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Iconic Twinkie maker Hostess to liquidate after 82 years Add to ...

These are stories Report on Business is following Friday, Nov. 16, 2012.

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Hostess to shut down
Hostess Brands Inc. says it’s shutting down amid a strike that “crippled the company’s ability to produce and deliver products” across the United States, throwing some 18,500 people out of work.

Hostess, whose well-known brands include Twinkies, Wonder Bread and Ding Dong, among others, had warned the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union it would close up shop if the strike didn’t end by late yesterday.

Today, the strike-bound food manufacturer said it is “winding down operations” and has filed documents with the U.S. Bankruptcy Court for permission to shut down completely and sell off assets.

“Hostess Brands is unprofitable under its current cost structure, much of which is determined by union wages and pension costs,” the company said.

“The offer to the BCTGM included wage, benefit and work rule concessions but also gave Hostess Brands' 12 unions a 25-per-cent ownership stake in the company, representation on its board of directors and $100-million in reorganized Hostess Brands' debt.”

Affected are 33 bakeries, more than 550 distribution operations and 570 stores in the U.S. Montreal's Saputo Inc. holds the rights to Hostess in Canada, though George Weston Ltd. holds Wonder Bread.

The Hostess workers have been on strike for a week as the company sought concessions and the union held firm. The International Brotherhood of Teamsters, the biggest union at Hostess, had already struck a deal with the company.

Employees say they have given enough for the struggling firm.

“We want to go back to work,” Dan Carlson, who has worked at the Hostess operation in Lenexa, Kansas, for six years, told Reuters yesterday. “We can’t keep giving.”

The company, however, which started up in 1930, said it can’t go on under its current cost structure. The motion to close was made to the court overseeing its Chapter 11 credit proceedings.

"We deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike," said chief executive officer Gregory Rayburn.

"Hostess Brands will move promptly to lay off most of its 18,500-member work force and focus on selling its assets to the highest bidders."

The added it has access to $75-million in debtor-in-possession financing as it winds down its operations and moves to sell its brands, of which there are about 30.

“I’m certainly hopeful we can sell the brands and that the brands can live on,” Mr. Rayburn told CNBC today.

“They are iconic.”

Hostess said that in September, the union rejected its final offer that was “designed to lower costs so that the company could attract new financing and emerge from Chapter 11.”

Astral halted
Shares of Canada's Astral Media Inc. were halted this morning as investors await word of a new bid by BCE Inc.

As The Globe and Mail's Jacquie McNish and Simon Houpt report, BCE and Astral are poised to unveil a new deal after being turned down by Canadian regulators.

They plan to sell several of Astral's English broadcast assets.

Petronas goes back to Ottawa
Malaysia’s Petronas is taking  a second run at Progress Energy Resources Corp. after being rebuffed by the Canadian government.

Petronas and Progress had already said they were in talks with Canadian officials.

Today, news outlets reported that a revised offer has now been put in.

Canadian officials rejected the bid for Progress, saying it failed the country’s “net benefit” test.

Also under scrutiny is a bid by China’s CNOOC Ltd. for Canadian energy giant Nexen Inc.

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