Hostess Files For Bankruptcy Protection

Mae Anderson and Michelle Chapman, AP Business Writers

NEW YORK (AP) — Just like many Americans, the maker of Twinkies, Sno Balls and Wonder Bread is trying to lose the fat.

Hostess Brands is hoping to take a bite out of its high costs as it heads back into bankruptcy protection for the second time in less than a decade.

Hostess has enough cash to keep stores stocked with its Ding Dongs, Ho Hos and other snacks for now.

But longer term, the 87-year-old company has a bigger problem: health-conscious Americans favor yogurt and energy bars over the dessert cakes and white bread they devoured 30 years ago.

Last year, 36 percent of Americans ate white bread in their homes, down from 54 percent in 2000, according to NPD Group.

Meanwhile, about 54 percent of Americans ate wheat bread, up from 43 percent in 2000.

And consumption of healthy snacks is growing, too.

About 32 percent of Americans ate yogurt at least once in two weeks in 2011, for instance, up from 18 percent in 2000.

“We’re less likely to be snacking on items that we shouldn’t be snacking on,” said Harry Balzer, chief industry analyst for The NPD Group, a consumer marketing research firm.

Hostess, which is a privately held, doesn’t disclose sales figures. But analysts say the iconic brand has been hurt by Americans’ changing eating habits.

To be sure, Hostess’ snacks don’t neatly fit into the U.S. trend toward a healthier lifestyle that includes a diet rich in whole wheat foods, fruits and vegetables.

For instance, Twinkies, a snack cake with a mysterious cream filling that epitomizes empty calories, has 150 calories and 4.5 grams of fat.

A Ding Dong chocolate cake with filling has 368 calories and 19.4 grams of fat.

“The iconic status of Twinkies is partly this perception that there’s nothing real in it,” said Ken Albala, professor of history at the University of the Pacific, in Stockton, Calif., who specializes in food history. “It’s this cake filled with an unidentifiable sugary cream filling that never goes bad.”

Hostess has other problems, too.

In Hostess’ Chapter 11 filing on Wednesday, the company said its rivals have combined and expanded their reach, heightening competition in the snack space.

Hostess’ competitors range from Bimbo Bakeries, which makes Entemann’s baked goods, and McKee Foods, which make Little Debbie snack cakes, along with larger food makers like Sara Lee and Kraft Inc.

Additionally, Hostess employees are unionized while most of its competitors aren’t.

As a result, Hostess has high pension and medical benefit costs. The company has 19,000 employees and operates in 48 states.

Hostess did not announce layoffs but spokesman Lance Ignon said the company will make future decisions “in the best interest of the company.”

CEO Brian Driscoll said the Hostess is working to reach a consensual agreement with its unions to modify its collective bargaining agreements. Hostess also hopes to modernize its systems, fleets and plants to keep pace with customer needs.

“This company has tremendous potential if we can remove the barriers to success,” Driscoll said.

The Teamsters Union, which represents about 7,500 of Hostess’ delivery drivers and merchandisers, said in a statement on Wednesday that it is also committed to working toward a solution.

The company’s filing comes just two years after its predecessor emerged from bankruptcy proceedings.

That company, called Interstate Bakeries and based in Kansas City, Mo., filed for bankruptcy protection in 2004 and changed its name to Hostess Brands after it emerged in 2009.

Hostess said Wednesday that its previous efforts to change, including the prior Chapter 11, were insufficient. Under the current bankruptcy protection, it is now looking to restructure into a “strong, competitive” company.

In its filing with the U.S. Bankruptcy Court for the Southern District of New York, Hostess listed about $860 million in debt. The company’s biggest unsecured creditor is the Bakery & Confectionary Union & Industry International Pension Fund, which it owes about $944.2 million.

In the filing, Hostess also listed its estimated assets between $500 million and $1 billion and its estimated liabilities at more than $1 billion.

The Irving, Texas-based company said that it will be able to maintain routine operations thanks to a $75 million financing commitment from a group of lenders led by Silver Point Capital LP.

Copyright 2012 The Associated Press.

  • fred

    This is the road almost all of our state and municipal governments are going down. They have billions in unfunded pension liabilities. All of our tax money will be used to fund this while we will have to pay fees for ALL services, Unless, of course the unions care to renegotiate. I see many cities filing for bankruptcy over the next 5 to 10 years, there will be no other way out. Oh yes, our twinkies will still be made, in Canada perhaps.

  • DoverDavid

    If we can bail out a bank, we can bail out Hostess.

  • Kathy

    maybe they need to change their recipes or come up with new edible healthy products, eh? I love twinkies too but why can’t they be fresh baked products with a really good marketing campaign? Hostess, call me, I’ve got lots of ideas.

  • Laura

    “Twinkies – are they food” was the first class this year of the food science course that I teach to middle and high school students. We made homemade twinkies; then taste tested the homemade twinkies vs. the real Twinkies. Have you tried a Twinkie recently? They have a disgusting, chemical taste.

    In that same class, each student placed a homemade twinkie and a real Twinkie in separate glass jars. They are observing these food projucts over the entire school year. The homemade twinkies quickly became moldy and are breaking down. After four months, the real Twinkies show little or no change.

  • Hostess Files For Bankruptcy Protection | Hot Topic 24

    […] Hostess Files For Bankruptcy Protection hot topic | January 13, 2012 | 0 Comments eWire Informer Hostess Files For Bankruptcy Protection CBS Local Hostess Brands is hoping to take a bite out of its high costs as it heads back into bankruptcy protection for the second time in less than a decade. Hostess has enough cash to keep stores stocked with its Ding Dongs, Ho Hos and other snacks for now. … Court Grants First-Day Motions for Hostess Sacramento BeeTwinkie Manufacturer Hostess Brands Goes Bankrupt Kozmedia NewsFiling For Bankruptcy Protection: Hostess …Source […]

  • Aleta Moore

    Go Worldwide Hostess….Australians cannot get their hands on Twinkies, Hohos and Wonderbread fast enough!!!! And We pay a fortune for it!!

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