Published March 27, 2012
IRVING, Texas – Bankrupt snack-maker Hostess is hoping to reach a deal with its unions that will allow it to sell individual brands to raise cash.
The maker of Twinkies, Ding Dongs and Wonder Bread, which is on its second trip through bankruptcy court and is fighting for survival, is negotiating with its unions to cut pensions costs.
While the pensions remain the key sticking point, the company is also seeking permission from its union to sell brands, such as Hostess CupCakes, Drake's and Dolly Madison.
Hostess, based in Irving, Texas, filed for "Chapter 22" bankruptcy protection in January, just three years after it emerged from a previous Chapter 11.
While America's largest bakery makes money off its snacks division, it is losing dough on its bread business, including Wonder Bread and Nature's Pride, according to a sources with knowledge of its finances.
The company has wanted to sell some of its individual snack brands for years, while the unions have been concerned that shedding profitable assets will leave the remaining company even more vulnerable to collapse.
However, Hostess' unions are willing to consider the sale of brands if the proceeds are used to strengthen the remaining business, a source close to the talks said.
Potential buyers for Hostess assets include Bimbo Bakeries, which makes Entenmann's baked goods; McKee Foods, which make Little Debbie snack cakes; and Flowers Foods, the owner of Tastykakes.
Hostess has extended until April 17 a hearing in which the bankruptcy judge will decide whether it has the right to scrap its collective bargaining agreement and its pensions.