CBS/AP/ January 10, 2012, 9:56 AM

Sugar crash? Twinkies maker facing cash crunch

Hostess Twinkies and CupCakes. (Credit: AP)

Hostess Brands Inc., the maker of Wonder Bread and Twinkies, is preparing to refile for Chapter 11 bankruptcy protection just two years after emerging, The Wall Street Journal reported Monday.

A spokesman for the privately held Irving, Texas, bakery company declined to comment on the report.

People familiar with the matter said the company is facing a cash crunch with more than $860 million in debt, high labor expenses and rising ingredient costs.

"Hostess's filing would mark what is known as a Chapter 22 proceeding in restructuring circles, since the company had already sought bankruptcy protection once before," the Journal noted.

When the company, then called Interstate Bakeries and based in Kansas City, Mo., filed for bankruptcy protection in 2004, it blamed low sales and high fixed costs. It emerged in February 2009.

Hostess Brands employs about 19,000 workers and operates in 49 states. Annual sales are about $2 billion, according to the company's website. Hostess' private-equity owner, Ripplewood Holdings, put $40 million into Hostess last year, and hedge funds including Monarch Alternative Capital and Silver Point Capital loaned the company $20 million late in 2011.

Sales of Hostess Twinkies have declined at a time when the market for bakery snacks has been flat. Nearly 36 million packages of Twinkies were sold in the year ended Dec. 25. That's a drop of almost 2% from a year earlier, according to data from SymphonyIRI Group, a Chicago-based market-research firm that captures sales from major retail outlets, excluding big-box stores.

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18 Comments Add a Comment

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Chippy5556 says:: Oh man, I heard 'Twinkies' and automatically thought they were talkin' 'bout Ex-ballerina Dead Fish and Screaming Weiner.; reply

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PourpaixPourpaix says:: Nice to know that if I go bankrupt, the law forbids me from filing again for 7 years. But if it's a big corporation, they're entitled to go bankrupt every full moon. After all, they're much more important than you or me. Guess I'll just have to give them a full moon, in the interest of proper opinion expression!; reply

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amerilatino says:: It should have happened to the tobacco companies first.; reply

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stuwerb says:

Let's bail them out so the executives can get their bonuses. Then, they can relocate the manufacturing operations to China. The good thing is that twinkies have such a long shelf life, they should easily be able to survive being shipped by slow boat from China.


stuwerb replies:: linkicon reporticon emailicon; And, they can continue using substandard ingredients, or maybe even more so! These can readily be found in China.

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MegaProcrastination says:: """"Time for a whole-grain twinkie. Maybe replace the refined white sugar with unrefined cane sugar or honey...""""

It would still be junk food and still be crap. I haven't bought this stuff in my entire adult life of over thirty years because their products taste like garbage. If I'm going to eat junk food it's going to taste a whole lot better than the stuff they make.

As much as I hate to see people possibly losing jobs over a company's failure, I'd come near to rejoicing if Hostess ended up going completely out of business. If they're smart, though, they'll adapt to what consumers today want. There are plenty of people out there who still think if it's made with whole grains it's "healthy".; reply

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baileyccc says:: Do what republicans encourage all corporations to do. Set up a plant in Mexico, if you can get them to show up for work daily, you will be just fine.; reply

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stuwerb says:

Time for a whole-grain twinkie. Maybe replace the refined white sugar with unrefined cane sugar or honey...


stuwerb replies:: linkicon reporticon emailicon; The funny thing is if they were to actually INNOVATE their product, and even increase its cost of production, potentially, customers might be very happy to pay much more. So they could still make a profit, and a bigger one at that.

Too bad our executives don't know anything about sound business principles these days.

These are products that are relics from the 60s/70s and nothing has been done to innovate them for the 21st century. Meanwhile, the executives were collecting their inflated bonuses...