Hostess Brands,a maker of breads and sweet goods in the US,has filed a plan for reorganization under US bankruptcy law,in order to pay creditors and emerge from Chapter 11 protection.
The plan would give a majority of the stake to a consortium of its existing lenders.It may give existing equity holders no return on their investment.
According to court papers,the largest equity owners,after funding$150m in equity and debt investments into the debtors since 2009,including$40m invested in 2011,will experience a complete loss and receive nothing on account of these investments.In addition,unsecured creditors with claims of$2bn to$2.5bn will not receive any recovery.
The new plan,which will enable the company to lower its debt,is subject to further modifications and approval by the court.
Hostess Brands chairman and chief executive officer Gregory F Rayburn said that demand for Hostess products has been very resilient,giving the company a solid base to work from.
"With a competitive cost structure and fresh capital at our disposal,we can begin to make the kinds of investments in our business that is essential to our future success,"Rayburn added.
Hostess filed for bankruptcy in January 2012,over high labor costs.Last week,it won court approval to force labor concessions.The new labor terms are expected to save the company more than$171m annually.
Hostess Brands operates 36 bakeries,565 distribution centers,approximately 5,500 delivery routes and 570 bakery outlet stores throughout the US.Its brands include Hostess,Wonder,Nature's Pride,Dolly Madison,Drake's,Butternut,Home Pride and Merita.
