22
   

Days of the Twinkie may be numbered

 
 
edgarblythe
 
  1  
Reply Mon 19 Nov, 2012 02:51 pm
@thack45,
I was thinking economics, rather than junk food. Sound companies and job security are harder to come by these days.
0 Replies
 
thack45
 
  1  
Reply Mon 19 Nov, 2012 03:21 pm
I figured. You always were a good guy edgar.
edgarblythe
 
  1  
Reply Mon 19 Nov, 2012 03:32 pm
@thack45,
Aw, thack - It was supposed to be a secret.
0 Replies
 
roger
 
  1  
Reply Mon 19 Nov, 2012 04:15 pm
@hawkeye10,
I meant partner in the sense of making business decisions, and taking the consequences.

By the way, I tend to resist the use of the word 'partner' as a verb. It usually means someone wants to sell you something.
ehBeth
 
  1  
Reply Mon 19 Nov, 2012 04:59 pm
@roger,
roger wrote:

I meant partner in the sense of making business decisions, and taking the consequences.


it's really hard to imagine who gets whacked with the consequences more than the employees
roger
 
  1  
Reply Mon 19 Nov, 2012 05:12 pm
@ehBeth,
They still don't vote on executive compensation. They are not partners.
ehBeth
 
  1  
Reply Mon 19 Nov, 2012 05:30 pm
@roger,
I get that they aren't traditionally thought of as partners. Doesn't mean that's the way it has to stay.

I've seen it in some of the resource industries in northern Ontario. Company threatens to go under without union concessions. Union doesn't capitulate. Company shuts down. Union members band together - sometimes with angel investors - buys plant/mill/factory - rehires the better managers - controls everyone's income - from cleaners through management. Sometimes excellent results, sometimes not.
0 Replies
 
realjohnboy
 
  1  
Reply Mon 19 Nov, 2012 05:36 pm
In a news update, management and labor have agreed to mediation in order to avoid liquidation.
Who blinked first?
edgarblythe
 
  3  
Reply Mon 19 Nov, 2012 05:54 pm
@realjohnboy,
I believe it was the judge.
0 Replies
 
hawkeye10
 
  0  
Reply Mon 19 Nov, 2012 05:59 pm
If the hostess owners did decide in sep to shut down then the mediation is a bump in the road...according to the report I read they can start selling off the assets on wed, and nothing will be made before that.
realjohnboy
 
  1  
Reply Mon 19 Nov, 2012 06:13 pm
@hawkeye10,
What do you see as Hostess' assets that could be sold?
Baking machinery
Labor staff
Distribution network
Brand names/brand loyalty
Grocery store shelf-space
Competent management
hawkeye10
 
  1  
Reply Mon 19 Nov, 2012 06:30 pm
@realjohnboy,
brands which hostess claim are only worth $150 million but that is way low

a few of the plants might have value to someone

land

machinery but only to whom ever buy the brands, to move into their plants to make hostess signiture products. for instance it will be cheaper for someone like bimbo to buy the old twinkie lines then to build new ones, but if bimbo did not buy it then they are only good for scrap.

there might be some patents that have value
0 Replies
 
ehBeth
 
  1  
Reply Mon 19 Nov, 2012 06:34 pm
@realjohnboy,
realjohnboy wrote:

Grocery store shelf-space


does Hostess have a significant presence on shelves in U.S. grocery stores? they're pretty much a vanishing brand up here - bottom shelf in a lot of cases
hawkeye10
 
  0  
Reply Mon 19 Nov, 2012 06:51 pm
@ehBeth,
sales 2011

bimbo 3.8 billion

flowers 2.8 billion

hostess 2.5 billion


as you can see reports that hostess died of lack of sales are greatly exaggerated....and ya, in order to sell this much product hostess need to buy a lot of self space. for 2011 hostess was the 40th largest food processor, which is not nothing in a country that is this large

http://www.foodprocessing.com/top100/index.html
ehBeth
 
  2  
Reply Mon 19 Nov, 2012 07:08 pm
@hawkeye10,
hawkeye10 wrote:
as you can see reports that hostess died of lack of sales are greatly exaggerated.


Quote:
By late 2011, Hostess was getting, well, creamed. Its sales last year -- $2.5 billion -- were down about 11% from 2008 and down 28% from 2004.


http://management.fortune.cnn.com/2012/07/26/hostess-twinkies-bankrupt/

from an interesting article from July/August of this year

http://fortuneaskannie.files.wordpress.com/2012/07/hostess_wars.jpg?w=612&h=365


it seems the company itself is third man on the totem pole

Quote:
Away from the sideshow over executive pay, the parties continued to wrangle in bankruptcy litigation. They've been at it for months, in court and in closed-door negotiations.

On one side are the Teamsters, and on the other are the two hedge funds, Silver Point and Monarch.

Ripplewood is pretty much out of the picture by now, except to the extent it can eventually persuade the bankruptcy judge to toss it a bone.

While Ripplewood retains some debt, its equity is so far under water that it might as well be gone. It doesn't attend negotiating sessions with the Teamsters -- such is the view from the bottom of the sea. Hostess is at the table but has resigned itself to being a mediator of sorts, with its interests subordinated to the hedge funds, which hold the senior secured debt.




Quote:
On exiting the first bankruptcy, Hostess's total debt load was nearly $670 million. That was well above what it went into bankruptcy with in the first place -- an unusual circumstance that the company justified on expectations of "growing" into its capital structure.

But the company was dead wrong. Its debt sowed the very seeds of the next bankruptcy. Looking back on the decision to reinvest in Hostess in the first bankruptcy, one of the lenders now says, "If you look in the dictionary at the definition of throwing good money after bad, there should be a picture of Hostess beside it."




Quote:
Even if the union can reach a deal with Hostess and investors, all parties would still have to turn to the wage concessions and work-rule changes that the company insists on -- and in return for which the Teamsters want a piece of the company.
hawkeye10
 
  -1  
Reply Mon 19 Nov, 2012 07:24 pm
@ehBeth,
the largest competitor is doing 40% better is sales, the company is #3 in sales, yet hostess was getting "creamed"?? no, sales are fine, it is costs which are the main problem.


hostess has debt equal to 5 months of sales, this should be doable.
ehBeth
 
  1  
Reply Mon 19 Nov, 2012 07:25 pm
@hawkeye10,
Hostess isn't even really involved in the negotiations. There's no there there.
0 Replies
 
Lustig Andrei
 
  1  
Reply Tue 20 Nov, 2012 06:18 pm
Looks like the possibility of life after death:

http://www.csmonitor.com/Business/2012/1120/How-Twinkies-could-survive-even-if-Hostess-doesn-t

Christian Science Monitor wrote:

For those panicked consumers considering a Twinkie bake set on eBay for some extortionate price, a word of caution.

No matter the outcome of the mediation session between Hostess Brands and the Baker, Confectionary, Tobacco Workers and Grain Millers International Union, Twinkies, Ho Hos, and Sno Balls may yet return to grocery store shelves.

Since Hostess announced last week that it planned to file for Chapter 11 bankruptcy – saying a two-week strike by the bakery union caused irreparable financial damage – a rush for its iconic sugary snacks has hit supermarkets and convenience stores across the country.

[Yet that very outpouring of gastronomical grief could be a saving grace. Even though Hostess sales are not as robust as they were in the past, the products still possess strong cultural value – and many companies are apparently eager to purchase Hostess assets if the company continues with its motion to file for bankruptcy Wednesday.

“There is a consumer reaction that comes viscerally when you get rid of an iconic brand," says Susan Fournier, a professor of marketing and an authority on brand research at Boston University School of Management. "That’s just the evidence these brands have resonance, they have meaning, they have value, and [consumers] are going to miss them.”

Top of the suitor list is C. Dean Metropoulos and Co., a private-equity firm based in Greenwich, Conn., that specializes in purchasing heritage brands, such as Pabst Blue Ribbon beer, Bumble Bee Tuna, Chef Boyardee pasta, and PAM cooking spray and rebooting them.


More at link.
And I believe the AP is reporting that Hostess may not go under after all.
hawkeye10
 
  -1  
Reply Tue 20 Nov, 2012 06:58 pm
@Lustig Andrei,
hostess has announced that mediation did not result in a deal.

SHOCKING!
hawkeye10
 
  1  
Reply Sat 1 Dec, 2012 07:44 pm
@hawkeye10,
Hostess CEO Surprised by Interest, But No Bidder Wants the Whole Company

Quote:
Hostess Brands has been surprised by the amount of interest its brands have received from potential bidders, CEO Greg Rayburn said Thursday evening.


Getty Images
But while there’s demand for buying the rights to Twinkies, Ho Hos and Drakes coffee cakes, not one of the 110 potential buyers have raised the prospect of buying the whole sweet shebang, he said.

Rayburn, speaking shortly after a court hearing, said the number of bidders has risen sharply: on Wednesday there were 80 and in just 24 hours there were 110 looking at the liquidating assets.

He said there have been signs of interest from regional bakers looking to add assets and from large customers and supermarket chains looking for brands they see customers clamoring for.

“It’s a broad spectrum of buyers,” Rayburn said while speaking at a conference at the New York Stock Exchange hosted by media outlet The Deal. ” I wouldn’t have predicted our customers would be bidders.


http://blogs.wsj.com/deals/2012/11/30/hostess-ceo-surprised-by-interest-but-no-bidder-wants-the-whole-company/

that hostess management wont get it right is something that we can count on all day long.
 

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