Hostess Bankruptcy Sale Could Save Twinkies Brand for Consumers

By John Clark

After Hostess Brands recently announced its plan to file for bankruptcy, customers across the country feared that their beloved Twinkies would quickly disappear from store shelves.

Recent events, however, could give hope to shoppers looking for a Twinkie fix, as well as creditors of Hostess looking to recover some of their debt.

This week, a bankruptcy judge gave Hostess permission to sell select assets, including the Twinkie brand, according to a report from The Wall Street Journal.

Hostess Plans to Sell Twinkies at Bankruptcy Auction

According to sources, Hostess has been granted permission to sell several of its brands, including Twinkie, Dolly Madison, Ho Hos, and Ding Dongs.

The laundry list of low-grade snacks may seem like an insignificant sale, but sources expect that the sale could be worth more than $400 million.

In fact, two private equity firms, Apollo Global Management and Metropoulos & Co., have already bid $410 million for the rights to sell the pastry brands. Sources note that this bid would also include the rights to a wide range of baking equipment.

The U.S. Bankruptcy Court in White Plains, New York, also gave Hostess permission to sell its Drake?s brand to the maker of Little Debbie snack cakes. This company has reportedly offered $27.5 million for the rights to Drake?s snacks.

Other brands that will likely be sold at a bankruptcy auction include Sweetheart, Eddy?s, Standish Farms, and Grandma Emilie?s. None of these brands carry the weight of Twinkies, but sources note that the minor brands may still be worth millions of dollars for Hostess.

Bankruptcy Auction to Help Hostess Shed its Debts

The bankruptcy auction, which will reportedly be held on March 13, will reap hundreds of millions of dollars for Hostess, which will then work with the bankruptcy trustee to repay some of its debts, and potentially discharge others.

The snack company, which is based in Irving, Texas, announced its intention to file for bankruptcy last November. Shortly after this announcement, Hostess closed its 36 plants, which led to the loss of more than 18,000 jobs, according to sources.

Sources note that Hostess opted for bankruptcy after failing to reach a labor deal with one of its unions, but the company had been struggling financially for years before the labor dispute.

All told, the company expects to earn more than $850 million through the sale of its dessert snacks, as well as a few of its major bread brands, including Nature?s Pride and Wonder.

Source: http://www.clearbankruptcy.com/blog/hostess-bankruptcy-sale-could-save-twinkies-brand-for-consumers/

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