/Vulture capitalists suck companies dry and the unions take the blame. This is an old and oft repeated story.

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Response to edhopper (Original post)

Fri Nov 16, 2012, 04:52 PM

2. K and R Bigtime

I wish the trolls that are parroting the RW Talking points about how it's all the Union's fault would go back the Freeperville.

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Response to edhopper (Original post)

Fri Nov 16, 2012, 04:56 PM

3. Typical M.O. for Vulture Corporatist.

Wow! The bullet we dodged in rejecting Romney. :whew:

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Response to Hugin (Reply #3)

Fri Nov 16, 2012, 06:32 PM

12. And the very same tactics emplyed by the airline industry for years.

Coal companies have been picking up on this too.

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Response to edhopper (Original post)

Fri Nov 16, 2012, 04:58 PM

4. K&R

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Response to edhopper (Original post)

Fri Nov 16, 2012, 05:09 PM

5. Thanks for the Recs

I don't care if I don't get many replies, but I hope everyone reads this.

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Response to edhopper (Original post)

Fri Nov 16, 2012, 05:40 PM

6. k&r

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Response to edhopper (Original post)

Fri Nov 16, 2012, 05:41 PM

7. But, but, but....

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Response to edhopper (Original post)

Fri Nov 16, 2012, 06:01 PM

8. So what happened between July and November?

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Response to progressoid (Reply #8)

Fri Nov 16, 2012, 06:06 PM

9. My guess is

that the company was leveraged to much and with slowing sales, they could not make enough to service the debt they piled on.
So they want to screw the workers out of their benefits to keep as much as they can for themselves.

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Response to progressoid (Reply #8)

Fri Nov 16, 2012, 06:35 PM

13. You can be sure that the company was already planning

to liquidate. This had nothing to do with the union or the strike, that was just the excuse that they needed to make the announcement. I worked for a company that did this same thing---plans had been in effect to close the company for two years, but they pushed the employees to the point of a strike, at which time they said they were closing instead of meeting the union demands. This was orchestrated then as it is now. That was in the 1970's.....nothing changes. Blame the poor, blame the unions, blame anyone but the people who are responsible for making the decisions.

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Response to Curmudgeoness (Reply #13)

Fri Nov 16, 2012, 07:54 PM

23. That's why management doubled their own salaries in July.

To get theirs while they could.

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Response to edhopper (Original post)

Fri Nov 16, 2012, 06:17 PM

10. Now my nonunion employer is circling the corpse

and hoping to increase market share and shelf space as Hostess products disappear.

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Response to edhopper (Original post)

Fri Nov 16, 2012, 06:30 PM

11. So the

 

equity that the Unions took in exchange for concessions is worth nothing....or just what little they get from selling off the assets.

And those assets will go to some rich dude/hedge fund who wants to start a bakery with no unions. Isn't this how the Business Model works.

All of that debt...nearly 1 billion...was supposed to bankrupt the company. And the rich hedge funds end up divvying up that nearly $1 billion.

Isn't that exactly like Bain's business model?

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Response to femrap (Reply #11)

Fri Nov 16, 2012, 09:00 PM

25. Pretty much

This is when management has no interest in actually running the company, just sucking it dry.

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Response to edhopper (Reply #25)

Fri Nov 16, 2012, 09:04 PM

26. Like what Bain

 

did to many companies. How many people lost their jobs due to RobMe.

ETA: Did you read this article from David Stockman?

http://www.thedailybeast.com/newsweek/2012/10/14/david-stockman-mitt-romney-and-the-bain-drain.html

Makes me ill.

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Response to femrap (Reply #26)

Fri Nov 16, 2012, 11:14 PM

28. Thanks

this country dodged a bullet.

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Response to edhopper (Original post)

Fri Nov 16, 2012, 06:38 PM

14. Unions have NEVER been the problem.

The more unions we have and the stronger they are the better EVERYONE does, including the 1% and their corporations.

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Response to edhopper (Original post)

Fri Nov 16, 2012, 06:45 PM

15. re:Info about the Hostess Brands (it's not the unions)

rec and

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Response to edhopper (Original post)

Fri Nov 16, 2012, 06:51 PM

16. Thom Hartmann read/commented on this thread this afternoon!

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Response to edhopper (Original post)

Fri Nov 16, 2012, 07:00 PM

17. Sounds like they were Bained (or should it be Romney-ed?)

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Response to edhopper (Original post)

Fri Nov 16, 2012, 07:10 PM

18. Hedge Fund Hyenas... asset strippers....

 

Load the company up with debt.... run the old equipment until it falls apart.

Make the employees take pay cuts, work longer hours, and train their Chinese replacements.

Then, dump the whole mess, steal what's left of the employee pensions and blame it on the unions.

The media will go along and say whatever the hedge funds and lenders want.

Some day soon, American workers may tire of this treatment.

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Response to lib2DaBone (Reply #18)

Fri Nov 16, 2012, 07:16 PM

19. Yep, you got their number

 

And kick

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Response to edhopper (Original post)

Fri Nov 16, 2012, 07:18 PM

20. K&R

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Response to edhopper (Original post)

Fri Nov 16, 2012, 07:40 PM

21. Damn it all

That is awful. And I don't just mean their twinkies.

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Response to edhopper (Original post)

Fri Nov 16, 2012, 07:50 PM

22. Vulture capitalists picking a carcass again.

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Response to edhopper (Original post)

Fri Nov 16, 2012, 08:10 PM

24. K & R

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Response to edhopper (Original post)

Fri Nov 16, 2012, 09:35 PM

27. Political move?

Seeing some of the actions by Hostess' management, I can't help but think this is a political move by their management to generate hostility against unions.

Some creditors question Hostess pay raises approved in late July.

Brian Driscoll, CEO, around $750,000 to $2,550,000 (300% raise)
Gary Wandschneider, EVP, $500,000 to $900,000
John Stewart, EVP, $400,000 to $700,000
David Loeser, EVP, $375,000 to $656,256
Kent Magill, EVP, $375,000 to $656,256
Richard Seban, EVP, $375,000 to $656,256
John Akeson, SVP, $300,000 to $480,000
Steven Birgfeld, SVP, $240,000 to $360,000
Martha Ross, SVP, $240,000 to $360,000
Rob Kissick, SVP, $182,000 to $273,008

NOTE: Some executives didn't take full raise. Source: Creditors' Committee court filings

If anyone has an account at reddit and can spare a minute to upvote, this would be much appreciated. All I'm seeing in the news is the unions taking most of the flak for this:

http://www.reddit.com/r/politics/comments/13bzbt/hostess_management_hikes_their_own_salaries_prior/

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Response to edhopper (Original post)

Sat Nov 17, 2012, 01:19 AM

29. "selling its assets to the highest bidders" Wow. That's the CEO. Isn't that kind of like, you know,

PROSTITUTION?

These people have no shame.

So bankruptcy and liquidation relieves them of all responsibility for pension plans?

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Response to edhopper (Original post)

Sat Nov 17, 2012, 03:18 AM

30. Hostess

Hasn't done any maintenance or up grading to speak of on their equipment for the last 10 years. All profit went to excessive salary and bonuses. It was not the unions.

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Response to dwilso40641 (Reply #30)

Sat Nov 17, 2012, 09:29 AM

31. They have no real stake in the company

they come out ahead if it succeeds or fails. If it succeeds they sell it for a profit, if it fails they make $ off of the bankruptcy.
And it is never their money to begin with.
A rigged game all around.

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Response to edhopper (Original post)

Sat Nov 17, 2012, 10:40 AM

32. Anyone who defends that record is a defender of bad business, so they also support a bad economy &

all of the evil that entails from that in re what they call "big" government and deficit spending and entitled classes up and down the income scale.

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Response to edhopper (Original post)

Sat Nov 17, 2012, 01:47 PM

33. Well, dammit

while grocery shopping yesterday, Hostess products were on sale 2 for $5.00. My family appreciated me picking up a box of Twinkies and those yummy chocolate cupcakes with the white curlicue icing.

How about some wealthy, pro-union, soulful person (maybe Warren Buffet?) stepping up and buying the company tout suite, retaining the workforce and continuing to put out an all-American product that's withstood the test of time.

K&R

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