Business

Union says deal with Hostess unlikely

PAUL SAKUMA/ASSOCIATED PRESS
Hostess, based in Irving, Texas, with 19,000 employees, will ask the court this week to toss out its existing union contracts if its workers do not accept cost-cutting proposals in its final offer.

NEW YORK - A union official representing workers at Hostess Brands Inc. said Monday that he is not optimistic the two sides will come to an agreement over workers’ contracts before the dispute lands in bankruptcy court.

Hostess has said it will ask the court this week to toss out its existing union contracts if its workers do not accept cost-cutting proposals in its final offer. The company filed for bankruptcy protection in January, citing rising competition and pension and medical costs.

Ken Hall, general secretary-treasurer of the Teamsters union, says his union’s members will walk off the job if the court throws out the contracts. Chief executive Greg Rayburn says a strike will force the company to shut down and liquidate.

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The unions sent Rayburn a counteroffer Sunday night.

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“I don’t think we’ll hear back,’’ Hall said.

A representative for Hostess, which makes Twinkies, Wonder Bread, Ding Dongs, and other popular snacks, said in a statement that the changes proposed by the union would not be enough for the company to attract the financing it needs to exit Chapter 11. As part of its turnaround plan, Hostess wants to raise at least $400 million from current lenders or new investors or by selling its brands.

The privately held company’s contract offer this weekend included reduced pension benefits, work rule changes to lower costs, and outsourcing some delivery work.

The Teamsters said its counter offer includes $150 million in concessions a year, including the suspension of pension contributions until next summer.