Pabst is considering buying the Hostess brands:
“We have analyzed this opportunity very carefully for a few years now,” Metropoulos said in an e-mail. “Shedding the complications of the unions and old plants makes it even more attractive.”
The 82-year-old company also makes Hostess CupCakes, Ding Dongs and Ho Hos. The private equity firm is “fully prepared to participate in any process involving selling the brands,” Daren Metropoulos said.
Hostess said today it will fire more than 18,000 workers and liquidate after a nationwide strike by bakery workers crippled operations. The company struggled after changes in American diets led to years of declining sales while ingredient costs and labor expenses climbed.
Think Bain Capital on this.
The WSWS has commentary on this matter:
In a statement posted on its website the BCTGM said, “Our members are on strike because they have had enough. They are not willing to take Draconian wage and benefit cuts on top of the significant concessions they made in 2004 and give up their pensions so that the Wall Street vulture capitalists in control of the company can walk away with millions of dollars.”
However, the BCTGM has advanced no strategy to defend workers’ jobs. Its calculation in calling the strike appears to have been to force Hostess into liquidation in the hopes that a new owner would recognize the union.
The majority stakeholder in Hostess is the private equity firm Ripplewood Holdings. The head of Ripplewood, Tim Collins, is a financier with connections to the Democratic Party. The firm acquired Hostess after it came out of bankruptcy in 2009, in the process imposing massive concessions on the unions.
Hostess’ major lenders are the hedge funds Silver Point Capital and Monarch Alternative Capital. Known as “vulture funds,” they buy the debt of distressed companies at a steep discount in order to squeeze out profits by slashing jobs, pay and benefits. As the senior secured debt holders of Hostess, Silver Point and Monarch stand to lose little, and could even profit, from the liquidation of the company, especially if a buyer can be found for most of Hostess’ assets.
Vulture capitalism.
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