The International Brotherhood of Teamsters said in an update to members on July 6 that it has yet to achieve a “significant breakthrough” in its negotiations with Hostess Brands, but that more talks are scheduled for this week.
Despite having little to report over the past month in the way of progress, the Teamsters said, “We continue to work to get to an agreement with the company and its senior lenders – hedge funds Silver Point Capital and Monarch Alternative Capital – and potential new investors.”
The Teamsters said, “A key difference in our proposals deals with the structure of the pension benefit going forward,” explaining that the union’s proposal gives all of the existing multi-employer plans to which Hostess has contributed the right to continue to accept Hostess as a contributing employer if they meet certain conditions, while the company is seeking to place Teamster employees in “one of two small plans.”
Beyond the pension issue, the Teamsters said, “We also have much stronger shared sacrifice language, governance controls, debt forgiveness, and upside in the form of equity in the new company than what the company proposed.”
The union said “there are indications the company and the lenders may be willing to move off their position on the pensions and allow our members to continue in funds other than the two small funds,” but added it “would come at a very high cost in terms of additional concessions.” The Teamsters added that it did not believe that its members would accept further concessions, at least in the absence of an “overall restructuring where everyone makes appropriate contributions.”
The union explained, “We’ve continued…to try and bridge the gap with the company and the senior lenders to convince them that the company needs to focus more on improving its operations in areas such as inventory control, and trade spend, rather than rely solely on cuts on the backs of the workers.” – Alan Zimmerman