General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsInfo about the Hostess Brands (it's not the unions)
This isn't an old established company that has run into trouble after years because of the nasty unions.
It is an overleveraged venture capitol op. that has been in bankruptcy for most of it's existence.
From Wiki:
Bankruptcy (2004)
On September 22, 2004, Interstate Bakeries filed for Chapter 11 bankruptcy. The company also named a new chief executive, Tony Alvarez. Interstate Bakery's stock, which had been at one time $34/share, fell to $2.05/share as they declared bankruptcy. At the time it was the longest bankruptcy in U.S. history. During bankruptcy, Interstate fought a 2007 bid from Mexican baked goods giant Grupo Bimbo and Ron Burkle of the Yucaipa Companies.[13]
With the leadership of Craig Jung, the company emerged from bankruptcy as a private company on February 3, 2009.[14] The plan included a 50 percent equity stake by Ripplewood Holdings and lines/loans by General Electric Capital and GE Capital Markets, Silver Point Finance and Monarch Master Funding. Interstate's union workers made contract concessions in exchange for equity.[15]
During the 20042009 bankruptcy period, Interstate closed nine of its 54 bakeries and more than 300 outlet stores. Interstate's work force declined from 32,000 to 22,000 employees. The company also dropped some regional brands and operating agreements, such as the agreement to produce Sunbeam Bread for the northeastern U.S. (now produced by LePage Bakeries of Auburn, Maine).[15]
Hostess Brands, Inc. (2009)
Effective November 2, 2009, the company was renamed Hostess Brands, Inc. after the cake division that featured Twinkies and cupcakes. Hostess continues its bread lines, including Wonder Bread.[16]
Bankruptcy and liquidation (2012)
By December 2011 it was reported that Hostess Brands was on the verge of filing for bankruptcy a second time after it suspended payments for union pensions and was struggling to remain current on its $700 million loan.[17]
On January 10, 2012, Hostess Brands filed for Chapter 11 Bankruptcy for the second time. In a statement in its filing, the company said it "is not competitive, primarily due to legacy pension and medical benefit obligations and restrictive work rules." The company said it employs 19,000 people and carries more than $860 million in debt. The company said it would continue to operate with $75 million debtor-in-possession financing from Monarch Alternative Capital, Silver Point Capital and other investors.[5]
Television talk show hostess Wendy Williams started a "Save The Twinkie" publicity campaign shortly after the bankruptcy filing.[18] The campaign included promotions on The Wendy Williams Show.[19]
In March 2012, Brian Driscoll resigned from his position as CEO.[20] Gregory Rayburn, who had been hired and named Chief Restructuring Officer only nine days earlier, assumed the leadership position. Fortune reported that unions within the organization had been unhappy with Driscoll's proposed compensation package of $1.5 million, plus cash incentives and a $1.95 million "long term compensation" package. Additionally, the court had discovered that Hostess executives had received raises of up to 80% the year prior. In an effort to restore relations, Rayburn cut the salaries of the four top Hostess executives to $1, to be restored on January 1 the following year.[21]
In July 2012, the New York Post reported that negotiations (lead by Silver Point Capital) with the Teamsters Union were close to a possible agreement that could allow Hostess Brands to cut employee pay and benefits, if the company maintained funding of existing pension plans.[22] In May, all 19,000 workers had been warned (as required by the Worker Adjustment and Retraining Notification Act) that they could face a mass layoff. In an email to the Appeal-Democrat Hostess spokesman Erik Halvorson said that the May notices were to alert employees to possible sale or wind down of the company, but that "our goal is still to emerge from bankruptcy as a growing company with a strong future."[23] These layoff notices listed the dates as July 721, but on July 5 another company spokesman told the Financial News & Daily Record that there were no immediate plans to start laying off Hostess employees.[24]
In November 2012, Hostess employees nationwide went on strike. The Bakery, Confectionery, Tobacco Workers and Grain Millers' International Union, which represents 6,600 Hostess employees, took the strike action after the latest contract proposal from Hostess Brands was rejected by 92 percent of its members. In response, Hostess Brands issued the following statement: "A widespread strike will cause Hostess brands to liquidate if we are unable to produce or deliver products. If that's the case, the company will move promptly to lay off most of its 18,300-member workforce and focus on selling its assets to the highest bidders. We urge our employees to remain on the job to rebuild the company."[25]
On November 16, 2012, Hostess announced that it was ceasing plant operations and laying off most of its 18,500 employees. It stated that it intended to sell off all of its assets, including the well known brand names, and liquidate.[26][27] The CEO, Gregory F. Rayburn stated, "Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders."[28][29]
GiaGiovanni
(1,247 posts)Venture/Vulture capitalists suck companies dry and the unions take the blame. This is an old and oft repeated story.
Savannahmann
(3,891 posts)I wish the trolls that are parroting the RW Talking points about how it's all the Union's fault would go back the Freeperville.
Hugin
(33,148 posts)Wow! The bullet we dodged in rejecting Romney. :whew:
Lasher
(27,597 posts)Coal companies have been picking up on this too.
Teamster Jeff
(1,598 posts)edhopper
(33,580 posts)I don't care if I don't get many replies, but I hope everyone reads this.
silvershadow
(10,336 posts)nadinbrzezinski
(154,021 posts)progressoid
(49,990 posts)edhopper
(33,580 posts)that the company was leveraged to much and with slowing sales, they could not make enough to service the debt they piled on.
So they want to screw the workers out of their benefits to keep as much as they can for themselves.
Curmudgeoness
(18,219 posts)to liquidate. This had nothing to do with the union or the strike, that was just the excuse that they needed to make the announcement. I worked for a company that did this same thing---plans had been in effect to close the company for two years, but they pushed the employees to the point of a strike, at which time they said they were closing instead of meeting the union demands. This was orchestrated then as it is now. That was in the 1970's.....nothing changes. Blame the poor, blame the unions, blame anyone but the people who are responsible for making the decisions.
Barack_America
(28,876 posts)To get theirs while they could.
Leontius
(2,270 posts)and hoping to increase market share and shelf space as Hostess products disappear.
femrap
(13,418 posts)equity that the Unions took in exchange for concessions is worth nothing....or just what little they get from selling off the assets.
And those assets will go to some rich dude/hedge fund who wants to start a bakery with no unions. Isn't this how the Business Model works.
All of that debt...nearly 1 billion...was supposed to bankrupt the company. And the rich hedge funds end up divvying up that nearly $1 billion.
Isn't that exactly like Bain's business model?
edhopper
(33,580 posts)This is when management has no interest in actually running the company, just sucking it dry.
femrap
(13,418 posts)did to many companies. How many people lost their jobs due to RobMe.
ETA: Did you read this article from David Stockman?
http://www.thedailybeast.com/newsweek/2012/10/14/david-stockman-mitt-romney-and-the-bain-drain.html
Makes me ill.
this country dodged a bullet.
obxhead
(8,434 posts)The more unions we have and the stronger they are the better EVERYONE does, including the 1% and their corporations.
allan01
(1,950 posts)rec and
alp227
(32,025 posts)japple
(9,825 posts)lib2DaBone
(8,124 posts)Load the company up with debt.... run the old equipment until it falls apart.
Make the employees take pay cuts, work longer hours, and train their Chinese replacements.
Then, dump the whole mess, steal what's left of the employee pensions and blame it on the unions.
The media will go along and say whatever the hedge funds and lenders want.
Some day soon, American workers may tire of this treatment.
GiaGiovanni
(1,247 posts)And kick
Sherman A1
(38,958 posts)tavalon
(27,985 posts)That is awful. And I don't just mean their twinkies.
FailureToCommunicate
(14,014 posts)Scurrilous
(38,687 posts)Progression
(30 posts)Seeing some of the actions by Hostess' management, I can't help but think this is a political move by their management to generate hostility against unions.
Some creditors question Hostess pay raises approved in late July.
Brian Driscoll, CEO, around $750,000 to $2,550,000 (300% raise)
Gary Wandschneider, EVP, $500,000 to $900,000
John Stewart, EVP, $400,000 to $700,000
David Loeser, EVP, $375,000 to $656,256
Kent Magill, EVP, $375,000 to $656,256
Richard Seban, EVP, $375,000 to $656,256
John Akeson, SVP, $300,000 to $480,000
Steven Birgfeld, SVP, $240,000 to $360,000
Martha Ross, SVP, $240,000 to $360,000
Rob Kissick, SVP, $182,000 to $273,008
NOTE: Some executives didn't take full raise. Source: Creditors' Committee court filings
If anyone has an account at reddit and can spare a minute to upvote, this would be much appreciated. All I'm seeing in the news is the unions taking most of the flak for this:
http://www.reddit.com/r/politics/comments/13bzbt/hostess_management_hikes_their_own_salaries_prior/
geckosfeet
(9,644 posts)These people have no shame.
So bankruptcy and liquidation relieves them of all responsibility for pension plans?
dwilso40641
(198 posts)Hasn't done any maintenance or up grading to speak of on their equipment for the last 10 years. All profit went to excessive salary and bonuses. It was not the unions.
edhopper
(33,580 posts)they come out ahead if it succeeds or fails. If it succeeds they sell it for a profit, if it fails they make $ off of the bankruptcy.
And it is never their money to begin with.
A rigged game all around.
patrice
(47,992 posts)all of the evil that entails from that in re what they call "big" government and deficit spending and entitled classes up and down the income scale.
Iwillnevergiveup
(9,298 posts)while grocery shopping yesterday, Hostess products were on sale 2 for $5.00. My family appreciated me picking up a box of Twinkies and those yummy chocolate cupcakes with the white curlicue icing.
How about some wealthy, pro-union, soulful person (maybe Warren Buffet?) stepping up and buying the company tout suite, retaining the workforce and continuing to put out an all-American product that's withstood the test of time.
K&R