United States Bakery Inc. of Portland, Ore., has bid on the Sweetheart Bakery in Billings, along with other properties of the bankrupt Hostess Brands Inc.
But the bid by the parent company of Franz Bakery won’t be awarded for another six weeks, and an announcement about whether the Billings bakery will ever reopen will probably take even more time.
The Oregon company bid $28.9 million for four bakeries: in Billings; Anchorage, Alaska; Salt Lake City; and Seattle, and four bread brands, including Sweetheart, Eddy’s, Standish Farms and Grandma Emilie’s. The bid also includes 14 depots or truck-loading facilities, plus some equipment. The bids were submitted to the U.S. Bankruptcy Court, Southern District of New York, which is handling the second bankruptcy of Hostess Brands.
“We believe the assets and brands will allow us to provide fresh-baked Franz Bakery products to a wider and diverse geographical base,” said chief executive Bob Albers in Portland.
The Portland bakery submitted what’s called a stalking-horse bid. That is where Hostess, a distressed seller, selects the highest and best bid. The stalking-horse bid sets a minimum price, so when other interested buyers bid they can’t submit low-ball bids for the assets.
No one will know whether Franz will be the winning bidder until three more events happen.
On Feb. 11, the bankruptcy court will approve bidding procedures. The auction, where companies other than Franz can submit bids, is set for March 15.
“We will hold an auction where qualified bidders will come in and there will be a hearing four days later to approve the sale,” said Anita-Marie Laurie, who works for Sitrick and Co. in Los Angeles, which represents Hostess.
Even if Franz is the successful bidder, that doesn’t immediately determine the fate of the Billings bakery.
“Unfortunately, we can’t comment right now on potential impact directly on Billings, as we feel it’s too early to make any assertions,” said Danny Pettey of Sasquatch Agency in Portland, which represents Franz.
Hostess, of Irving, Texas, has been making Ding Dongs, Ho Hos and Hostess CupCakes for 82 years. Hostess closed operations on Nov. 16 after one-third of its employees, who belonged to the Bakery Confectionery Tobacco Workers and Grain Millers International Union, walked off their jobs to protest the bankruptcy judge imposing an austere contract that they had soundly rejected. The shutdown eliminated the jobs of 18,500 Hostess employees, including about 250 Montanans.
Since then, Hostess has been preparing to sell off all the assets from a baking empire dating to 1930.
Tennessee-based McKee Foods, which makes Little Debbie snacks, offered to pay nearly $28 million for some of the Drake’s brand, including snacks like Devil Dogs, Ring Dings, Yodels, Yankee Doodles and Drake’s Coffee Cake.
On Feb. 28, Hostess will hold a separate auction for most of its bread business. This is not a complete list of all the offers for the Hostess assets.
Hostess said all of its stalking-horse bids totaled $858 million and estimated that its remaining assets, including the Twinkies brand, will bring another $100 million.
Finally, on Jan. 28, Hostess asked the bankruptcy judge for permission to stop paying benefits to its retired employees, which cost $1.1 million for the 12 months ending in June.