Hostess Brands Inc. is moving to the next front in its bid to slash its labor costs: a trial on whether it can reject labor deals with its smaller unions.
On Monday, a White Plains, N.Y., bankruptcy judge will hear arguments over
the fate of 67 collective bargaining agreements with 10 unions that represent
1,165 Hostess employees. The company wants to modify such employment terms as
health benefits, pensions and work rules, warning the success of its
restructuring is on the line.
The maker of Wonder Bread, Twinkies and Ho Hos completed a trial last month
over whether it could terminate the labor deals with its two biggest unions, the
Teamsters and the Bakery, Confectionery, Tobacco Workers and Grain Millers
International Union. Together, the two unions represent 14,101 of Hostess's
18,400 active employees.
The outcome of that trial was mixed: the judge said Hostess could reject
bargaining agreements with 35 locals of the bakers' union but nixed its ability
to reject deals with the Teamsters. As a result, Hostess must return to the
drawing board and continue negotiations with the Teamsters.
The so-called "other unions" whose bargaining agreements are the subject of
the upcoming trial include the United Brotherhood of Carpenters and Joiners of
America, the Retail, Wholesale and Department Store Union and the International
Association of Machinists and Aerospace Workers.
Hostess, based in Irving, Texas, filed for Chapter 11 bankruptcy protection
in January and is searching for a new investor. Failure to secure new capital
and cost savings from its workforce could lead to the baker's liquidation.
On Wednesday, Catalyst Paper Corp.'s creditors will determine which path the
paper and pulp producer's restructuring will take.
Secured and unsecured creditors alike will meet in Richmond, British
Columbia, to vote on the Canadian company's restructuring plan, which is subject
to the approval of Canadian and U.S. courts. The company sought the protection
of both courts earlier this year.
If creditors don't vote in favor of the plan, Catalyst has a backup strategy:
a sale to its lenders for $275 million, subject to higher bids at a
Catalyst recently amended its restructuring plan to slash $435 million from
its balance sheets, or $120 million more than originally expected.
Under the amended plan, first-lien noteholders would receive a smaller amount
of new debt and more stock. Specifically, they would trade their $390.4 million
in senior secured debt for $250 million in new first-lien notes and all of the
new common shares in Catalyst, subject to dilution, versus $365 million in new
first-lien and coupon notes and 80% of the new common shares.
Unsecured noteholders owed $250 million may now choose between equity or
sharing in the proceeds from the sale of Catalyst's stake in a subsidiary that
owns two hydroelectric dams. General unsecured creditors could also choose
between receiving stock or cash.
In the event Catalyst's creditors don't vote in favor of the plan, the
company's backup plan is to sell itself through a competitive auction process.
Catalyst operates plants in British Columbia and Arizona that together
produce about 1.9 million tons of paper and pulp each year. Its coated papers
are used to publish such magazines as Rolling Stone and Men's Journal. Its
newsprint is used by such publications as the New York Times and The Wall Street
Journal, which is owned by News Corp. (NWS, NWSA, NWS.AU) unit Dow Jones &
Co., publisher of this newswire.