Bloomberg News

Hostess Says 2011 Liquidation Value Was $450 Million

November 29, 2012

Hostess Brands Inc. was valued at $450 million in 2011, a company official told a bankruptcy judge, about half what a financial adviser estimated last week the maker of Twinkies and Wonder Bread was worth now.

The interim treasurer of the defunct baker, David Rush, provided the lower figure today to U.S. Bankruptcy Judge Robert Drain at a hearing in White Plains, New York. Last week, financial adviser Joshua Scherer of Perella Weinberg Partners LP said the sale of Hostess’s assets may generate about $1 billion.

Rush said the 2011 estimate needs reevaluation in part because of the interest shown by potential buyers of the bankrupt company’s intellectual property and brands. Scherer told the judge today that buyer interest is “fast and furious.”

Hostess, based in Irving, Texas, sought court protection in January, its second time in bankruptcy, listing assets of $982 million and debt of $1.43 billion. The 82-year-old maker of Hostess CupCakes, Ding Dongs and Ho Hos endured years of declining sales as consumers switched to other brands of snacks and breads and the costs of labor and ingredients increased.

Hostess is in active talks on asset sales with 110 parties, Scherer said at today’s hearing. It’s “like drinking from a fire hose,” he said. Some of the would-be buyers are “large companies” with recognizable names, and some have hired investment bankers and are performing due diligence, evaluating company data, he said.

Retiree Cuts

Also at today’s hearing, a company lawyer told the judge that Hostess won’t be able to provide retiree benefits to some former employees.

The lawyer, Heather Lennox, said the company would cut $1.1 million a month slated for the pensioners. Drain approved formation of a Committee of Retired Employees to help protect their rights under the U.S. Bankruptcy Code.

Drain is being asked to approve Hostess’s request to close down, sell its assets and pay as much as $1.75 million in incentive bonuses to 19 senior managers. About 18,000 jobs would be eliminated in the wind-down.

The case is In re Hostess Brands Inc., 12-22052, U.S. Bankruptcy Court, Southern District of New York (White Plains).

To contact the reporter on this story: Phil Milford in Wilmington, Delaware at pmilford@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net


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