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November 16, 2012

Hostess to close, cites nationwide worker strike

— Hostess, the maker of Twinkies and Wonder Bread, plans to go out of business, lay off its 18,500 workers and sell its snack cake and bread brands.

The Irving, Texas, company said a nationwide strike crippled its ability to make and deliver its products, which also include Ding Dongs, Ho Ho’s and Home Pride bread.

Hostess suspended bakery operations at all its factories and said its stores will remain open for several days to sell already-baked products.

The company had warned employees that it would file a motion in U.S. Bankruptcy Court to unwind its business and sell assets if plant operations didn’t return to normal levels by Thursday evening. The privately held company filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade.

“Many people have worked incredibly long and hard to keep this from happening, but now Hostess Brands has no other alternative than to begin the process of winding down and preparing for the sale of our iconic brands,” CEO Gregory F. Rayburn said in a letter to employees posted on the company website.

He added that all employees will eventually lose their jobs, “some sooner than others.”

“Unfortunately, because we are in bankruptcy, there are severe limits on the assistance the (company) can offer you at this time,” Rayburn wrote.

Thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike last week after rejecting in September a contract offer that cut wages and benefits. Hostess said Friday the company is unprofitable “under its current cost structure, much of which is determined by union wages and pension costs.”

A union representative did not immediately return a call from The Associated Press seeking comment on the company’s announcement.

Hostess has said that production at about a dozen of the company’s 33 plants has been seriously affected by the strike. Three plants were closed earlier this week.

Hostess had already reached a contract agreement with its largest union, the International Brotherhood of Teamsters.

The company, founded in 1930, was fighting battles beyond labor costs. Competition is increasing in the snack space and Americans are increasingly conscious about healthy eating. Hostess also makes Dolly Madison, Drake’s and Nature’s Pride snacks.

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