WATERLOO, Iowa -- A bankruptcy judge granted Hostess Brands Inc. final approval Thursday to wind down its operations, a process that the company said could take a year to complete.
"We are very pleased with today's outcome because it provides certainty to our employees and potential bidders that we are moving forward with the sale of our assets," CEO Gregory Rayburn said in a prepared statement.
Irving, Texas-based Hostess' final shipment of bread from its Waterloo bakery went out Nov. 16.
Hostess baked Wonder, Home Pride and Nature's Pride breads at its Waterloo bakery, at 325 Commercial St. It served all of Iowa and major portions of Minnesota and Wisconsin.
The Greater Cedar Valley Alliance & Chamber and IowaWORKS have scheduled a job fair for displaced Hostess workers for 10 a.m. to 1 p.m. today at the Waterloo Center for the Arts, at 225 Commercial St. in downtown Waterloo next door to their shuttered bakery.
The company's iconic brands, on the other hand, appear likely to return.
Hostess said Thursday it already has interest from would-be buyers of the Wonder, Twinkie and Ding Dong brands, among others.
"The company has received inquiries from 110 potential bidders, 70 of which have already signed non-disclosure agreements," company spokesman Lance Ignon said in an email Thursday.
"We are gratified with the outpouring of interest in our assets," Rayburn said, adding that "we look forward to a robust sales process."
Hostess is not disclosing the names of any bidders.
Hostess had received interim approval Nov. 21 from U.S. Bankruptcy Judge Robert Drain to wind down the company after it couldn't reach an agreement with representatives of the Bakery, Confectionary, Tobacco and Grain Millers Union. The union announced a national strike Nov. 9, which affected 24 of Hostess' 33 bakeries. Waterloo workers remained on the job until the company closed the bakery here.
Hostess told the bankruptcy court Thursday that it has to cut $1.1 million a month in retiree benefits as part of its liquidation plan. The company also is asking for permission to pay incentive bonuses as high as $1.75 million to 19 senior managers who are still in place to oversee the wind-down process.
"The wind-down budget includes only those items that can maximize the value of the company, which is required by the Bankruptcy Code," Ignon said. "Also, remember that with no more revenues coming in, the company's entire budget is funded by its lenders."
Paying retirement benefits don't "maximize" the company's value, Ignon said.
"The incentive bonuses, which were approved by the lenders, do build value because they encourage 19 executives to meet strict targets for reducing the time and cost of the wind-down," he said. "If the executives don't meet those targets, they won't get any bonus."
Hostess said it is retaining 3,200 employees during the first phase of its wind-down, but its employee roster likely will shrink by 94 percent within the first 16 weeks of the process.
Hostess employed 18,500, including 59 Waterloo bakery workers and another 30 drivers affiliated with Teamsters Local 238.
Ignon said the 3,200 non-executives who are staying on during the wind-down also will get bonuses.
Drain also approved formation of a panel of retired Hostess workers to represent retirees' interests, according to the Bloomberg news service.
Hostess has 33 bakeries, 565 distribution centers, about 5,500 delivery routes and 570 bakery outlet stores.
(c)2012 Waterloo-Cedar Falls Courier (Waterloo, Iowa)
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