The union representing Hostess Brands Inc (IBCIQ:US).’s fired bakery workers held talks with companies bidding for the Twinkie maker’s assets, the union’s leader said.
“We’ve engaged with potential future owners and we’re willing to work with them,” David Durkee, president of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, told reporters on a conference call today. He didn’t specify which companies the union contacted or what was discussed.
The union signed a confidentiality agreement allowing it to pursue the talks and will fight to be part of Hostess’s future, Durkee said. Hostess, founded in 1930, is liquidating its brands, recipes, plants and other assets after failing to reach an agreement with the striking union on concessions to help the company emerge from its second bankruptcy.
Flowers Foods Inc. (FLO:US), McKee Foods Corp. and United States Bakery Inc. (0071158D:US), Apollo Global Management LLC (APO:US) and C. Dean Metropoulos & Co. are the so-called stalking-horse, or lead, bidders for most of Hostess’s cake and bread brands, setting the thresholds other suitors will have to exceed.
“Our members want their middle-class jobs back,” Durkee said. With the bidder talks, “we’re one step closer” to that goal, he said.
The bakers have worked successfully with dozens of companies in the past, including Grupo Bimbo SAB, Sara Lee Foods LLC, General Mills Inc (GIS:US)., Hershey Co (HSY:US). and Kellogg Co (K:US)., Durkee said. The union’s experience with Hostess was “the exception, not the rule,” he said.
Lance Ignon, a spokesman for Hostess; Keith Hancock, a spokesman for Flowers; and Charles Zehren, an Apollo spokesman, declined to comment on Durkee’s remarks. Mike Gloekler, a spokesman for McKee; Danny Pettey, a spokesman for United States Bakery; and Mark Semer, a Metropoulos spokesman, didn’t immediately respond to e-mails seeking comment.
The union seeks “a seamless restart” of the bakery business and believes it can get a better deal than it had with Hostess, where wages trailed those of rivals by $2.50 an hour, Durkee said. Union members endured pay and benefit cuts of as much as 32 percent, even as Hostess failed to live up to promises to modernize and install new equipment, he said.
“There have been no winners in this situation,” said Durkee, a fourth-generation baker who has been with the union 14 years. The union “just gave up” on Hostess, which represented “a prescription for failure,” he said.
Previously known as Interstate Bakeries Corp., Hostess left an earlier bankruptcy in 2009 under the control of buyout firm Ripplewood Holdings LLC and lenders. The company, based in Irving, Texas, entered bankruptcy again in January 2012.
The case is In re Hostess Brands Inc., 12-22052, U.S. Bankruptcy Court, Southern District of New York (White Plains). The prior bankruptcy was In re Interstate Bakeries Corp., 04-45814, U.S. Bankruptcy Court, Western District of Missouri (Kansas City).
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