Bankrupt Hostess Brands and its biggest union are close to a deal that would spare workers’ pensions in return for what could be deep cuts, The Post has learned.
Hostess’ creditors, led by Silver Point Capital, have agreed to the Teamsters’ top demand that the company continue to fund 22 multi-employer pension plans, people close to the situation said. Sources warned that talks were fluid, however, and could break off.
The deal under discussion would come at a painful price to the company’s 18,000 workers, who are looking at potential pay and benefits cuts.
Hostess, which filed for Chapter 11 bankruptcy protection in January, and its unions must reach an agreement soon if the maker of Twinkies and Wonder Bread is to avoid liquidation and emerge intact from bankruptcy.
The deal would also need the approval of union members, who may be far less amenable this time around.
Workers already suffered through a round of pay cuts in 2009, when Hostess emerged from its first contentious bankruptcy, only to file again just three years later.
“The price is really high,” a source told Post.
A Hostess spokesman declined to comment on the contract talks.
A 15-year veteran Brooklyn Hostess driver said even if the Teamsters reached a deal with the company, he would not vote for any plan in which he would have to take a pay cut.
“I am not taking another hit,” the driver said. “I am making about $65,000. That is the same as I was making 10 years ago.”
He pointed to a Stroehmann’s bread truck driver delivering to the same supermarket who he said gets a guaranteed $300 a week — compared to his $195 — and earns much more in commissions.
“I keep delivering the bread and there are very few returns,” the driver said, adding the company’s problems are not his fault.
The Teamsters members have shown their independence in the past. In May 2011, they voted to reject negotiated changes to their collective bargaining agreement with the company.
If the two sides reach a deal and members approve it, the senior creditors would likely forgive some of Hostess’s $700 million in loans in exchange for ownership stakes in the business, sources said.
In that restructuring, Hostess’s current owner, New York City-based private equity firm Ripplewood Holdings, would see its ownership largely wiped out.