Sugar crash? Twinkies maker facing cash crunch
Hostess Twinkies and CupCakes. (Credit: AP)
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.
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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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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".
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...
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