Twinkies and Wonder Bread maker Hostess Brands Inc filed for bankruptcy protection for the second time in less than three years, after failing to reach an agreement with workers on pension and health benefits.
Hostess' declining financial performance, crippling legacy costs associated with its pension plans and massive debt levels led the company to Chapter 11 bankruptcy, court papers showed on Wednesday.
The company, which has about $860 million in debt, said it does not expect disruptions in the manufacturing and delivery of its products during the bankruptcy process.
To reorganize itself, the company must withdraw from multiemployer pension plans, address legacy health and welfare costs and secure new capital to modernize its production and distribution operations, Irving, Texas-based Hostess said.
The company had total assets of $981.6 million and liabilities of $1.43 billion as of December 10, 2011.
Hostess said it has secured $75 million in debtor-in-possession financing from its existing lenders led by Silver Point Capital LP.
The privately held company said it had made efforts to sell its businesses and other M&A alternatives, including reaching out to companies like Smuckers, Kraft, Blackrock, KKR and others without any success.
Hostess, founded in 1930, operates around 36 bakeries and employs about 19,000 people, a majority of whom are members of 12 unions.
"We remain hopeful that we can reach an agreement that will allow us to amend our labor contracts so that we can emerge from Chapter 11 as a highly competitive company that provides secure jobs for our employees," Chief Executive Brian Driscoll said in a statement.
Hostess, formerly known as Interstate Bakeries Corp, had first filed for bankruptcy protection in 2004 in Missouri and emerged from it in February 2009 with private equity firm Ripplewood Holdings and other lenders taking control.
The case is Hostess Brands Inc, Case No. 12-22052, U.S. Bankruptcy Court, Southern District of New York.
(Reporting by Kavyanjali Kaushik and Tanya Agrawal in Bangalore; Editing by Greg Mahlich and Gopakumar Warrier)