Twinkies in Trouble!

[3113]

No, not that kind of twinkles! These kind:

http://overthehedgeblog.files.wordpress.com/2011/09/hostess-twinkies.jpg

Hostess is Filing for Bankruptcy!

Hostess Brands Inc. is preparing to file for Chapter 11 bankruptcy protection as soon as this week, said people familiar with the matter, a move that would mark the second significant court restructuring for the Twinkies and Wonder Bread baker in the past several years. The privately held Irving, Texas, company, which employs roughly 19,000 people and carries more than $860 million in debt, has been facing a cash squeeze amid high labor costs and rising prices for sugar, flour and other ingredients, according to people familiar with the matter. Those costs together have proved higher than the company's roughly $2.5 billion in annual sales, creating losses and cash shortfalls, the people said.

Hostess also owes more than $50 million to vendors, which have been demanding payments on shortened time frames because of Hostess's financial condition, one of the people said. Most of those goods and services were provided to Hostess within the past three weeks or so.

Full story here.

This is serious people! Our cupcakes are in danger!

http://upload.wikimedia.org/wikipedia/commons/thumb/2/25/Hostess-Cupcake-Whole.jpg/275px-Hostess-Cupcake-Whole.jpg

 

[shoulderblade]

This is serious people! Our cupcakes are in danger!

Serious and messy to boot.

One sticking point for the baker: It pays about $100 million a year into so-called multi-employer pension plans that cover workers at a wide array of companies, the people said. Hostess, whose pension plan is underfunded by about $2 billion, wants to rescind its obligations to that plan and start paying into a plan that only covers its own workers, one of the people said.

Overall, Hostess carries hundreds of separate labor contracts that the company believes impose cost burdens, people familiar with the matter said; the company also wants to reduce benefits costs.

I won't miss them myself as I don't like the products but those who do are likely to lose out here.

But hey, someone will move in to fill the void.

 

[TxRad]

Serious and messy to boot.



I won't miss them myself as I don't like the products but those who do are likely to lose out here.

But hey, someone will move in to fill the void.

That is the main problem, too many someone's have moved in and most of them under cut the price by making a low cost product that tastes like crap.

 

[shoulderblade]

That is the main problem, too many someone's have moved in and most of them under cut the price by making a low cost product that tastes like crap.

Could well be, I am not up to speed on the various product lines involved here.

What I do see is a company with debt/revenue problems which is caught up in a web of other companies, pension shortage, unions etc. Very difficult situation to untangle to the benefit of the company.

 

[R. Richard]

3113, actually the one kind of twinkie eats the baked kind of twinkie. There is a linkage.