1,100 work­ers kept for shut­down


Austin American-Statesman - - BUSINESS - Con­tin­ued from B

said is the coun­try’s only kosher bak­ery plant.

Ad­di­tional bids have been submitted for its bread brands, which in­clude Won­der and Home Pride. Host­ess ex­pects to file bind­ing “stalk­ing horse” bids for many of its brands in Jan­uary. Those fil­ings would be fol­lowed by a four­week auc­tion process to al­low com­pet­ing bids. Scherer said the auc­tions could be very ac­tive for some of the brands, given the num­ber of par­ties that have ex­pressed in­ter­est. Sales could be com­pleted by as early as mid-March.

About 30 plants could also be sold with the brands, Scherer said, with six plants, sev­eral ware­houses and a fleet of trucks likely to be closed or scrapped.

Host­ess has hired the firm Hilco to act as a sales agent for those ad­di­tional as­sets; the firm will also give Host­ess a $30 mil­lion loan to main­tain op­er­a­tions dur­ing its liq­ui­da­tion, which is ex­pected to take about a year.

Host­ess has said po­ten­tial buy­ers in­clude ma­jor pack­aged food com­pa­nies and na­tional re­tail­ers, such as big-box re­tail­ers and su­per­mar­kets. The com­pany has stressed it needs to move quickly in the sale process to cap­i­tal­ize on the out­pour­ing of nos­tal­gia sparked by its bank­ruptcy.

To be­gin wind­ing down its op­er­a­tions late last month, Host­ess had said it would re­tain about 3,000 work­ers to shut­ter plants and per­form other tasks. On Fri­day, an at­tor­ney for Host­ess said in court that fig­ure was down to about 1,100 em­ploy­ees. The liq­ui­da­tion of Host­ess ul­ti­mately means the loss of about 18,000 jobs, not in­clud­ing those shed in the years lead­ing to the com­pany’s fail­ure. CEO Greg Ray­burn, who was hired as a re­struc­tur­ing ex­pert ear­lier this year, is earn­ing $125,000 a month.

The com­pany’s demise came af­ter years of man­age­ment tur­moil and turnover, with work­ers say­ing the com­pany failed to in­vest in up­dat­ing its snack cakes and breads. Host­ess filed for its sec­ond Chap­ter 11 bank­ruptcy in less than a decade this Jan­uary, cit­ing steep costs as­so­ci­ated with its union­ized work­force.

The com­pany was able to reach a new con­tract agree­ment with its largest union, the Team­sters, the bak­ers union re­jected the terms and went on strike Nov. 9. A week later, Host­ess an­nounced its plans to liq­ui­date, say­ing the strike crip­pled its abil­ity to main­tain nor­mal pro­duc­tion. Although Host­ess sales have been de­clin­ing over the years, they still clock in at be­tween $2.3 bil­lion and $2.4 bil­lion a year.

When asked how much the brands are ex­pected to fetch from buy­ers, Scherer said he would rather not say.

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