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While Twinkies have a reputation for an unlimited shelf life, the company that makes the junk food may not.
Hostess Brands, the bankrupt maker of cream-filled pastries like Twinkies and Ho Hos, said on Friday that it planned to wind down its operations. The decision comes a week after one of the company’s biggest unions went on strike to protest a labor contract.
Friday’s move could spell the end of Hostess, a company that has endured wars, countless diet fads and even an earlier Chapter 11 filing. But the liquidation may not mean the end of its signature product, the Twinkie, with its cake exterior and cream filling. The confection — originally banana flavored, rather than the vanilla of today — could find new life under a different owner, if the company auctions off its brands and assets.
In the short term, Twinkies may be in short supply. The last batches rolled off Hostess production lines early Friday morning, according to Tom Becker, a company spokesman, and no new products will be made for the time being.
Hostess Brands has evolved through a series of acquisitions. Formerly known as Interstate Bakeries, the company picked up ownership of Twinkies, Wonder Bread and other fixtures of Americana through its 1995 deal for Continental Baking.
As the national appetite for the junk food waned, the company fell on hard times. In 2004, it was forced to file for bankruptcy, in the face of high labor and commodity expenses.
The company emerged in 2009 as Hostess Brands, named after its most prominent division. With America’s new health conscious attitude, the company, with its new private equity backer Ripplewood Holdings, sought to reshape itself to changing times, introducing new products like 100-calorie Twinkie Bites.
Despite the strategy shift, the company struggled under the weight of its debt load and rising labor costs. In 2010, Hostess tried to find a buyer, hiring Goldman Sachs and JPMorgan Chase to explore a possible sale. But the potential suitors like Hershey, Pepperidge Farm and private equity companies took a pass.
Since then, the company’s financial picture has only deteriorated. While the company notched revenue of $2.5 billion in fiscal 2011, it posted a net loss of $341 million.
With profits eroding, the company filed again for Chapter 11 in January, just three years after emerging from the previous restructuring. The company originally hoped to reorganize its finances, principally by cutting labor costs. It won the agreement of some of its unions, including the Teamsters.
But those plans have been stymied by the recent labor dispute. The work stoppage by the Bakery, Confectionery, Tobacco Workers and Grain Millers Union affected nearly two-thirds of Hostess’s factories across the country. The company first responded by closing three factories, and then gave union members until 5 p.m. on Thursday to return to work.
“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Gregory F. Rayburn, Hostess’s chief executive, said in a statement.
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Hostess Brands, the bankrupt maker of cream-filled pastries like Twinkies and Ho Hos, said on Friday that it planned to wind down its operations. The decision comes a week after one of the company’s biggest unions went on strike to protest a labor contract.
Friday’s move could spell the end of Hostess, a company that has endured wars, countless diet fads and even an earlier Chapter 11 filing. But the liquidation may not mean the end of its signature product, the Twinkie, with its cake exterior and cream filling. The confection — originally banana flavored, rather than the vanilla of today — could find new life under a different owner, if the company auctions off its brands and assets.
In the short term, Twinkies may be in short supply. The last batches rolled off Hostess production lines early Friday morning, according to Tom Becker, a company spokesman, and no new products will be made for the time being.
Hostess Brands has evolved through a series of acquisitions. Formerly known as Interstate Bakeries, the company picked up ownership of Twinkies, Wonder Bread and other fixtures of Americana through its 1995 deal for Continental Baking.
As the national appetite for the junk food waned, the company fell on hard times. In 2004, it was forced to file for bankruptcy, in the face of high labor and commodity expenses.
The company emerged in 2009 as Hostess Brands, named after its most prominent division. With America’s new health conscious attitude, the company, with its new private equity backer Ripplewood Holdings, sought to reshape itself to changing times, introducing new products like 100-calorie Twinkie Bites.
Despite the strategy shift, the company struggled under the weight of its debt load and rising labor costs. In 2010, Hostess tried to find a buyer, hiring Goldman Sachs and JPMorgan Chase to explore a possible sale. But the potential suitors like Hershey, Pepperidge Farm and private equity companies took a pass.
Since then, the company’s financial picture has only deteriorated. While the company notched revenue of $2.5 billion in fiscal 2011, it posted a net loss of $341 million.
With profits eroding, the company filed again for Chapter 11 in January, just three years after emerging from the previous restructuring. The company originally hoped to reorganize its finances, principally by cutting labor costs. It won the agreement of some of its unions, including the Teamsters.
But those plans have been stymied by the recent labor dispute. The work stoppage by the Bakery, Confectionery, Tobacco Workers and Grain Millers Union affected nearly two-thirds of Hostess’s factories across the country. The company first responded by closing three factories, and then gave union members until 5 p.m. on Thursday to return to work.
“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Gregory F. Rayburn, Hostess’s chief executive, said in a statement.
Click here for more info
... please make yourself at home ... 