Hostess Brands Reorganizes under Chapter 11
Hostess Brands, Inc. announces that the company and its five subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. Concurrent with the filing, the company said that, subject to Court approval, it has received a commitment for $75 million in debtor-in-possession (DIP) financing from a group of its existing first-lien lenders, led by Silver Point Capital, L.P. The financing will enable the company to continue routine operations while undertaking a comprehensive financial and operational restructuring to transform it into a strong, competitive company.
"Hostess has some of our industry's most powerful and resilient brands," says President and Chief Executive Officer Brian Driscoll. "With generations of loyal consumers, numerous iconic products and a talented and experienced workforce, Hostess Brands has tremendous inherent strengths to build upon."
During the Chapter 11 proceeding, the company will continue operating its bakeries, outlet stores and distribution centers and delivering its products to its customers across the country. The company does not anticipate any disruptions in the manufacturing and delivery of any of its bread or cake products. The company's brands, including Wonder, Merita and Butternut breads; Drake's, Twinkies and Hostess cakes, will still be available and on store shelves everywhere.
The Chapter 11 filing is intended to provide Hostess Brands the opportunity to re-engineer the company and, upon emergence, to execute a business plan that will transform Hostess Brands into a competitive wholesale baker that can provide employment on competitive terms and continue to efficiently service all of its customers. The business plan is designed to create a sustainable cost structure with competitive employee benefit plans while allowing the company to invest in modern systems, fleets and facilities to meet changing customer needs and consumer tastes.
"With these changes, we can access capital to reinvest in our company again and begin to level the playing field with our competitors," Driscoll says. “This Company has tremendous potential if we can remove the barriers to success."