Private Equity-Owned Hostess Agrees To Mediation Before Liquidation

Nov 20 2012 | 12:44pm ET

Twinkie-maker Hostess Brands won a two-day reprieve after its private equity and hedge fund owners agreed to mediation with a union.

Hostess had sought permission yesterday to lay off most of its 18,500 works and to liquidate. But U.S. Bankruptcy Judge Robert Drain in White Plains, N.Y., wouldn't give the go-ahead just yet, insisting that two sides meet again today—with him as mediator.

Hostess, which is owned by Ripplewood Capital and has Monarch Alternative Capital and Silver Point Capital as its leading creditors, filed for bankruptcy last week, blaming a strike by the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union. That union ordered a work stoppage after refusing to accept a contract approved by Drain that other unions had agreed to.

Drain said he was concerned that neither side had exhausted all efforts to avoid a liquidation of the company, which also makes Wonder Bread and dozens of other products. He cited the union's failure to formally contest the last-and-best contract it rejected.

If the mediation should fail, Hostess may disappear but most, if not all, of its products will likely go on. Several private equity funds, including Metropoulos & Co. and Sun Capital Partners have expressed interest in buying the company.

"I think that we could offer a slightly better, more labor-friendly deal than what was on the table last week," Sun Capital's Marc Leder told Fortune magazine. "We also think that one point the unions have made is that there hasn't been a great amount of reinvestment in the business. We've found that investing new capital into companies like this can by very positive for brand, people and profitability."


In Depth

Q&A: Open Season For Closed-End Funds

Aug 29 2014 | 10:00am ET

When Maury Fertig and Bob Huffman, former Salomon Brothers coworkers, launched...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.