Hostess Brands expects several bids Wednesday
LOS ANGELES (Reuters) - Hostess Brands Inc said it expects several interested parties to submit bids for the bankrupt maker of Twinkies by Wednesday's deadline.
"There are interested parties. Bids are due today," said a spokeswoman for Hostess, which late last week warned all of its 18,500 employees they may be laid off.
Potential investors in the privately-held company were not disclosed.
Hostess mailed out notices in accordance with the federal WARN Act that requires companies to give employees 60 days notice before closing a facility or ordering mass layoffs.
"It was a legal requirement to notify employees if a change of employment, sale or a wind down is possible in the future," the spokeswoman said, but added that it does not mean that any of those events is definitely happening.
"Our goal is to emerge from bankruptcy as a growing company with a strong future, one that continues to provide good jobs with competitive wages and benefits," she said.
Hostess's fate relies largely on the outcome of its search for new capital as well as its labor negotiations.
Last week, Hostess was given the go-ahead by a bankruptcy judge to reject certain union contracts and modify some retiree benefits, as it tries to work its way out of its second bankruptcy in less than a decade.
Hostess can now reject some agreements with the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), as it tries to cut crippling legacy costs associated with its pension plans and massive debt levels.
But the judge said some contracts that had expired under which the union is still operating, cannot be modified or rejected by the company. Hostess and the BCTGM union are arguing about the expiry date of some of the agreements.
A hearing to determine the validity of the contested agreements will be held on May 16. On May 14, another hearing will be held on Hostess's attempt to reject the Teamsters collective bargaining agreement, which covers 7,500 employees.
Hostess filed for Chapter 11 protection in January. As part of its reorganization, the company has withdrawn from multi-employer pension plans, bringing down its cost of long-term worker benefits and altering the terms of its various collective bargaining agreements.
Hostess, founded in 1930, has about $860 million in debt. It operates around 36 bakeries. The company filed for its first bankruptcy in 2004, citing declining sales, rising ingredient costs, excess capacity and high worker benefit expenses. It tackled some issues - closing bakeries and simplifying some union contracts -- but failed to adequately deal with its huge pension and health obligations.
Other bankrupt companies, like AMR Corp (AAMRQ.PK), parent of American Airlines, are battling trade unions to cut costs. The case is In re: Hostess Brands Inc, U.S. Bankruptcy Court, Southern District of New York, No. 12-22052.