Hostess judge approves brand sales of more than $800 million
Tuesday, March 19, 2013
WILMINGTON, Del. — Snack-maker Hostess Brands Inc. won approval Tuesday of asset sales totaling more than $800 million.
U.S. Bankruptcy Judge Robert Drain in White Plains, N.Y., approved sales to Flowers Foods, Grupo Bimbo, Apollo Global Management and C. Dean Metropoulos & Co. for most of Hostess's cake and bread brands.
Hostess attorney Lisa Laukitis told Drain the sales were in the best interests of the company and creditors, and there is "sound justification" for the deals, with "the highest and best offers" from "good-faith purchasers."
Drain gave Hostess extra time to file a bankruptcy plan after arguing it still has significant assets to sell that may yield more than $100 million to help pay creditors.
"We embarked on the sales process with one overarching goal -- to maximize value for all of the company's stakeholders -- and I am pleased to report that we have been successful," said Gregory Rayburn, chief executive officer of Irving, Texas-based- Hostess. "I'd like to thank all of the employees and advisers who supported the process and helped preserve the value of some of the most beloved brands in the U.S."
United States Bakery, based in Portland, won a March 15 auction with a bid of $30.9 million for the Sweetheart, Eddy's, Standish Farms and Grandma Emilie's bread brands, four bakeries and 14 depots, plus certain equipment.
A joint offer from Apollo and Metropoulos was the only qualified bid received by the deadline for the assets they bought. The companies offered as much as $410 million for the Hostess snack-cake business, which includes Twinkies, CupCakes, Ding Dongs and Ho Hos, and other assets including five bakeries and equipment.
Flowers, based in Thomasville, Ga., will pay $360 million for Hostess's Wonder, Butternut, Home Pride, Merita and Nature's Pride brands, 20 bread plants, 38 depots and other assets.
Grupo Bimbo won an auction to buy the Beefsteak bread brand, beating a bid by Flowers with a $31.9 million offer.
McKee Good Corp., Collegedale, Tenn.-based maker of Little Debbie snacks, made the only qualified bid for Drake's. McKee will pay $27.5 million for Drake's products including Devil Dogs, Ring Dings, Yodels, Yankee Doodles, Sunny Doodles, Funny Bones and Drake's Coffee Cake.
Hostess, founded in 1930, is liquidating its brands, recipes, plants and other assets after failing to agree with striking bakers on concessions to help the company emerge from its second bankruptcy.
"We share the enthusiasm, energy and passions exhibited by new ownership, and believe our highly motivated and skilled workforce will serve as indispensable partners in the seamless re-opening of factories," said David Durkee, International President of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union.