Hostess Brands Seeking Union Deals to Continue Operations

Reaches agreement with Teamsters, not bakers; files motion to impose same changes

IRVING, Texas -- Hostess Brands Inc. announced late last week that employee members of the International Brotherhood of Teamsters (IBT) voted to ratify changes to their bargaining agreement that, if implemented throughout the company, will enable Hostess to continue operating.

The company also announced that it intends to file a motion under the U.S. Bankruptcy Code with the U.S. Bankruptcy Court in White Plains, N.Y., to impose the same changes ratified by the IBT on employees represented by the Bakery, Confectionery, Tobacco Workers & Grain Millers International Union (BCTGM), which voted to reject them.

If granted, the relief, along with similar relief requested of the company's other, smaller unions, will enable the company and its employees to avoid liquidation and successfully emerge from Chapter 11.

The company has already made its final offer to the BCTGM.

Hostess Brands CEO Gregory F. Rayburn said that the BCTGM's membership may have voted against the final offer because their union leadership incorrectly informed members that a "white knight" would step in to buy the company and save their jobs, or that Hostess would return with a better offer.

"It has been suggested to our BCTGM-represented employees by their union leaders that two unidentified parties may be prepared to invest in or purchase Hostess or a significant portion of its baking facilities if the company's proposal was rejected," he said. "This is not true. There is no white knight. There is no better offer. Our only option to save Hostess, preserve jobs and avoid liquidation is to amend our labor agreements."

Members of the BCTGM employed by Hostess Brands rejected the company's proposal by 92%, the union said in a statement. BCTGM International president Frank Hurt said the members "did not reject this proposal because of 'bad information' from the International Union; they rejected it because it was an outrageously unfair proposal."

Click here to read the full BCTGM statement.

Hostess Brands filed for Chapter 11 bankruptcy protection in January 2012. Since the filing, the company has been pursuing new collective bargaining agreements with all of its union employees. Under the company's current proposal, all Hostess employees, including management and nonunion workers, will have their compensation adjusted by an equivalent percentage.

The Company plans to seek approval of its motion at a hearing to be held on October 3.

Founded in 1930 and based in Irving, Texas, Hostess Brands' products have included iconic brands such as Butternut, Ding Dongs, Dolly Madison, Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride, Twinkies and Wonder. Hostess Brands had approximately 18,500 employees and operated 36 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores throughout the United States.