By CANDICE CHOI and TOM MURPHY
Associated Press
Hostess Brands Inc. says
it's going out of business after striking workers across the country
crippled its ability to make its Twinkies, Ding Dongs and other snacks.
The company had warned
employees that it would file a motion with U.S. Bankruptcy Court Friday
seeking permission to shutter its operations and sell its brands if
plants hadn't resumed normal operations by a Thursday evening deadline.
The deadline passed without a deal.
The closing would mean the loss of about 18,500 jobs.
"I don't know if they
thought that was a bluff," CEO Gregory Rayburn said on CNBC Friday. He
said the financial impact of the strike makes it "too late" to save the
company even if workers have a change of heart. That's because the
clients such as retailers decide to stop carrying products when supplies
aren't adequate.
Rayburn said he's hopeful
that the company will find buyers for its roster of about 30 brands,
which include Ho Hos, Dolly Madison, Drake's and Nature's Pride snacks.
The company books about $2.5 billion in sales a year.
Hostess, based in Irving,
Texas, said its stores will remain open for several days to sell
remaining products. Operations at its 33 factories were suspended
Friday. The privately held company filed for Chapter 11 protection in
January, its second trip through bankruptcy court in less than a decade.
The move comes after
thousands of members of the Bakery, Confectionery, Tobacco Workers and
Grain Millers International Union went on strike last week after
rejecting a contract offer that slashed wages and benefits in September.
The bakers union represents about 30 percent of the company's
workforce.
Rayburn said the union's
leadership had misled members into believing there was a buyer in the
wings who would rescue the company. He said the union hadn't returned
the company's calls for the past month.
A union representative did not immediately return a call seeking comment.
Hostess had said earlier
this week that production at about a dozen of its plants were seriously
affected by the strike. Although many workers decided to cross picket
lines, the company said it wasn't enough to keep operations at normal
levels. Three plants were closed earlier this week.
Hostess had already reached
a contract agreement with its largest union, the International
Brotherhood of Teamsters. The Teamsters had urged the bakery union this
week to hold a secret ballot on whether to continue striking.
Hostess said the company is
unprofitable under its current cost structure, in large part because of
union wages and pension costs. Rayburn said in a statement on the
company website that all employees will eventually lose their jobs,
"some sooner than others."
"Unfortunately, because we
are in bankruptcy, there are severe limits on the assistance the
(company) can offer you at this time," Rayburn wrote.
Hostess, founded in 1930,
was fighting battles beyond labor costs. Competition is increasing in
the snack space and Americans are increasingly conscious about healthy
eating.
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2012 The Associated Press. All rights reserved. This material may not
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