Fri
Nov 16 2012
12:14 pm

Ho Ho Ho Hostess is shutting down and taking their Twinkies (Superfood) with them. Red states are frantic. This is the first assault the second Obama Administration has pulled on the American South. We were told he would come after our guns but this could be far more devastating.

Some are saying Mr. Obama should bail this too big to fail industry with taxpayer dollars but he refuses to do it because a secret study showed that most of the golden goodies are enjoyed by Republicans. Michelle would not allow saving such an obesity generator anyway.

What must we do?

Fortunately, Twinkies bought today may be hoarded for at least ten years before they start showing signs of decay and there are recipes for pretty good knock-offs out there on the Intarwebs. Maybe some enterprising entrepreneur to step in and save us.

And you Twinkie haters needn't sit there and look so smug; they're taking away your Ding Dongs too.

Topics:
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bizgrrl's picture

Seems like this could help

Seems like this could help the Little Debbie company and Tennessee (Little Debbie is based in Chattanooga).

Beale Street's picture

Topics: National Humor

18,500 people are out of work. That is funny to you?

metulj's picture

Because the margin that kept

Because the margin that kept that poison shoveling crap pile's doors open was what it wasn't paying everyday workers. Dude. Nature Made is the number two bread brand by placement in the country. Do you think something won't come in to replace it? Is Bimbo Breads publicly traded?

redmondkr's picture

You are funny to me!

You are funny to me!

R. Neal's picture

No, it's not funny. It's sad.

No, it's not funny. The post is funny. The closing isn't. It's sad. The company has been through a string of bankruptcies and mergers and acquisitions, and is now owned by an equity capital company (similar to Bain Capital). It sounds like they have been mismanaged for quite some time, and keep asking the unions to make up for their failures. The unions said enough, and the company is using that as an excuse to exit the business they apparently can't run. Atlas shrugging, and all that. Their competitors will move in and many of these workers will get jobs with them if they want.

Tamara Shepherd's picture

*

Per CNBC, all that's certain is that the only victors here look to be two "vulture funds" (hedgies), Silver Point and Monarch.

They nabbed a 60% interest in the company, presumably for pennies on the dollar, following Hostess's last bankruptcy.

Everybody else now loses.

(Do follow the link therein to David Kaplan's Fortune article, which is also interesting reading.)

Edit: Shoulda said Silver Point and Monarch bought 60% of Hostess's debt. Their interest isn't an equity interest. Mea culpa.

Pam Strickland's picture

Among those 18,500 workers

Among those 18,500 workers are employees in Chattanooga and Knoxville. Chattanooga employees were striking and 60 percent of the Knoxville employees were honoring the strike.

They had been asked to take an immediate 8 percent wage reduction take on 20 and percent more of the healthcare costs. There was also an elimination of the retiree medigap insurance and a pension supplement used to pay health and funeral costs. as well as elimination of an eight-hour work day and there had been closure of 12 plants with a refusal to tell the union which plants are profitable, which plants will be closing.

They are in a National Labor Relations Board dispute over Hostess' refusal to honor pension obligations to the workers' pension funds.

metulj's picture

And the two hedge funds who

And the two hedge funds who are behind all of this are going to make millions.

CathyMcCaughan's picture

Little Debbie saves the day.

Little Debbie saves the day.

Edit: Nevermind

Average Guy's picture

Merita Bread

Heard from a friend they laid off workers today. But she stated her bother-in-law had his wages cut $20k the last few years, halving his salary.

If the fight is working for a livable wage or acquiescing to working below the poverty line, it kind of makes the decision easy doesn't it?

Andy Axel's picture

You'd think that after two

You'd think that after two bankruptcies, the writing was more or less on the wall: HOSTESS IS NOT A WELL-RUN COMPANY.

Memphis Slim's picture

Baker's union showed them who is boss

in rejecting their contract. Ironically, the Teamsters, the guys that drive the trucks, approved the contract as it pertains to their routes, schedules, deliverables, and their wages.

American's eating habits are changing one way or the other and this one looked like a very easy decision for management and for the labor leadership, nobody was happy, lets just shut the thing down and let the pieces fall where they may. They can place the thing in bankruptcy court, but divorce courts may be better suited to wind up this unfortunate experience of a corporate catastrophe.

By the way, McKee Bakery is a non union shop, headquartered in a right to work state, and they are looked at as the potential purchaser for certain Hostess assets and a potential "savior" of some of the 18,500 union jobs that just vanished in the liquidation of Hostess.

Fabricant's picture

Savior? Please.

Maybe McKee Bakery can start making Little Jesus cakes, in honor of itself. The removal of a prime competitor coupled with the destruction of union jobs in the industry = a gift to McKee Bakery! Get out of here with that savior talk.

CE Petro's picture

Imagine, Hostess Misinforms the Public

Statement from the BCTGM cross posted on the AFL-CIO website (emphasis mine).

Over the past eight years since the first Hostess bankruptcy, BCTGM members have watched as money from previous concessions that was supposed to go toward capital investment, product development, plant improvement and new equipment was squandered in executive bonuses, payouts to Wall Street investors and payments to high-priced attorneys and consultants.

BCTGM members are well aware that, as the company was preparing to file for bankruptcy earlier this year, the then-CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from $375,000 to $656,256.

Over the past 15 months, Hostess workers have seen the company unilaterally end contractually obligated payments to their pension plan. Despite saving more than $160 million with this action, the company continues to fall deeper and deeper into debt. A mountain of debt and gross mismanagement by a string of failed CEOs with no true experience in the wholesale baking business have left this company unable to compete or survive.

The Baining of Hostess.

redmondkr's picture

Image from AFL-CIO

jmcnair's picture

nm

nm

Average Guy's picture

Private equity / Hedge funds takeovers

It appears Romney's much touted investment at Staples was that of seed money, not like GST, which more closely resembled the situation at Hostess.

The reason for the Staples example was I thought it was something Bain bragged about as something it "turned around". From what I can find, it was more about "starting" than "saving".

Which got me wondering: Are there any big name examples of where private equity / hedge fund operators (aka corporate raiders) have resurrected a dying company instead of sucking it dry?

metulj's picture

It is a good question.

It is a good question.

Average Guy's picture

How many of these companies

How many of these companies need to get their legs broken before they quit going to loan sharks?

Poetic justice would be employees wising up and just leaving when they see these guys coming. Instead of getting inevitably screwed, leave these assholes holding the bag for once.

Fabricant's picture

I think the mismanagement of

I think the mismanagement of Hostess was a Right wing response to the legalization of marijuana in many states. Twinkie sales are strongly correlated with marijuana use, or so I've heard.

redmondkr's picture

I have a friend who drove a

I have a friend who drove a '69 Ford pickup truck for years with a package of Twinkies on the dash in the hot sun. He always said it was there in case of an attack of the munchies.

Fabricant's picture

That's funny!

That's funny!

Factchecker's picture

Bronco Bama gets his socialist way again

Cue Fox and talk radio, e.g., Rush et. al., to preach this is what the workers wanted all along. Now they can get free unemployment, food stamps, and all the other wonderful so-called "gifts" from Obama.

Darn your union thuggery, Bronco Bama!

Stick's picture

Fraudulent Conveyance

This was nothing but plutocrats draining the value out of a struggling company. It also happens to give the radio idiots and Faux News something to talk about...

Link

Rachel's picture

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