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Hostess closing will put hundreds in N.J. out of work

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(Hostess Brands Inc.)
(Hostess Brands Inc.)

Citing an unprofitable cost structure and a lack of finances to survive an extended nationwide strike, Hostess Brands Inc. today announced it will go out of business and permanently close its plants, lay off most of its 18,500 workers and attempt to sell its assets — which include a bakery and distribution center, and possibly a number of bakery outlet stores in New Jersey.

The maker of Twinkies, Ho Hos and Wonder Bread permanently closed three of its 36 plants Nov. 12 as a result of the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union's national strike, which began Nov. 9, after the bakers union rejected changes to its collective bargaining agreements imposed by a bankruptcy judge.

Hostess said Wednesday it would be forced to liquidate if a sufficient number of workers did not return to work by 5 p.m. Thursday. The Irvine, Texas-based company determined last night it would be unable to restore normal operations, so it filed a motion with the U.S. Bankruptcy Court seeking permission to dissolve its business and sell its baked goods brands and facilities.

"We deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike," Hostess CEO Gregory F. Rayburn said in a statement.

Rayburn said the company has already started discharging most of its 18,500 workers and seeking bidders for its 33 bakeries, 565 distribution centers and 570 bakery outlet stores throughout the United States. That effort includes shuttering a facility in Wayne that employs 550 bakers, drivers and support staff members, a spokesman for Hostess said. The spokesman said the company is also closing down a bakery in Philadelphia with 347 employees — many of whom reside just across the Delaware River in New Jersey.

The spokesman did not immediately know how many bakery outlet stores Hostess operated in New Jersey prior to today's announcement, but before the company's website was shut down this morning, it listed an outlet location in Trenton.

The company said it will allow all of its retail stores to remain open for several days to sell the Hostess products on their shelves, though its bakery operations have been permanently suspended.

Hostess's debtor-in-possession lenders have given it access to the $75 million financing facility that was put in place at the start of its bankruptcy cases to fund its closure and sale, though the spokesman said it is not yet known what portion of that funding will be funneled to shuttering the company's New Jersey operations.

Write to the Editorial Department at editorial@njbiz.com

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