Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Hostess Begins First Round Of Bankruptcy Auctions
Author: Joel R. Glucksman
Date: February 26, 2013
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Hostess Brands will soon begin the process of auctioning off its most iconic labels in an effort to emerge from protection under bankruptcy law.
The process will begin in the last week of February, during which the company will auction off several of its brands, including Wonder Bread, Dow Jones Newswires reports. One bidder – Flowers Foods – has already shown great interest in several of the brands and has offered $360 million for five of them, including Wonder Bread and Nature’s Pride. Flowers Foods currently produces Tastykakes and Nature’s Own. The auction will be overseen by a U.S. Bankruptcy judge who must approve any bids before they are allowed to move forward. However, if Flowers Foods loses the Wonder Bread brand to a higher bidder, it will receive a $10.8 million break-up fee.
Another auction will take place in March, during which the coveted Twinkies and Ho Hos brands will be put up for sale. Private-equity firms Apollo Global Management LLC and Metropoulos & Co. have created a partnership to bid roughly $410 million for most of Hostess’s cakes business, including Twinkies and Ho Hos. Hostess has agreed to pay the equity firms $12.3 million if they lose the bid during the March 13 auction, according to MarketWatch.
A third bidder, McKee Food Corp., the maker of Little Debbie snack cakes, has its eye on Hostess’s Drake’s and a number of bread brands, including Grandma Emilie’s and Sweetheart. The company has offered up a $27.5 million bid for the Drake’s brand and equipment, MarketWatch notes.
Hostess originally sought Chapter 11 bankruptcy, which would have allowed it to restructure its assets, but moved to a Chapter 7 liquidation in November after discovering that future projected income would not support its restructuring plan.
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