Twinkies and their cousin snacks will live to fight for your shopping dollars another day. Hostess, the parent company that makes Twinkies and many other snacks Americans have come to love, may be going bankrupt, but their brands will live on. As the Hostess company makes its way through the bankruptcy courts it has found over 100 companies interested in buying some, or all, of its assets.
More than a dozen Hostess executives will be in charge of making sure the Hostess brands fetch the highest price the market will bear. The company has earmarked almost $2 million to keep a select group of executives on board and focused on liquidating the company. The company has identified 19 top corporate executives that will steer the company through bankruptcy and ensure shareholders get every penny that can be taken in by the company.
Hostess CEO, Gregory Rayburn, will be taking in his salary of $125,000 a month and will have the opportunity to make even more depending on how the liquidation of Hostess winds down. Not everyone has such a fat paycheck to bank on, but all the executives staying on to guide Hostess through bankruptcy will be handsomely rewarded for their efforts.
Despite the positive outlook for Hostess products, 18,000 employees will be let go and it is not yet clear what their severance packages will look like. About 3,200 will stay on, along with the small executive crew, to get Hostess through the liquidation process and transition it to its new owners. Hostess may have a longer list of potential suitors than any company in recent history, if reports are accurate. It’s certainly a testament to the company’s senior management over the years that they built such strong, valuable brands.
Hostess has been through years of management turnover and has had challenges with employee unions over the years. Its attempts to get agreement on labor issues has met with mixed success, but earlier this month the baker’s union strike seemed to be the straw that broke Hostess. While the company’s revenue has been in decline, coming in at a bit more than $2 billion the last two years, it has had serious difficulties balancing its human resource issues. Not only has the company struggled with its employees day to day concerns, but its pension has been a serious strain on cash flow.
Hostess has had to write checks totally over $1 million a month for retiree benefits. While those retirees are the backbone of what built the Hostess brands, they represent a big obligation the company has found increasingly difficult to fulfill.
The liquidation of Hostess, and its purchase by a new company may end up being a net positive for current Hostess employees and retirees. Only time will tell, but given the situation the company was in, there is every reason to believe that Hostess’ brands, that so many Americans grew up loving, will endure the bankruptcy process and come out the other side. Who ends up owning the Hostess products will definitely impact its future course, but if American’s can get their Twinkie fix, they are not likely to care who is behind delivering them to store shelves.
