There are 12 different unions, with some 15,000 members, 40 separate pension plans, and $2 billion in unfunded pension liabilities. (Whew!) That's what Hostess claims is at the heart of the company's woes. The unions say management was fine with those pensions after the first bankruptcy and may go on strike if they feel they're being made the fall guys in any court-ordered restructuring. That would be the end of Hostess as we know it.
THE PE FIRM
Run by Tim Collins, a financier with Democratic Party connections, private equity firm Ripplewood Holdings acquired control of Hostess as it came out of its first bankruptcy in 2009. Ripplewood pumped a total of $170 million into the company, but the string of CEOs it appointed could not keep Hostess from sliding back into Chapter 11 (cheekily called Chapter 22 in some circles). While it still retains some debt, Ripplewood has little chance of recouping any of its investment.
THE HEDGE FUNDS
Silver Point Capital and Monarch Alternative Capital, hedge funds that specialize in distressed companies, are both said to hold about 30% of Hostess's debt. Sources say their current stake is between $50 million and $100 million apiece, though they originally invested more. The goal now: renegotiate the Teamsters' contract and get out as soon as possible. Or liquidate the company and just take what they can get. As the holders of Hostess's senior secured debt, either way the hedgies will walk away with plenty.
CAKE WRECK: HOSTESS FROM ICON TO BUST
- 1925: Continental Baking Co. buys Taggart Baking, maker of Wonder Bread. Continental becomes the largest bakery in the U.S.
- 1930: Continental baker James Dewar gets the idea to make an inexpensive cream-filled sponge cake using strawberry shortcake equipment that sat idle in the off-season. The Twinkie is born.
- 1930: Wonder Bread becomes the first large-scale baker to sell loaves of presliced bread. The company's advertising is thought to be the origin of the phrase "the greatest thing since sliced bread."
- 1947: Mascot Twinkie the Kid is introduced.
- 1947: Hostess introduces white Sno Balls. It takes about three years for the company to add the cream filling and distinctive pink color.
- 1950s: Hostess Twinkies sponsors The Howdy Doody Show, reinforcing its status as a ubiquitous lunchbox treat.
- 1967: Hostess introduces Ding Dongs and Ho Hos.
- 1979: "Twinkie defense" is coined during the trial of Dan White, who binged on junk food before killing San Francisco's mayor and city supervisor Harvey Milk.
- 1992: Seinfeld's Newman reveals a passion for Drake's Coffee Cake, now part of Hostess Brands.
- 1995: Interstate Bakeries Corp. acquires Continental, the country's largest wholesale baker, for $220 million in cash plus stock. Interstate becomes the nation's largest bakery company.
- 1999: Hillary Clinton approves the inclusion of Twinkies in the Millennium Time Capsule, alongside Ray Charles' sunglasses and a piece of the Berlin Wall. The Twinkies are removed, however, because of rodent concerns.
- 2004: Citing pressure from carb-conscious consumers, rising ingredient costs, and climbing expenses for employee pensions and health care, Interstate Bakeries files for Chapter 11.
- 2009: Woody Harrelson risks his life in an obsessive search for Twinkies in the post-apocalyptic hit Zombieland.
- 2009: Backed by private equity, the company exits bankruptcy as a private entity and changes its name to Hostess Brands.
- 2012: Hostess again enters bankruptcy, this time with 19,000 employees and $860 million in debt