NEW YORK The future of Twinkies is virtually assured.
Hostess Brands Inc. got final approval Thursday for its wind-down plans in bankruptcy court, setting the stage for its iconic snack cakes to find second lives with new owners even as 18,000 jobs will be wiped out.
The company said in court that its in talks with 110 potential buyers for its brands, which include CupCakes, Ding Dongs and Ho Hos. The suitors include at least five national retailers such as supermarkets, a financial adviser for Hostess said. The process has been so fast and furious that Hostess wasnt able to make its planned calls to potential buyers, said Joshua Scherer of Perella Weinberg Partners, an asset management firm advising Hostess.
Not only are these buyers serious, but they are expecting to spend substantial sums, he said, noting that six of them had hired investment banks to help in the process.
The update on the sale process came as Hostess received approval also to give its top executives bonuses totaling up to $1.8 million for meeting certain budget goals during the liquidation. The company says the incentive pay is needed to retain the 19 corporate officers and high-level managers for the wind-down process, which could take about a year.
Two of those executives would be eligible for additional rewards depending on how efficiently they carry out the liquidation. The compensation would be on top of their regular pay.
The bonuses do not include pay for CEO Gregory Rayburn, who was brought on earlier this year as a restructuring expert. Rayburn is being paid $125,000 a month.
Hostess was given interim approval for its wind down last week, which gave the company the legal protection to fire 15,000 union workers. The company said the terminations were necessary to free up workers to apply for unemployment benefits. About 3,200 employees are being retained to help in winding down operations, including 237 employees at the corporate level.
The bakers union, Hostess second-largest union, has asked the judge to appoint an independent trustee to oversee the liquidation, saying the current management has been woefully unsuccessful in its reorganization attempts.
Hostess said last week that it was getting a flood of interest from potential buyers for its brands, which also include Devil Dogs and Wonder bread. The company has stressed it needs to move quickly to capitalize on the outpouring of nostalgia sparked by its liquidation.
The longer these brands are off the shelves, the less theyre going to be valued, Scherer said Thursday in U.S. Bankruptcy Court in the Southern District of New York in White Plains.
Last week, Scherer noted it was a once-in-a-lifetime opportunity for buyers to snap up such well-known products without the debt and labor contracts that would come with purchasing the entire company.
Although Hostess sales have been declining over the years, they still clock in at $2.3 billion to $2.4 billion a year.
The companys demise came after years of management turmoil and turnover, with workers saying the company failed to invest in updating its products.