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The Hostess Liquidation: A Curious Cast Of Characters As The Twinkie Tumbles

Tyler Durden's picture




 

Perhaps one of the most interesting aspects of the just announced Hostess liquidation, one that will be largely debated and discussed in the media, or maybe not at all, is the curious cast of characters and the peculiar history of this particular bankruptcy. Some may not be aware that the company's Chapter 11 (or colloquially known as 22) bankruptcy filing this January, which today became a Chapter 7 liquidation, was the second one in the company's recent history, with Hostess, previously Interstate Bakeries, emerging from its previous protracted multi-year bankruptcy in 2009. What is curious is that its emergence had all the drama of a anti-Mitt Romney PAC funded thriller, with a PE firm, in this case Ripplewood holdings, injecting $130 million in order to obtain equity control of Hostess as it was emerging last time. There were also more hedge funds, investment banks, strategic buyers, politicians involved in this particular story than one can shake a deep fried numismatic value Twinkie at. More importantly, however, as America has been habituated following the last season of the reality TV show known as the presidential election, if Private Equity then "bad." Only this time there is a twist: because it wasn't really PE that was the pure evil in the Obama long-term campaign, it was associating PE with Republicans, and thus: with jobs outsourcing. And here comes the Hostess twist: because Tim Collins of Ripplewood, was a prominent Democrat, a position which allowed him to get involved in the first bankruptcy process in the first place, due to his proximity with the Teamsters' long-term heartthrob Dick Gephardt (whose consulting group just happens to also be an equity owner of Hostess). In other words, the traditional republican-cum-PE scapegoating strategy here will be a tough one to pull off since the narrative collapses when considering that it was a Democrat who rescued the firm, only to see it implode in a trainwreck that has resulted in the liquidation of a legendary brand, and 18,500 layoffs.

But it only gets better. Because the full cast of characters involved here is quite stunning, as David Kaplan summarized so well recently:

Ripplewood is run by Tim Collins, 55, who's been at the center of other famed PE transactions. Known as a brilliant capitalist-philanthropist-networker, he's an eclectic character: a Democrat in an industry of Republicans; an Adirondack enthusiast dreaded by pheasant and fish; a board member at the Yale divinity and business schools; and someone who took a year at 31 to work at a refugee camp in the Sudan. Ripplewood orchestrated the $1.1 billion turnaround in 2000 of the Long-Term Credit Bank of Japan, which marked the first time that foreign interests controlled a Japanese bank. (Collins made the cover of Fortune Asia for it.) The bank was renamed Shinsei, and in 2004 it had a lucrative initial public stock offering. Far less fortunately, in 2007 Ripplewood acquired Reader's Digest -- and saw its $275 million investment vanish in Reader's Digest's bankruptcy filing in 2009. (Collins reportedly had visions of merging Reader's Digest with the magazine division of Time Warner (TWX), which owns Fortune.)

 

Ripplewood's foray into Hostess was partly enabled by Collins's connections in the Democratic Party. He wanted to explore deals with union-involved companies and sought the help of former congressman Gephardt, who in 2005 founded the Gephardt Group, an Atlanta consulting firm that provides "labor advisory services." In his 2004 presidential bid, Gephardt -- whose father was a Teamsters milk truck driver -- was endorsed by 21 of the largest U.S. labor unions; in 2003, Collins was one of 19 "founding members" of Gephardt's New York State leadership committee. (Today, Ripplewood and Hostess are listed online as major clients of Gephardt's consulting group, which is also an equity owner of Hostess.) Back when Hostess was coming out of the first bankruptcy, Gephardt's credibility with both Ripplewood and the Teamsters gave them each a little more room to break bread.

 

During this first bankruptcy, Hostess was almost sold. In 2007 it warded off a $580 million bid from its biggest competitor, Bimbo Bakeries USA. Bimbo Bakeries USA is part of Grupo Bimbo, the Mexican baking giant that owns such brands as Sara Lee, Entenmann's, Freihofer's, Arnold, Boboli, Ball Park Buns, and Thomas' English Muffins. Joining Bimbo in the bid were the union-friendly investment arm of supermarket titan Ron Burkle and the Teamsters themselves.

 

Hostess was able to exit bankruptcy in 2009 for three reasons. The first was Ripplewood's equity infusion of $130 million in return for control of the company (it currently owns about two-thirds of the equity). The second reason: substantial concessions by the two big unions. Annual labor cost savings to the company were about $110 million; thousands of union members lost their jobs. The third reason: Lenders agreed to stay in the game rather than drive Hostess into liquidation and take whatever pieces were left. The key lenders were Silver Point and Monarch. Both are hedge funds that specialize in investing in distressed companies -- whether you call them saviors or vultures depends on whether you're getting fed or getting eaten.

 

Based in Greenwich, Conn., Silver Point was founded in 2002 and has approximately $6.5 billion under management; its two co-founders are 49-year-old Edward Mulé and 47-year-old Robert O'Shea, both former Goldman Sachs (GS) partners. Silver Point helped bail out Krispy Kreme Doughnuts, Delphi, CIT Group, and various TV stations. Monarch, based in Manhattan, was created in 2008 as a spinoff from the Quadrangle Group. It reportedly has more than $3 billion under management; among its three co-founders are 52-year-old Michael Weinstock and 48-yearold Andrew Herenstein, both formerly of Lazard. Monarch has invested in Eddie Bauer and the Texas Rangers. (In 2010, after Herenstein sent a letter to baseball teams warning them not to approve a sale of the Rangers "at a price below fair market value," the letter became public, and the Dallas Morning News ran this ominous blog headline: MONARCH ALTERNATIVE CAPITAL THREATENS BASEBALL.)

 

Silver Point and Monarch, along with about 20 other lenders, owned about $450 million of Hostess secured debt at the time of the bankruptcy filing in 2004, according to court records. Remarkably, though -- given that Hostess's financials are now supposed to be an open book in federal bankruptcy court -- it's unclear how much the lenders actually paid for those notes. But it's presumably less than face value. Opportunistic investors like Silver Point and Monarch commonly buy distressed debt at a considerable discount. Their strategy: Invest in fundamentally "good" companies that have "bad" capital structures brought about by overborrowing, bankruptcy, or other corporate stresses.

 

Neither the specific amount put up by each investor nor the percentage of the total debt is public record (In re Hostess Brands, Case No. 12-22052). So it's impossible to know for sure how much "skin in the game" the creditors have. But according to sources with knowledge of Hostess's debt structure, Silver Point owns about 30% of the debt; Monarch, also about 30%; and the other lenders combined own the remaining 40%. Clearly, it was Silver Point and Monarch, along with Ripplewood, that had the biggest bets going forward.

Confused yet? Here it is summarized in a schematic:

The rest of the story is your typical post-emergency NewCo gone horribly wrong with a prominent role for the Snafu here reserved to Hostess restructuring banker Miller Buckfire for not cutting enough of the firm's pre-petition debt, with the straw that broke the camel's back being, what else, unfunded pension liabilities. As was explained back in July:

The critical issue in the bankruptcy is legacy pensions. Hostess has roughly $2 billion in unfunded pension liabilities to its various unions' workers -- the Teamsters but also the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (which has largely chosen not to contest what Hostess wants to do -- that is, to get out of much of that obligation). If the bankruptcy court lets Hostess off the pension hook -- which often happens in these cases -- it only moves the struggle outside the courthouse, and the ante goes up. For the Teamsters can then call a strike -- which its Hostess employees have already ratified by a 9-to-1 margin. If the court doesn't grant relief, Hostess can seek liquidation, which would mean that some creditors get some money, but equity would be gone for good, as would a lot of jobs. Either way, each side holds a nuclear warhead with which to annihilate the company.

Liquidation is what ended up happening, as no compromise was possible, and the magic money tree, primarily as a result of equityholders (and creditors) refusing to inject any more cash.

Yet while the balance sheet burden was certainly the pension liabilities, what precipitated the liquidation was the income statement, and more accurately, the cash flow statement, or specifically the lack of cash flow.

 

as the company tried to reinvent itself in 2009 and 2010, external currents were running against it. The Great Recession hurt many consumer brands generally, and the prices of the commodities that Hostess relied on -- corn, sugar, flour -- went up, which is the opposite of what's supposed to happen in a downturn. In addition, the bakery industry underwent more consolidation when Sara Lee sold out to Bimbo.

 

Those fortuities aggravated Hostess's two root problems -- a highly leveraged capital structure that had little margin of safety, and high labor costs. Neither problem was adequately addressed in the first bankruptcy, and neither existed to the same degree in major competitors like Bimbo and Flowers Food (owner of such brands as Nature's Own and Tastykake). On exiting the first bankruptcy, Hostess's total debt load was nearly $670 million. That was well above what it went into bankruptcy with in the first place -- an unusual circumstance that the company justified on expectations of "growing" into its capital structure.

 

But the company was dead wrong. Its debt sowed the very seeds of the next bankruptcy. Looking back on the decision to reinvest in Hostess in the first bankruptcy, one of the lenders now says, "If you look in the dictionary at the definition of throwing good money after bad, there should be a picture of Hostess beside it."

 

By late 2011, Hostess was getting, well, creamed. Its sales last year -- $2.5 billion -- were down about 11% from 2008 and down 28% from 2004. (Twinkies remain the best individual seller -- 323 million of them in the 52-week period ending June 29, give or take a splurt.) Overall, Hostess lost $341 million in fiscal 2011, 2½ times the loss of the prior year -- and by early 2012, primarily because of burgeoning interest obligations, its debt had grown to about $860 million.

 

As revenue declined, the company continued to burn cash -- in the second half of 2011, the rate was $2 million a week. The liquidity crunch forced Ripplewood in the early spring of 2011 to pump in $40 million more in return for more equity as well as debt that was subordinate to that held by Silver Point and Monarch. In August -- to save a company teetering on the edge of fiscal calamity and forced liquidation -- Silver Point, Monarch, and the group of other lenders put up an additional $30 million to see if a negotiated turnaround was possible.

 

They turned to the unions and demanded new concessions. But the unions, having three years earlier given up thousands of jobs and millions in benefits, flatly refused.

 

The company was going to pieces -- again -- and Hostess filed for Chapter 11 protection -- again -- in January of this year. This time, though, the moneymen were no longer on the same page. As the majority equity holder, Ripplewood badly wanted to keep Hostess out of bankruptcy. It pleaded with the lenders to show flexibility, but they were not so inclined. They lenders held superior fiscal hands and had less downside if Hostess failed. In the event of a bankruptcy, given all the assets Hostess owned, the lenders would still walk away with millions.

There is much more to this story, but the ending is well-known to all, and it is not a happy one.

End result: a near total loss for everyone involved, except the secured creditors of course, who will now get pennies on the dollar, or perhaps even par, for their claims when all is said and done.

Sadly, in many ways Hostess is now indicative of that just as insolvent larger corporation, the USA, whose insurmountable balance sheet liabilities will be the eventual catalyst for its collapse, but only once the Income Statement and the Cash Flow sheet join in. For now, the Fed provides the flow needed to avoid the day of reckoning, but everything ends eventually.

In the meantime, what the Hostess story will hopefully teach the always gullible public, is that nothing is ever black or white, and there are numerous shades of gray in every story: even one in which an "evil" PE firm is unable to come to resolution with labor unions, despite the man in charge of it all being a prominent democrat. Because when it comes to money other things such alliances, ideology and certainly politics are always, always, secondary. Sadly, ever more Americans will be forced to learn this lesson the hard way.

 

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Fri, 11/16/2012 - 11:20 | 2987748 Dre4dwolf
Dre4dwolf's picture

Union bosses get rich, Union workers lose their jobs, and America losses the Twinkie, great way to start a Friday morning America, really makes me proud to be an American lol

 

Fri, 11/16/2012 - 11:23 | 2987749 markmotive
Fri, 11/16/2012 - 11:25 | 2987774 Dre4dwolf
Dre4dwolf's picture

I bet Obama is itching to be known in the history books as "the president that saved the twinkie", with his genius Twinkie bailout of 2012.

 

Fri, 11/16/2012 - 11:32 | 2987804 nope-1004
nope-1004's picture

Something tells me that there is a backroom deal to transfer the assets of Hostess to another company, fire up the machines, and try again - this time without the union and this time with terms more suitable for the suits.

Both are greedy.  But the only ones truly in control are the owners, not the unions, and that is what has always perplexed me about the union mantra.  In a matter of minutes they can be wiped out, as we see here.

 

Fri, 11/16/2012 - 11:35 | 2987815 GetZeeGold
GetZeeGold's picture

 

 

What....no bailout?

Fri, 11/16/2012 - 11:37 | 2987825 Manthong
Manthong's picture

This is a travesty.

Twinkies are a systemically important health food and essential for the vitality of Chicago.

http://www.bookofjoe.com/2005/04/what_you_look_l.html

Fri, 11/16/2012 - 11:57 | 2987925 Troll Magnet
Troll Magnet's picture

i'm genuinely saddened by this.

LONG LIVE TWINKIES, BITCHEZ!!!!

Fri, 11/16/2012 - 12:20 | 2988086 gmrpeabody
gmrpeabody's picture

Another "GM" deal is in the works....

 

 

Fri, 11/16/2012 - 12:49 | 2988258 LMAOLORI
LMAOLORI's picture

 

 

I wouldn't doubt that I bet taxpayers will have to end up paying for their unfunded pensions either way

 

The Pension Benefit Guaranty Corporation: Who Will Guarantee This Guarantor?

http://www.american.com/archive/2012/june/the-pension-benefit-guaranty-corporation-who-will-guarantee-this-guarantor

 

Fri, 11/16/2012 - 12:07 | 2987984 Atlas_shrugging
Atlas_shrugging's picture

I'm sure the President will work to get the parties around the table "to have a beer" and discuss this...before its over.

Fri, 11/16/2012 - 11:39 | 2987839 redpill
redpill's picture

And of course the union bosses see this as necessary loss.  They would rather watch these folks languish in unemployment than let word get out that they compromised.

Next time you are talking to some douchebag with a "live better, work union" sticker on his car, you may want to mention that.

Fri, 11/16/2012 - 11:41 | 2987848 krispkritter
krispkritter's picture

Michelle wants sole ownership of the phrase 'Hostess with the Mostest' and frowns on saving any company making any foods with over 80 calories. I expect if they do revive it they'll make 'O, O's' and 'Bling Bongs' in honor of the Head Choomster. 

Fri, 11/16/2012 - 11:54 | 2987912 redpill
redpill's picture

You have brought up an important point.  What in the world are the next generation of Obama's Choom Youth supposed to snack on once they have achieved 'total absorption' ??

Fri, 11/16/2012 - 11:59 | 2987943 Troll Magnet
Troll Magnet's picture

michelle looks like she'd enjoy some twinkies with her big fat ass..

Fri, 11/16/2012 - 11:36 | 2987823 idea_hamster
idea_hamster's picture

Prediction:  The "Twinkie" name turns out to be the most valuable piece of the company when it gets bought at auction by a gay porn website.

Fri, 11/16/2012 - 12:01 | 2987950 hoos bin pharteen
hoos bin pharteen's picture

Don't forget Snowballs!

 

http://www.youtube.com/watch?v=MeS6DvyLScE

 

Fri, 11/16/2012 - 12:20 | 2988092 Coldsun
Coldsun's picture

Snowballs! I HATE Snowballs. Not the taste, the consistency...

Fri, 11/16/2012 - 13:50 | 2988606 Papasmurf
Papasmurf's picture

" Snowballs! I HATE Snowballs. Not the taste, the consistency..."

 

I can understand why. . .   http://en.wikipedia.org/wiki/Snowballing

Fri, 11/16/2012 - 11:37 | 2987829 Central Bankster
Central Bankster's picture

Haha where are Bobnoxy and Gully Foyle now? No doubt they will be defending this bankruptcy now that they know it's guys from their team. 

Fri, 11/16/2012 - 11:44 | 2987862 Gully Foyle
Gully Foyle's picture

nope-1004

I worked as a temp at a CUMMINS plant in the late 80's.

All the regulars were scared of the temps.

There was a rumor CUMMINS closed a plant in one of the Carolinas and next day opened it with temps.

Free ride would have been over for quite a few people.

(Biden 2016 Workin it)

Fri, 11/16/2012 - 12:24 | 2988118 Whoa Dammit
Whoa Dammit's picture

"Something tells me that there is a backroom deal to transfer the assets of Hostess to another company, fire up the machines, and try again "

Given the Silver Point connection,  I am betting on Kripsy Kreme taking over all or part of Hostess. Also in the past 2 weeks I have seen Krispy Kreme route trucks (never seen them have route trucks before) going to the convenience stores in the Atlanta area.

Fri, 11/16/2012 - 21:41 | 2990437 bilejones
bilejones's picture

The whole Industrial Baking industry is operating far below capacity.

If a buyer for the brands can be found, they'd merely have to use their excess.

Fri, 11/16/2012 - 11:51 | 2987899 gamera9
gamera9's picture

Better Yet Backdoor method, Snap cards are good for Hostess products only. 47 million strong and growing

Fri, 11/16/2012 - 16:59 | 2989592 Grinder74
Grinder74's picture

Osama is dead!

Twinkie is alive!

 

/BUCK FARACK/

Fri, 11/16/2012 - 14:11 | 2988708 Rathmullan
Rathmullan's picture

Well, what do you expect with there being rumors of a twinkie currency standard.

Fri, 11/16/2012 - 11:24 | 2987760 Stoploss
Stoploss's picture

So, it looks like we are going to hit 500K in initial claims before Jan 1.

Fri, 11/16/2012 - 11:29 | 2987791 brewing
brewing's picture

this is just a start.  more to come, including state and local governments that can't pay for the bloated pension plans they've over promised...

Fri, 11/16/2012 - 12:48 | 2988271 dirtbagger
dirtbagger's picture

Right on this, be it local, state, federal, or private pensions, everyone is gaming the system trying to recieve benefits far exceeding contributions.   From what the CEO said on MSNBC, the blame for the Hostess downfall can be spread pretty evenly between management and workers, not so much blame to the investors.

Fri, 11/16/2012 - 11:33 | 2987799 exi1ed0ne
exi1ed0ne's picture

Bah, there are more then enough temporary and casual staff being added for the holidays to make up for it.  If that isn't enough they can just use the magical BLS sliderule and add a brazillian* jobs.

Brazillion - WAY more fun then a bazillion.

Fri, 11/16/2012 - 11:47 | 2987875 Gully Foyle
Gully Foyle's picture

exi1ed0ne

I thought the "Brazillian " jobs were hairless.

Now you say there would be way more hair?

Wouldn't that be a seventies Merkin?

(Biden 2016 Who funk da funk)

Fri, 11/16/2012 - 11:26 | 2987768 spastic_colon
spastic_colon's picture

all part of the soros et. Al. planned obsolescence of America

Fri, 11/16/2012 - 11:40 | 2987843 SeattleBruce
SeattleBruce's picture

And enter stage left - the new world order...

Fri, 11/16/2012 - 11:49 | 2987887 Gully Foyle
Gully Foyle's picture

spastic_colon

Dude, think reset.

Now take a good look at the Soviet Union.

That's where we will be in thrity odd years.

(Biden 2016 The Diamond dogs are poachers and they hide behind trees)

Fri, 11/16/2012 - 11:26 | 2987777 jdelano
jdelano's picture

Inconceivable.  Democrats poisoned by their own iocane powder.  

Fri, 11/16/2012 - 11:33 | 2987805 natty light
natty light's picture

Those brands' licenses will just be aquired by another food company.

Fri, 11/16/2012 - 12:25 | 2988122 gmrpeabody
gmrpeabody's picture

Nestle's will take them...

Fri, 11/16/2012 - 11:33 | 2987808 jdelano
jdelano's picture

Bernanke floods the world with dollars to target unemployment.  Corn goes through the roof.  Hostess implodes, 18,500 layoffs.

 

Fucking brilliant.  

Fri, 11/16/2012 - 11:48 | 2987879 Thulsa Doom
Thulsa Doom's picture

1.21Gigawatts at 88mph, bitchez!

Fri, 11/16/2012 - 12:17 | 2988008 ebworthen
ebworthen's picture

The Washington/Wall Street version needs 2.42 Jizzawatts at 176 mph.

The Jizz is our savings, IRA's, 401K's, Pensions, any other assets.

No brakes, and the DeLorean only goes to the Janitor's closet in Biff's casino.

Fri, 11/16/2012 - 11:49 | 2987882 Central Bankster
Central Bankster's picture

Unintended consequences of central planning on display. 

Fri, 11/16/2012 - 11:48 | 2987883 Central Bankster
Central Bankster's picture

Unintended consequences of central planning on display. 

Fri, 11/16/2012 - 11:46 | 2987870 repete
repete's picture

So we need unions, vulture capatilists and hedge funds to make little fucking cakes?  My grandma used to make little fucking cakes before she went to church,

Fri, 11/16/2012 - 12:26 | 2988128 gmrpeabody
gmrpeabody's picture

CLASSIC....

Fri, 11/16/2012 - 12:28 | 2988146 Satan
Satan's picture

" Grandma's Little Fucking Cakes "

Surely a marketing opportunity right there...

Fri, 11/16/2012 - 15:01 | 2988989 graneros
graneros's picture

In today's society your right.  They'd probably sell like hotca... er "Grandma's Little Fucking Cakes."

Fri, 11/16/2012 - 19:16 | 2989977 Kali
Kali's picture

No shit!  How fucking pathetic, we can't manage to bake cakes in this country without totally fucking it up. Way to go USA.

Fri, 11/16/2012 - 12:04 | 2987964 Bangin7GramRocks
Bangin7GramRocks's picture

The moral of the story is accept your 34% wage/benefit cut, be happy and prepare to accept another 34% cut next year. If you can't produce your poison "snacks" without paying poverty wages, then maybe it is time to go. I personally won't miss that shit "food".

Fri, 11/16/2012 - 12:18 | 2988072 Joe Davola
Joe Davola's picture

I'm thinking the moral is more along the lines of:  if you want an unlimited benefit in the future, you're gonna have to give up a lot today.

Never had twinkies.  Mom's home baked goods were much better, luv ya mom!

Fri, 11/16/2012 - 12:28 | 2988140 overmedicatedun...
overmedicatedundersexed's picture

waiting for obuma to come to the rescue?  you leftist union thugs ..hold your breath and die.

Fri, 11/16/2012 - 12:23 | 2988015 augustus caesar
augustus caesar's picture

Some perspective may be had on what is involved by imagining an application of the techniques of the labor union in some other field. If A is bargaining with B over the sale of his house, and if A were given the privileges of a modern labor union, he would be able to (1) to conspire with all other owners of houses not to make any alternative offers to B, using violence or the threat of violence if necessary to prevent them, (2) to deprive B himself of access to any alternative offers, (3) to surround the house of B and cut off all deliveries of food (except by parcel post), (4) to stop all movement from B's house, so that if he were for instance a doctor he could not sell his services and make a living, and (5) to institute a boycott of B's business. All of these privileges, if he were capable of carrying them out, would no doubt strengthen A's position. But they would not be regarded by anyone as a part of 'bargaining' .............. unless A were a labor union.

Fri, 11/16/2012 - 18:25 | 2989882 Ident 7777 economy
Ident 7777 economy's picture

+1 

Fri, 11/16/2012 - 12:44 | 2988240 walküre
walküre's picture

Hostess is a victim of extreme couponing. I kid you not. No manufacturer can survive the double and triple coupon bonanza only to stack some idiot's basement full of junk food and tooth brushes. The manufacturers and grocery giants basically pay to have this stuff leave the shelves. It's a business model that cannot win.

Sat, 11/17/2012 - 03:07 | 2991085 sleepingbeauty
sleepingbeauty's picture

But who makes the coupon??? Oh yeah, the ones that the manufacturer are responsible for say "manufacturer coupon". I guess their accountants can't do math as well as a typical house wife. Can't blame someone else for their incompetence. Actually strike that, they can blame someon else for their incompetence but it doesn't make sense.

Fri, 11/16/2012 - 13:40 | 2988555 sgt_doom
sgt_doom's picture

Ripplewood.....oh, puuuuhlease already!!!!

They are long donors and members of "American Friends of Bilderberg, Inc." -- the American chapter of the Bilderbergers.

Faux crat or R-con --- they all belong to the Bankster Party.

What's in a name?  Not their net worth, that's for damn sure!


Fact Checking

In Michelle Alexander’s wonderful writing and talks (link below) she recounts a moment of skepticism when a young man, whom she believed to be “legitimate,” explains how he was framed by a crooked LA cop.  Later, she would read the news stories of how that specific LA policeman was convicted of framing suspects, or random arrested individuals, thus damning those innocent individuals forever.

Fact checking is a never ending process; we learn that something, once presented as fact, turns out to be fiction and then, upon further historical examination, much of the surrounding circumstances were also fictionalized.

The first superficial stories the corporate media presented on CIA Director Petraeus sound somewhat different after more and more data surfaces.

Jill Kelley’s sizable debt, and her sister’s custody battles, makes them both highly vulnerable to external pressure.

Add to that the flakey-sounding FBI agent, his shirtless (topless) emails to Ms. Kelley, while he ardently pursues an investigation on her behalf.  Then, the suggestion by others that the emails in question to Ms. Kelley weren’t really of a threatening nature to begin with, and Paula Broadwell’s status as a reserve officer in the military, yet another point of vulnerability.

We know the record of FBI flimsiness where evidence is concerned:  from FBI employees, upon retirement (and safely receiving their pensions now), who then blasted the FBI’s handling of DNA evidence in the FBI labs --- to the flimsy and highly suspect “evidence” presented as fact to identify a scientist at Ft. Detrick, after his death, as the Anthrax assassin (said evidence attacked and disputed by highly reputable scientists).

We’ve seen that whether under Bush or Obama, the FBI still appears to be illegally running their COINTELPRO operation, a situation which renders everything originating from the FBI highly, highly suspect!

When doing an historical analysis of the backgrounds of those LA police involved with the investigation of the assassination of Bobby Kennedy back in 1968, we find that almost every single copper turns out to be dirty --- some were later implicated and convicted of various crimes  (Rampart Division) --- one was even implicated in torture-murders in South America, while involved in a CIA international police training program.

In fact, turns out the majority of those police involved in RFK’s assassination investigation were on the CIA’s payroll through the aforementioned international police training program!

There was a police chief in Seattle some years back, named Fitzsimons, who established an unethical record, publicly damning victims of homicides by suggesting they were involved with illegal drugs, when it later turned out --- after the standard police investigation --- that they were simply innocent homicide victims.

Fitzsimons would later be appointed to the board of the FBI Academy at Quantico --- a definite continuation line of unethical possibilities.  (Fitzsimons was appointed by the then Seattle Mayor Norm “there are no gangs in Seattle” Rice.)

An excellent research method to better understand the back story, the underlying agenda, is to closely follow the travel records of individuals like Karl Rove and Richard Perle.

The operational fellows usually exhibit interesting travel itineraries; Rove’s trips to Sweden at the beginning of the actions taken to extradite Wikileaks’ Julian Assange to Sweden, Rove’s trip to Crimea prior to problems erupting in Georgia (the one in Eastern Europe), etc.

It can be difficult as they frequently fly on private jets, registered out of the British Virgin Islands, but well worth the effort.

The FBI has incredible power, but little accountability.  The DOJ’s Lanny Breuer and his weasel words to excuse the perfidy of BP does little to instill confidence in the citizenry; it will be interesting to see if Breuer seriously pursues TransOcean and Halliburton for their culpability as well?

[Disclaimer:  I am a neutral observer with regard to Gen. Petraeus, whom I have little regard for and agree with Col. MacGregor’s assessment in the article link below.  Also, I have no regard for Ms. Broadwell, nor anyone else affiliated with the Aspen Institute, another faux outfit of the plutocracy, but I do believe that their adultery is simply the cover story for some deeper, behind-the-scenes machinations occurring.]


http://www.counterpunch.org/2012/11/14/epitaph-for-a-four-star/

http://cryptome.org/2012-info/spy-flog/spy-flog.htm

http://www.amazon.com/New-Jim-Crow-Michelle-Alexander/dp/1595586431

http://www.ehow.com/how_5067866_track-private-plane-flight.html

http://www.thirtythousandfeet.com/track.htm#websites

http://projects.wsj.com/jettracker/

http://www.propublica.org/article/off-the-radar-private-planes-hidden-from-public-view-040810

http://flightaware.com/

http://www.airliners.net/aviation-forums/general_aviation/read.main/1357692/

http://www.aeroseek.com/webtrax/

http://www.stratosjets.com/flight-tracker.php

 

Fri, 11/16/2012 - 14:58 | 2988980 ExpendableOne
ExpendableOne's picture

Read just this one little book and you'll fully understand how the country is "run".

 

http://www.amazon.com/Secret-Team-Allies-Control-United/dp/0939484358

 

 

Fri, 11/16/2012 - 11:21 | 2987752 Ident 7777 economy
Ident 7777 economy's picture

Hmmm ... which way sugar-rush futures?

Fri, 11/16/2012 - 11:21 | 2987753 Shizzmoney
Shizzmoney's picture

Twinkies can survive a nuclear holocaust......but they couldn't survive union fail and Wall Street corporate raiders.

 

Fri, 11/16/2012 - 11:29 | 2987784 Dre4dwolf
Dre4dwolf's picture

I guess they are going to have to revise the Twinkie episode of "How its made" to "How not to make a twinkie", or "How its NOT made" lol

I kinda liked that episode too, my favorite part is the part where all the twinkies are on the 100% automated assembly line and the the fat diabetic workers do nothing but stare at them / make sure none fall off the track.

 

lol

Fri, 11/16/2012 - 13:56 | 2988638 Papasmurf
Papasmurf's picture

Automated assembly, sort of like the I Love Lucy candy factory episode.  http://www.youtube.com/watch?v=HnbNcQlzV-4

Fri, 11/16/2012 - 11:50 | 2987890 Thulsa Doom
Thulsa Doom's picture

Much desired in Zombieland, too!

Fri, 11/16/2012 - 11:23 | 2987758 The Gooch
The Gooch's picture

How did I know Mittens name would grace this article?

Fri, 11/16/2012 - 11:43 | 2987858 Central Bankster
Central Bankster's picture

Why am I not surprised that you had difficulty interpreting the article? 

Fri, 11/16/2012 - 12:01 | 2987952 The Gooch
The Gooch's picture

Is his name not there, asshole? Even if it is just for comparison.

 

Fri, 11/16/2012 - 12:11 | 2988011 Central Bankster
Central Bankster's picture

Oh come on! its just a laugh:) 

Fri, 11/16/2012 - 12:17 | 2988067 The Gooch
The Gooch's picture

Fair enough.

me asshole.

Fri, 11/16/2012 - 11:24 | 2987759 j0nx
j0nx's picture

Executives and the board get rich and the workers accept austerity. No more. Tear all these mofos down.

Fri, 11/16/2012 - 12:00 | 2987949 jdelano
jdelano's picture

Actually no, I doubt anybody will walk away from this richer.  The expected liquidation value was no doubt fudged and overstated in order to prop up the balance sheet... senior debt holders who made an attempt to save the brand will be lucky to recoup their investment, breaking even at best.  And your workers are in a word, fucked, because they were so convinced that they deserved an unending slew of fat checks in retirement (for a life spent mindlessly injecting cream into tiny cakes) that they shot themselves in the crotch and killed the company...   

Fri, 11/16/2012 - 17:40 | 2989736 JimBowie1958
JimBowie1958's picture

Actually no, I doubt anybody will walk away from this richer.

Except for the fucking lawyers you mean.

Sat, 11/17/2012 - 03:10 | 2991090 sleepingbeauty
sleepingbeauty's picture

+10000

Fri, 11/16/2012 - 11:25 | 2987775 the not so migh...
the not so mighty maximiza's picture

You didn't eat that twinkie.

Fri, 11/16/2012 - 12:05 | 2987968 Troll Magnet
Troll Magnet's picture

yes i did. and you better believe i'll be stocking up on that shit this weekend. too much weed, not enough twinkies in my house.

Fri, 11/16/2012 - 12:07 | 2987980 edifice
edifice's picture

Oh, but I did.

Actually, I prefer Nutty Bars.

Fri, 11/16/2012 - 11:27 | 2987779 Dr. Engali
Dr. Engali's picture

Another reaosn for Moochelle and Bloomberg to be excited. Now if we can just get rid of that pesky Hershey's.

Fri, 11/16/2012 - 12:15 | 2988054 DaveyJones
DaveyJones's picture

a little harder when you own a city

Fri, 11/16/2012 - 11:30 | 2987796 lordbyroniv
lordbyroniv's picture

Snowballs, Chocodiles and Suzy Q's

 

At least America was once a great country.  sigh.

Fri, 11/16/2012 - 11:35 | 2987819 Fredo Corleone
Fredo Corleone's picture

I can recall as a kid, always seeming to have a package of either Suzy-Q's or Yankee Doodles in my lunchbox.

Such were the '70s...tragic, how the Hostess story ends.

Fri, 11/16/2012 - 12:43 | 2988233 Miss Expectations
Miss Expectations's picture

Yodels wrapped in silver and blue foil.  I liked to eat frozen Yankee Doodles.

Fri, 11/16/2012 - 13:27 | 2988338 Fredo Corleone
Fredo Corleone's picture

I remember them well -- Miss, you mention frozen Yankee Doodles: growing up, we always had a box of Devil Dogs in the freezer during summertime...

Fri, 11/16/2012 - 11:33 | 2987810 SeattleBruce
SeattleBruce's picture

Wait - the Democrats (Republicans) really aren't the party of the working person?

Fri, 11/16/2012 - 18:06 | 2989826 Ident 7777 economy
Ident 7777 economy's picture

-1 for your being conflicted; make up your damn mind so we can 'score' you correctly.

Fri, 11/16/2012 - 11:33 | 2987811 Freewheelin Franklin
Freewheelin Franklin's picture

Creative destruction, bitchez.

Fri, 11/16/2012 - 11:33 | 2987812 natty light
natty light's picture

Spend a little more and buy local quality baked goods.

Fri, 11/16/2012 - 11:41 | 2987851 adr
adr's picture

BUT THEY DON'T HAVE ALL THAT FANTASTIC SATURATED FAT!!!!

That's like saying don't eat Oreos, just buy the organic ones from Whole Foods.

What are you, a Nazi???

Fri, 11/16/2012 - 11:46 | 2987867 natty light
natty light's picture

Something w/out beef fat or lard

Fri, 11/16/2012 - 11:35 | 2987813 Dre4dwolf
Dre4dwolf's picture

I just had a thought, since twinkies are going extinct, maybe we should all buy a few dozen boxes and store them, who knows in 50 years they could be worth something to someone.

Is James Dewar still around? I wana get his signature on a box and have it authenticated.

Fri, 11/16/2012 - 12:07 | 2987991 Troll Magnet
Troll Magnet's picture

proof twinkies? goddamn i hate paying premiums...

Fri, 11/16/2012 - 11:36 | 2987822 Freewheelin Franklin
Freewheelin Franklin's picture

I'm gonna go buy a case of Butterscotch Krimpets

 

 

 

 

 

 

Fri, 11/16/2012 - 12:10 | 2988006 Clycntct
Clycntct's picture

Pretty sure that's a different  distress/success.

Tasty cake. Flowers Food.

http://www.philly.com/philly/blogs/inq-phillydeals/Georgia-firm-buys-Tas...

 

Fri, 11/16/2012 - 11:37 | 2987826 lynnybee
lynnybee's picture

is this that ol' bankruptcy for profit business model that seems to be all the rage the past many years .. you know, go into a business, gut it, drive it down & dump the pension responsibilities onto the gov't & the new owners make out like bandits leaving the employees with squat & their heads spinning, "what the hell! i ain't got no job & no pension !"    so, what hedge fund stands to profit handsomely ?

Fri, 11/16/2012 - 12:36 | 2988195 jdelano
jdelano's picture

You have no idea what you are talking about.  Destroying a business is never as profitable as growing one.  Even the most debauched hedge funds and private equity firms know this.  Go talk to someone in PE and let them explain/show you what they actually do before you paint them as villains.  I can't speak for all firms but the ones I do business with operate almost diametrically opposite to your characterization.  Their M.O. is to go into an ailing firm and trim the fat---which often means canning the unproductive guys at the top who are flying around in private jets and playing golf in addition to renegotiating unrealistic pensions.  The goal is to make the business healthier, not tear it apart.  You want villany, look to Washinton.   

Fri, 11/16/2012 - 13:00 | 2988332 Miss Expectations
Miss Expectations's picture

My experience puts me in lynnybee's camp.  The money men who came into Revlon (Perelman and MacAndrews Forbes) first order of business was to sell half the company then raid the pension plan.  They did end up sticking around to "make the business healthier" but they didn't.  I think that the thing is, well, that the money men/financial guys don't think like the original business owners (ie Charles Revson).  They don't love the business, their heart isn't in it and all their decisions are financial.  They end up with company that has no heart.

Fri, 11/16/2012 - 13:30 | 2988497 jdelano
jdelano's picture

You probably have a point about some PE firms being incompetent/not successful because they don't understand the heart of the business...that's valid.  But I'd argue that if the business ultimately ends up worse off it's simply because the PE firm failed, not because they accomplished their "evil" plan to ruin the company and exploit its resources, and they won't "get rich" off it.  Take JCP for example...the goal is to reinvent a dying department store...it doesn't appear to be working, but if the business fails Ackman won't be laughing his way to the bank...he'll be disappointed and slinking away poorer with egg on his face.  Really my point here is that all PE/activist investor men/women shouldn't be lumped in with the corruption axis of Washington, the TBTF banks, the Fed, and Union bosses.  A lot of PE folks are pretty decent people looking to be constructive, not destructive:

  Ackman has given to charitable causes such as the Center for Jewish History to preserve Jewish genealogy[16] where he spearheaded a successful effort to retire their $30 million in debt personally contributing $6.8 million.[17] In a press release, the Ackman family stated, "We want our children to know, not only their living relatives, but those representing past generations for a greater connection to their family and ancestral origin and heritage."[18] This donation made with that ofBruce Berkowitz, founder of Fairholme Capital Management, and Joseph Steinberg, president of Leucadia National, were the three largest individual gifts that the center has ever received.[19]

 

Ackman's foundation donated $1.1 million to the Innocence Project in New York City and Centurion Ministries in Princeton, N.J. The two groups are dedicated to investigating the cases of people who have been wrongfully convicted.[17]

[edit] 

 

 

Fri, 11/16/2012 - 14:03 | 2988676 Diogenes
Diogenes's picture

Yeah but gutting a company is quicker and easier. You can loot as much money in 6 months as you can earn in 10 years, then on to the next deal.

An awesome business model as long as there are companies around with equity built up over the last 50 or 100 years that you can take over and asset strip.

Fri, 11/16/2012 - 17:39 | 2989733 Blankenstein
Blankenstein's picture

I remember back in the housing boom times there were articles about leveraged buyouts where the buyer only had to put down a very small percentage to get a loan to buy the company (similar to home buyers at the time). About 15 million down was all you needed to buy a 3 billion dollar company.  The debt was packaged as CDOs and sold off to investors.  (I wonder what happened to those??)  Then the buyer would take huge consulting and managment fees in the process and then sell off the remains of the company after they had restructured and increased the debt of the company.  They were not interested in investing in the company, they wanted to get-rich-quick.  

Sat, 11/17/2012 - 03:14 | 2991095 sleepingbeauty
sleepingbeauty's picture

I guess it depends from whose point of view you are assessing the situation. And how likely the business is ever going to grow again. Sometimes it is more profitable for TPTB to take the business down on their terms with their CDS and their control over the assets. And some businesses no longer have a viable market, and to re-invent themselves may be "too hard".

Fri, 11/16/2012 - 21:09 | 2990334 Common_Cents22
Common_Cents22's picture

where is the evidence and the math that investors pour money into a company and MAKE money by running it out of business???

Fri, 11/16/2012 - 11:37 | 2987831 ultimate warrior
ultimate warrior's picture

Im going to stock up on a shit load of hostess products and sell them in 5 years for gold and silver.

That's my plan for prosperity.

Fri, 11/16/2012 - 11:50 | 2987886 Mr. Poon
Mr. Poon's picture

Well, you can stockpile it all you want, but when trouble comes, you won't be able to eat . . . umm, wait, never mind, yes, you can.  Carry on!

Fri, 11/16/2012 - 11:38 | 2987834 FuzzyDunlop21
FuzzyDunlop21's picture

Could have easily been avoided

Fri, 11/16/2012 - 11:38 | 2987835 TrumpXVI
TrumpXVI's picture

Maybe that History Channel, "Modern Marvels; Snack Foods" program where Hostess is featured will become a collector's item? 

Fri, 11/16/2012 - 11:39 | 2987838 adr
adr's picture

It's too bad this didn't come out before the election. No way Obama would have won with this news. Higher taxes, murdering Americans, pah doesn't even register.

Now Twinkies, that is a national treasure and a disgrace worthy of impeachment.

You may take my freedom, but you will never take my cupcake!!!!!!

Fri, 11/16/2012 - 11:40 | 2987844 karzai_luver
karzai_luver's picture

The debt funding die has been cast many decades ago by those with mush for brains that fund and run these "concerns".

 

Believe it or not ,my little twinkey addled morons, there was and of course still is a way to run  company without loading it with killer debt that can never and was never intended to be serviced long-term , let alone repaid.

It is black and white to those who put down the creme filled fluff that passes for analysis these days.

Sorry suckers , you can eat little debbie for all i care

Fri, 11/16/2012 - 11:46 | 2987865 adr
adr's picture

mmm nutter bars.

Hostess had problems because their products were actually fresh in most cases. Many people don't realize that Hostess owned the shelves in the stores. If the products didn't sell within a certain time period the Hostess delivery men took them out of the store and replaced the Twinkies with new ones. The costs associated with this became enormous along with the retiring bakers expecting full pensions.

Everyone likes to knock on Hostess for producing garbage junk food, but the snacks they make are actually better for you than many of the other pre-packaged crap. Not that a Twinkie is good for you.

Fri, 11/16/2012 - 13:25 | 2988474 Thisson
Thisson's picture

I appreciate your point, but you should also consider that the company that wants to be responsible and avoid debt still has to compete with other companies that are willing to take on debt.  Those competitors are able to offer higher wages/benefits for employees and are able to purchase other advantages with the borrowed money.  So once the debt genie is out of the bottle, it's hard to avoid.

Fri, 11/16/2012 - 11:44 | 2987861 forwardho
forwardho's picture

The systemic problem is more basic than PE vs union. Pensions are not sustainable in todays labor market. That ship has sailed. That which cannot be sustained...

Fri, 11/16/2012 - 11:45 | 2987863 Schmuck Raker
Schmuck Raker's picture

Well, there goes our last chance at peace in the Middle East.

I'm fresh out of ideas now guys...good luck. Godspeed.

Fri, 11/16/2012 - 11:46 | 2987869 paddy0761
paddy0761's picture

Twinkie Twubble.

Fri, 11/16/2012 - 11:46 | 2987871 KCMLO
KCMLO's picture

Reposted from other thread:

I have a good friend nearing retirement age that was one hit by this. I don't know much about the company and how they operated but I did get to see first hand what they did to him:

1. Admittedly he was decently well paid when he was even able to work, made about $20 an hour loading trucks. However, the union constatnly blocked him from being able to work full hours.

2. His exact position opened up at a bakery within a mile of his house, since the union required more senior people to have first dibs on the job he had to quietly train 3 (THREE!) more senior employees trying to take the position. Each of the three were unable to perform the duties of the position. Namely this would be mental math, inventory, and loading trucks for delivery. That astonished me.

3. At every step of the way the union was constantly obstructive. I never once heard him complain about the company, not a single time, it was always the union.

4. The union even kept them in the dark about these proceedings and that they were heading over the cliff. His word from the union as of 48 hours ago "We're still negotiating."

Fri, 11/16/2012 - 11:52 | 2987904 Central Bankster
Central Bankster's picture

Thanks for sharing. 

Fri, 11/16/2012 - 18:10 | 2989840 Ident 7777 economy
Ident 7777 economy's picture

 

 

" 4. The union even kept them in the dark about these proceedings and that they were heading over the cliff. His word from the union as of 48 hours ago "We're still negotiating." "

 

What!?? 

 

Including the overwhelming union membership vote to strike? T

 

This post does not pass the 'smell' test ...


 


Fri, 11/16/2012 - 11:47 | 2987874 Mr. Poon
Mr. Poon's picture

Twinkies?  Ho-hos?  Snowballs?  Crocodiles?  What trash, some people have terrible taste in food.

For me and my house, it's nothing but the finest in foods:  frozen Ding Dongs all the way.

Fri, 11/16/2012 - 11:47 | 2987877 Stuck on Zero
Stuck on Zero's picture

Ten to one this was a pre-packaged bankruptcy so that Hostess could be taken over without being saddled by unions, debts, and the hangovers of mismanagement.

 

Fri, 11/16/2012 - 11:50 | 2987888 Rentenmark
Rentenmark's picture

The shelf life, or is it half-life, of a Twinkie is like 25 years so no need to freeze them.  They can be stock piled with other non-perishables such as toilet paper.  Gotta think that Twinkies and Toilet Paper (T&TP) will be valuable in the future!

Fri, 11/16/2012 - 11:50 | 2987889 ElvisDog
ElvisDog's picture

Well, at least a 0.01% fuck-head like Tim Collins is going to lose a big pile of money on this one. $670M in debt on $2.5B in revenue and losing $340M last year. The "grow into the capital structure" plan is a hoot.

Fri, 11/16/2012 - 13:27 | 2988488 Thisson
Thisson's picture

Sounds a lot like our politicians: "we've got to grow our way out of our debt" - impossible!

Fri, 11/16/2012 - 11:50 | 2987891 mess nonster
mess nonster's picture

I think, considering the shelf life of these products, that their manufacture can be easily outsourced to China with a little melamine, extra BHT, and sawdust added to the formula. After all, Hostess products are nothing more than a drug delivery vehicle. The psychoactive ingredient is GMO HFCS, and as long as the consumer's blood sugar skyrockets to mind-munbing (on purpose) levels, who cares what else is in there? Twinkies will be around, regardless of who makes them, for a long long time.

Fri, 11/16/2012 - 11:51 | 2987898 Atlantis Consigliore
Atlantis Consigliore's picture

Ding Dong da Rich is Dead....  http://youtu.be/nrEdYyejlj8

move on Sheeple, Muppets, its a Twinky Economy, you didnt build or invest in that Stupid...

US of Muppets.

 

Fri, 11/16/2012 - 11:53 | 2987908 buzzsaw99
buzzsaw99's picture

from wiki:

In March 2012, Brian Driscoll resigned from his position as CEO.[18] Gregory Rayburn, who had been hired and named Chief Restructuring Officer only nine days earlier, assumed the leadership position. Fortune reported that unions within the organization had been unhappy with Driscoll's proposed compensation package of $1.5 million, plus cash incentives and a $1.95 million "long term compensation" package. Additionally, the court had discovered that Hostess executives had received raises of up to 80% the year prior...

Don't worry about the long string of execs, they got plenty.

Fri, 11/16/2012 - 18:15 | 2989847 Ident 7777 economy
Ident 7777 economy's picture

 

 

 

 

 

Additionally, the court had discovered that Hostess executives had received raises of up to 80% the year prior...

 

Smarmy peanut-gallery comment: "Don't worry about the long string of execs, they got plenty."

 

 

You don't know how talent is recruited or kept at these companies, do you?

 

The sales staff for example require INCENTIVES like 'raises' to perform ...

 

I just *know* yiou would stick around without any incentives, as sharp as you are.

 

Dolts.

 

 

Sat, 11/17/2012 - 03:26 | 2991109 sleepingbeauty
sleepingbeauty's picture

Your comment isn't passing the smell test. "The sales staff for example require INCENTIVES like 'raises' to perform ..."

 

If they were performing as you say, then a bankruptcy is not needed. And if the EXECUTIVES got an 80% raise then supposedly their skills were commensurate. But I did not hear anywhere that revenue went up and surprisingly the company still had to declare bankruptcy.

Sat, 11/17/2012 - 08:15 | 2991307 Ident 7777 economy
Ident 7777 economy's picture

 

 

 

" If they were performing as you say, then a ... "

 

Bzzzzzt!

 

Still wroooooooooooooooooooooooooooooong!

 

Market forces (high-wage union contracts) and a contracting economy can STILL impact your earnings (WHICH IT DID HERE). 

 

How much WORSE off without a functioning sales staff is what you SHOULD be asking in regards to loss of high-caliber sales staff ... 

 

Of course, you employ a staff of low-IQ dunces in your co so there is no comparison I suppose.


 


Fri, 11/16/2012 - 11:56 | 2987922 bankonzhongguo
bankonzhongguo's picture

The value is the brand and placement in the stores, not the sugar, hydrogenated oil and workers that pump it out.

Some cadre of MBA just figured it all out and since they also just read 'Atlas Shrugged,' well you know the rest.

The unions understand.  They are replaceable by those amnestied Mexican workers.

In ten year it will all be robots.

Maybe after that you can 3D print yourself a Ding Dong.

Can't wait for the BLS to print these numbers.  Ho Ho Ho.

Fri, 11/16/2012 - 11:58 | 2987935 Clycntct
Clycntct's picture

Thanks TD for all the info.

I give THANKS to Zero Hedge to keep me in the Know.

Fri, 11/16/2012 - 11:58 | 2987936 mess nonster
mess nonster's picture

Hey this is agood test case- hopefuly we'll get to see Hostess disintegrate, and if we pretend it was GM, we will get to see what the consequenses of a free-market actually looks like.

Hostess goes under, the brand gets bought out by anothert (non-union) co, and the product is back on the shelves, just as inedible, and all's well in the world. Or, we get several Hostess-like products that fill the void, all competing for the top slot as the most artery-clogging, pancreas-destroying baked toxins on the market.

The unnions get to have a wake-up call that their members still have to actually work for that paycheck, and the union heirarchy gets shaken back to the place where they advocate for railings around the giant twinkie vats so that fewer workers are overcome by the fumes and fall in to their deaths. They may also advocate that the batch containing humans is thrown out (or at least sold to a hog-farm) so that twinkies don't actually become Soilent Green.

Unions have a place in the economy. That place is not to create a job that allows a "worker" to collect the private equivalent of food stamps and welfare.

 

Fri, 11/16/2012 - 12:10 | 2988012 GeorgeHayduke
GeorgeHayduke's picture

"Unions have a place in the economy. That place is not to create a job that allows a "worker" to collect the private equivalent of food stamps and welfare."

I agree with that. But Management could also make 8-15 times more than the average worker in the place instead of 1,000 times more. Not that this is the cause of Hostess's problems, but usually after the full story is known blame can be spread around instead of just towards the usual targets. Not all the time, but usually.

Fri, 11/16/2012 - 12:02 | 2987954 ebworthen
ebworthen's picture

I thought we were in a "recovery"?

Where is Jon Corzine?

Fri, 11/16/2012 - 12:02 | 2987955 moonman
moonman's picture

This just in,

 

Another Chocodile has been found wandering around a parking lot on Long Island

Fri, 11/16/2012 - 12:05 | 2987970 GeorgeHayduke
GeorgeHayduke's picture

Dang, no more of those awesome crunch gem donuts and yellow zingers. I hope someone fills that vacuum.

Fri, 11/16/2012 - 12:07 | 2987985 williambanzai7
williambanzai7's picture

Let's run him for President

Fri, 11/16/2012 - 12:07 | 2987992 The Continental
The Continental's picture

Tyler, you missed out on an epic title for this article:

 

The Hostess Liquidation: A tale of Twinkies and Bimbos.

Fri, 11/16/2012 - 12:10 | 2988005 nick howdy
nick howdy's picture

http://news.yahoo.com/bctgm-members-initiate-national-strike-hostess-bra...

Hostess Brands is in bankruptcy for the second time in eight years. Since the first bankruptcy in 2004, BCTGM members across the country have taken dramatic wage and benefit concessions and watched as 21 Hostess plants were shut down and thousands of jobs lost.  At the time of the first bankruptcy, Hostess workers were assured by management that money saved via concessions or plant closings would help make the company stronger, more vibrant, and more competitive.

Instead, helpless Hostess employees watched as money that was supposed to go towards capital investment, product development, plant improvement and new equipment went to executive bonuses and payouts to the hedge funds that own Hostess Brands. They watched as the company illegally withdrew from all Taft-Hartley pension plans, saving more than $50 million in the first five months. The BCTGM learned that the then Hostess CEO was to be awarded a 300% raise, and at least nine other top executives were to receive raises ranging between 35% and 80%.

Since the company ceased making contractually obligated payments to the Hostess workers' pensions in July 2011, it has pocketed approximately $160 million – money earned by and owed to its dedicated workforce.

Striking members know that the Wall Street investors currently in control of the company have no intention of building a world class wholesale bread and cake company.  They will simply take the money from the workers' severe concessions and the sale of assets, pay themselves and then liquidate the company. 

The company's business plan, when reviewed by a highly-respected financial analyst retained by the company, was determined to have little or no chance of succeeding in saving Hostess. 

The current CEO, Greg Rayburn, was originally brought on as a consultant because of his expertise in corporate liquidations.  He has absolutely no experience running a baking company and the Wall Street investors that own the company have absolutely no interest of rebuilding the baking business.

"Our members have fought hard for decades through the collective bargaining process to build a decent standard of living for themselves and their families. The deplorable actions taken by Hostess would take our members back to the workplace standards of the 1950's.

"Our members have now said NO to Hostess and the Wall Street investors in the only means available to them, the strike.  The BCTGM International Union stands in full and uncompromising support of our striking members," concludes Hurt.

The BCTGM represents more than 80,000 workers in the baking, food processing, grain milling and tobacco industries in the United States and Canada.

Fri, 11/16/2012 - 18:35 | 2988045 Central Bankster
Central Bankster's picture

You've been corzined! The pensions just got vaporized like an account at MF Global. 

Fri, 11/16/2012 - 12:16 | 2988060 GeorgeHayduke
GeorgeHayduke's picture

As usual, the predators paint the vicitms as the cause of the problems. This has been happening for years and is the reason the US is where it's at financially. Meanwhile the predators, like Romney, say it's the 47% who just want a handout who are the problem. The sheep may be finally waking up. We will see. Waking up and doing something are two different things.

Fri, 11/16/2012 - 12:50 | 2988281 blunderdog
blunderdog's picture

I'm sure plenty of folks would agree with Mittens' perspective that a job is just another form of handout.

Too bad it wasn't McDonald's...

Fri, 11/16/2012 - 13:45 | 2988584 NEOSERF
NEOSERF's picture

At a very high level, some of us have jobs that fulfill the basic necessities that make living "civil"; electricity production, gasoline production, food production, hospital services...From YVSL to McDonalds to Hostess, the rest of us are involved with elegantly trying to pick the consumers pocket and sell them things and services they simply do not need.  What are you involved in.  Financial services used to be a valuable service but somewhere along the road became a pocket picker.

Fri, 11/16/2012 - 14:45 | 2988919 blunderdog
blunderdog's picture

I do monkey work "fixing" computers for people who probably should just have Etch-a-Sketches instead.

I'd never pretend it's *important,* but at least folks can understand why I get paid.

Fri, 11/16/2012 - 12:27 | 2988136 nick howdy
nick howdy's picture

Since they were  going to lose their jobs anyway..Well why not strike..Fuck it. You know this shit is going to keep happening till there are no freaking jobs, anything that can be offshored will be offshored...The way we treated the American native is the same way we treat the American worker....Once people have nothing left and nothing left to lose they will start doing things that folks might call a bit anti-social, and then you'll call them terrorists and attack them with autonomous kill machines...Prepare for the new American "terrorist". 

Fri, 11/16/2012 - 13:14 | 2988422 GeorgeHayduke
GeorgeHayduke's picture

Gee nick, you don't have the usual "tow the corporate (or plantation owner, or predatory capitalist) line" attitude that so many posters here seem to have. Expect to get lots of negative votes and responses of no substance with feeble attempts at sophomoric humor to your thoughful posts. Don't let them bug you. Keep posting as what you present provokes thought (and is likely truth, as in this case), something many here prefer to avoid in favor of their own beliefs and biases.

Fri, 11/16/2012 - 17:55 | 2989791 Blankenstein
Blankenstein's picture

That goes for BOTH teams.  I see a lot of partisans who still believe that team blue isn't part and parcel to the enriching of the oligarchs.  Just check out Obama's biggest campaign contributers from 2008 and bundlers for 2012.  Bailouts for the banksters and no prosecutions, but I still see the disciples crying that their team will save the day for main street.  Yes I hope people will begin to see the facts in favor of their own beliefs and biases, but it's unlikely they will peel themselves away from the TV (Thought Vacuum) long enough.

Fri, 11/16/2012 - 13:34 | 2988530 Thisson
Thisson's picture

What a bunch of nonsensical propaganda.  The company was losing $300m a year.  Even if those 10 execs are getting 2 million/year each, it's still a drop in the bucket compared to the losses.  Now I agree that exec comp is out of control across the board in the USA, but the problems here are the debt load and the pension costs.  Both of these will be eliminated via bankruptcy, the assets will be liquidated, and someone, somewhere, will use them to bake products (likely not with union labor).  The big losers here are the equity investors and the union management, which failed to understand that a company that loses money cannot stay in business, and that a low-paying job is better than no job.

Fri, 11/16/2012 - 13:35 | 2988538 jdelano
jdelano's picture

well said.

Fri, 11/16/2012 - 15:03 | 2988995 blunderdog
blunderdog's picture

     but the problems here are the debt load and the pension costs.

Er...maybe I'm misreading your point, but if not, why shouldn't MANAGEMENT be blamed for that?  What are they supposed to be doing if they couldn't address those problems?

I don't think the guy maintaining the Twinkie-manufacturing machine is responsible for the company's high-leverage and debt-load.  That's the Execs who did that.

Fri, 11/16/2012 - 12:10 | 2988009 Madcow
Madcow's picture

start thinking like a sociopath ... 

why not asset taxes to fund the PBGC?

Fri, 11/16/2012 - 12:24 | 2988056 Omen IV
Omen IV's picture

the teaching moment is the opposite of your conclusion - the focus should be on PE and leverage not the company nor the union nor the democratic party

the company and the union  - absent the leverage  - would pay off Operating Debts and Pension Obligations on time and without a problem - the leverage and lack of focus by managment in the intrinsic business with the revolving door of CEO's and cash flow always going to latest newly invented capital structure contributes nothing to the business and drives away serious management

no matter what the unions agree to in concessions -  the leverage players will put up more debt and fees to cover the flexibility created in the cash flow by the concessions so that there is never a real business or postive cash flow to cover the inevitable vagaries of the marketplace - these clowns dont want an operating business they want a toy.

BIMBO - is the winner - they will get the PP&E for cents on the dollar - they have been waiting for the clown car to leave the scene since 2007 and they have good relations with the unions to make it a real business

this is not a parable about the democratic party nor Gephardt who is a whore (I would call him a bimbo but that name is trademarked)  but about Vampire Capitalism that doesnt work for the country no matter who is in power

 

 

Fri, 11/16/2012 - 13:37 | 2988547 Thisson
Thisson's picture

I agree that Bimbo is the winner, but outcomes like this ensure that there is no "vampire capitalism" as you put it.  The PE firms and the unsecured debt holders are going to take big losses.  The union should have agreed to the concessions but with a contractual provision against debt-financing.

Fri, 11/16/2012 - 18:17 | 2989865 Ident 7777 economy
Ident 7777 economy's picture

+1 This.

Fri, 11/16/2012 - 12:17 | 2988070 Rick Blaine
Rick Blaine's picture

As Dr. Dre put it so elegantly...

Ring ding dong...Ring-a-ding ding-ding dong.

...Keep their mother-F-ing heads ringing...

http://www.youtube.com/watch?v=Cj-Ay6x7Wbg

 

...bitchez.

Fri, 11/16/2012 - 12:24 | 2988096 DR
DR's picture

Just another demonstration of US decline. This past great country that won WWII and lead the world on logistic and industrial acumen now days can't even successful operate a bread baking company.

Fri, 11/16/2012 - 12:51 | 2988283 jtg
jtg's picture

Exactly, and far worse is to come.

Fri, 11/16/2012 - 12:24 | 2988119 bugs_
bugs_'s picture

If you can't get twinkies consider switching to Gansitos

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