A Corporate Bailout For Hostess Twinkies?

Junk food lovers apparently will soon learn if they still will be able to find their favorite “golden sponge cake with creamy filling” on the grocery store shelves in the future.

Hostess Brands, the company that makes the Twinkie snack cake and other baked goods, went Chapter 11 in January, and has been on the verge of closing its doors and liquidating.

Some potential buyers have stepped forward this week to throw the bankrupt company a possible lifeline, however. According to the New York Post, there are at least two institutional investors in the “mix”:

Private-equity firm KPS Capital Partners and at least one other bidder made formal offers by yesterday’s deadline to buy bankrupt Hostess Brands, offering a potential lifeline to the maker of the iconic snack cakes, The Post has learned.

A source said the bids likely ranged between $500 million and $600 million for the nation’s biggest bakery, whose stable of brands also includes Wonder Bread and Drake’s coffee cake.

Formerly Interstate Bakeries Corp., Hostess Brands Inc. is a privately-held company which employs roughly 19,000 people and is on the hook for more than $860 million in debt. It has been trying to renegotiated burdensome union contracts with the Teamsters, especially as it relates to inefficient work rules and unsustainable pension obligations.

Hostess went through bankruptcy proceedings in 2004 and after three years of reorganization was able to slash costs and stay in business. The company has struggled since then, however.

Hostess is due in court on Monday at which time the the company is expected to tell the bankruptcy judge if it has accepted any of the offers. The Twinkie and Ding Dong baker has already warned its large workforce that they may be out of job if things don’t go well.

A single Twinkie is said to contain 2.5 grams of saturated fat.

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In general, there is nothing wrong with treating ourselves to a guilty pleasure now and then. And in this teetering economy, no one wants to see others lose their jobs.

That being said, given the national obesity epidemic, is it a good thing that Twinkies will still be available to the consumer if the company manages to attract new investors to keep it going?

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