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subspaceseven -> RE: A few Labor Leader, cost 18,500 their jobs (12/4/2012 1:22:05 PM)
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Everyone keeps blaming the unions for this, but do not think the companies debt from the last bankruptcy orf sales bottoming out had anything to do it. From Fortune 500
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.
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