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Hostess To Ask Court To Impose Union Deal To Keep Twinkie Maker In Business

Posted On: 9/20/2012

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TAGS: Hostess Brands, Hostess unions, Twinkies, Ding Dongs, Hostess bankruptcy, Interstate Bakeries, Greg Rayburn

IRVING, TX -- Hostess Brands said it would seek a court order to force members of one of its unions to accept a deal in order to emerge from bankruptcy and remain in business.

The Irving, TX, maker of Twinkies and Ding Dongs filed for Chapter 11 bankruptcy in January, nearly three years after its predecessor, Interstate Bakeries, emerged from its own bankruptcy proceedings. | SEE STORY

Hostess made what it called its "last, best offer" to its two largest unions last month as part of its plan to emerge from bankruptcy.

Late last week, the International Brotherhood of Teamsters, which represents 7,500 of Hostess's 19,000 employees, voted narrowly to accept the proposed agreement, but the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union rejected it by 92%.

In response, Hostess said it planned to ask the bankruptcy court to impose the Teamsters-approved changes on the bakers' union members.

"Our only option to save Hostess, preserve jobs and avoid liquidation is to amend our labor agreements," said Hostess chief executive Greg Rayburn.

Among the changes Hostess is seeking with the new agreement are a reduction in its pension obligations and a salary cut across the company by 8% in the first year of the five-year agreement. Salaries would then increase 3% in the next three years and 1% in the final year.

In exchange, workers would get a 25% equity stake and the inclusion of two union representatives on an eight-member board of directors.

"Our members are frustrated at being in the position to bail out the company again, but overall were willing to accept modifications with the hope that Hostess will recover and be in a better position in the years to come," said Teamsters general secretary-treasurer Ken Hall.

Hostess hopes to have the motion heard in October.