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Court directs Hostess bidding


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The fate of the shuttered Hostess plant on National Road could become clearer by the end of February as a result of a court ruling by a New York bankruptcy judge that sets a fast-track schedule to sell a big chunk of the snack maker’s holdings.

Under the latest ruling, Hostess can accept competing bids until Feb. 25 for its iconic Wonder Bread brand, a variety of other bread labels, 38 depots and 20 manufacturing plants, including the 53-year-old Columbus snack factory that used to make Dolly Madison cakes, doughnuts and a few other sweets.

If multiple bids surface, an auction to pick a winner would be held Feb. 28 and a final sale order could be issued at a March 5 bankruptcy hearing before U.S. Bankruptcy Judge Robert Drain in White Plains, N.Y., the court said.

Earlier this month, Georgia-based Flowers Foods bid a total of $390 million for Wonder Bread, Nature’s Pride, a few other bread labels, as well as a collection of depots and plants, all of which were closed in November amid a dispute between the bankrupt Hostess company and its union workforce about pay and benefits.

Under bankruptcy court rules, Flowers’ mid-January offer becomes the lead or “stalking horse” bid that other contenders would have to beat by the end of February, or Flowers will prevail.

On Tuesday, Larry Duncan, business agent for the union that represented most of the local plant’s laid-off workers, said the Flowers bid offers a glimmer of hope that the Columbus plant may one day produce snacks again.

Although Flowers is known primarily as a bread company, it also makes snack cakes, cream-filled treats, doughnuts and honey buns under the Blue Bird label. Some of those are distributed in Indiana.

Duncan said those products are similar to the assorted Dolly Madison cakes, doughnuts and other snack foods made in Columbus until late last year.

“If you go in a Circle K store, you’ll see Flowers’ Blue Bird snacks, glazed honey buns, sugar buns and dunking cakes,” said Duncan, the business agent for Local 132 of the Bakery Confectionery Tobacco Workers and Grain Millers International Union.

At first, Duncan said he couldn’t figure out why Flowers might want to buy the Columbus plant as part of its $390 million bid for many of Hostess’ assets.

But now Duncan thinks Flowers might use the plant to expand the territory in which it sells Blue Bird products or other snacks under its Philadelphia-based Tastykake label.

It appears that Hostess, the company known for Wonder Bread and Twinkies, is being carved into separate sections for eventual sale to multiple bidders.

In recent developments:

  • Flowers Foods is the first bidder for Wonder Bread and other assets, including the Columbus snacks plant.
  • McKee Foods Corp. of Tennessee, which makes Little Debbie snacks, has said it wants to take over Drake’s brands, such as Ring Dings and Yodels, for $27.5 million.
  • United States Bakery Inc., based in Portland, Ore., offered $28.9 million Monday to buy Sweetheart, Eddy’s and a few other bread brands from Hostess.

And Tuesday, news reports surfaced suggesting that two bidders led by the hedge fund owner of Pabst Brewing Co., may want to buy the famous Twinkies brand and some other Hostess assets.

C. Dean Metropoulos & Co., the private equity firm that owns the popular Pabst beer label, is one of the likely stalking horse bidders for Hostess cake brands such as Twinkies, Ho Hos, Ding Dongs and CupCakes, according to news reports quoted by the Associated Press.

Metropoulos would be joined by Apollo Global Management, a private equity firm that owns major companies such as Carl’s Jr.

parent CKE.

The stalking-horse bidder sets the auction standard for other prospective buyers. Hostess’ cake brands, with their long history and cult appeal, are seen as the crown jewel in the company’s

portfolio.

Hostess filed a Chapter 11 bankruptcy petition in January 2012, saying at the time it hoped to get concessions from its union employees and keep operating. But by November the Bakery, Confectionery, Tobacco Workers and Grain Millers International union went on strike instead.

That led Hostess to shut its doors, say it couldn’t survive as a going concern and seek bankruptcy court approval to sell all its brands and real estate.

In Columbus, whoever ends up buying the National Road manufacturing plant could use it as a bakery or as a depot or perhaps sell it to someone else, Duncan has said.

The Columbus bakery, which was founded by Sap Essex in 1948, moved to its current location in 1960 and in 1972 merged with Beatrice Foods. Interstate Brands purchased the company in 1979 and changed the name from Sap’s Donuts to Dolly Madison. Interstate Brands, renamed Interstate Bakeries and then Hostess, filed for bankruptcy in 2004, emerged in 2010, and was bankrupt again last year.

When Hostess imposed, through a judge, a new contract on the employees late last year, the Bakery, Confectionery, Tobacco Workers and Grain Millers International union, including Local 132 that represented the workers in Columbus, began to strike.

On Nov. 16, the company said all operations had been stopped.

The parcel of real estate where the plant sits on National Road is zoned industrial, and it was appraised each of the past three years for

$2.4 million for land and buildings, according to county property records.

Even if the local Dolly Madison plant reopened as a bakery, a new owner would have no obligation to rehire former employees or to honor previous job contracts.

The Associated Press contributed to this story.

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