After 'no' vote, Hurt lashes out at Hostess c.e.o.
Sept. 17, 2012
by Eric Schroeder
KENSINGTON, MD. — Members of the Bakery, Confectionary, Tobacco and Grain Millers International Union (B.C.T.G.M.) employed by Irvine, Texas-based Hostess Brands, Inc. rejected the company’s latest proposal by 92%. In many locations, the vote to reject the proposal was unanimous, the B.C.T.G.M. said.
“Throughout this entire bankruptcy process, I have been crystal clear with Hostess management that our members will determine the outcome,” said Frank Hurt, president of the B.C.T.G.M. International Union. “On Aug. 14, the company presented to us their last, best, final and non-negotiable offer, which we sent to our local unions. The results speak for themselves.”
Gregory Rayburn, chief executive officer of Hostess, earlier said the B.C.T.G.M. International Union rejected the offer because it was “incorrectly informed” that “a white knight would step in to buy the company and save their jobs, or that Hostess would return with a better offer.”
But Mr. Hurt dismissed Mr. Rayburn’s comments, saying the union did not reject the proposal because of “bad information” but rather “because it was an outrageously unfair proposal from a company that has destroyed the trust of its workers through years of mismanagement, greed and unfulfilled promises.”
“For Mr. Rayburn to state otherwise is an insult to our members’ intelligence and the integrity of the B.C.T.G.M. International Union,” Mr. Hurt said. “It is particularly offensive given that Mr. Rayburn (a ‘liquidation specialist’) has been with the company for less than a year while many, many of our members have given decades of dedicated service to Hostess Brands and its predecessor companies.
“Our members have seen this company squander more than $50 million that it was contractually obligated to put towards our members' pension. They have seen the company fail to invest in product development and new plant and equipment as was promised when the company emerged from its previous bankruptcy and for which our members made significant concessions.
“Our members have seen this company attempt to give millions of dollars in unseemly and unjustified bonuses to managers and supervisors in the midst of this bankruptcy. They have seen this company go through numerous c.e.o.s in the last seven years with not one of them having had any significant experience in the wholesale bread and cake baking business.
“Our members reviewed the analysis of this company’s business plan provided by a highly-respected financial analyst retained by the company which showed that the plan has little or no chance of succeeding in saving the business but would provide the investors with a windfall.
“Our members know that this is a company that is controlled by Wall Street private equity and hedge fund firms, whose sole objective is to maximize their own returns, not rebuild a company for the long haul.”
The International Brotherhood of Teamsters on Sept. 14 said its members narrowly approved contract modifications that Hostess management and lenders required as a condition to bring the company out of bankruptcy again. More than 4,400 Teamsters voted in a national mail ballot referendum, with 2,357 voting to approve and 2,043 voting to reject. Ballots were mailed out on Aug. 25.
Following the decisions by the company’s unions, Mr. Rayburn said Hostess now intends to file a motion under Section 1113 and 1114 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court in White Plains, N.Y., to impose the same changes ratified by the Teamsters on employees represented by the B.C.T.G.M. who voted to reject them. If granted, the relief, along with similar relief requested of the company’s other, smaller unions, would enable the company and its employees to avoid liquidation and successfully emerge from Chapter 11. Hostess already has made its final offer to the B.C.T.G.M.
The company plans to seek approval of its 1113 motion at a hearing on Oct. 3.