Meanwhile the president of the AFL-CIO, Richard Trumka, released a statement calling the closure "a microcosm of what's wrong with America, as Bain-style Wall Street vultures make themselves rich by making America poor." Bain Capital is the asset management company founded by former Republican presidential nominee Mitt Romney that invested in faltering companies.
"Crony capitalism and consistently poor management drove Hostess into the ground, but its workers are paying the price," he said. "These workers, who consistently make great products Americans love and have offered multiple concessions, want their company to succeed. They have bravely taken a stand against the corporate race-to-the-bottom. And now they and their communities are suffering the tragedy of a needless layoff."
According to CNBC, the forces most responsible for Hostess' decision to close are "two hedge funds that control hundreds of millions of Hostess debt and which have finally decided they won't squeeze any more filling into the Twinkie." It is not clear that Hostess would have lasted this long without such investors: Hostess has faced struggles to maintain market share as Americans' appetites have moved away from junk food and competition has increased, and the company sought bankruptcy in 2004 and again in January. Hostess' debt was most recently purchased by the two funds, Silver Point and Monarch, which generally buy corporate debt at discounts in hopes of turning companies around.
What the hedge funds want is some degree of capitulation from a union whose members will otherwise lose thousands of jobs in liquidation," Fortune's David Kaplan wrote in an extensive article in July. "If the hedge funds don't get it, they've concluded, the company isn't worth saving."
"Union bosses" and "Wall Street vultures" blamed for Hostess' demise - Political Eye - CBS News
"Crony capitalism and consistently poor management drove Hostess into the ground, but its workers are paying the price," he said. "These workers, who consistently make great products Americans love and have offered multiple concessions, want their company to succeed. They have bravely taken a stand against the corporate race-to-the-bottom. And now they and their communities are suffering the tragedy of a needless layoff."
According to CNBC, the forces most responsible for Hostess' decision to close are "two hedge funds that control hundreds of millions of Hostess debt and which have finally decided they won't squeeze any more filling into the Twinkie." It is not clear that Hostess would have lasted this long without such investors: Hostess has faced struggles to maintain market share as Americans' appetites have moved away from junk food and competition has increased, and the company sought bankruptcy in 2004 and again in January. Hostess' debt was most recently purchased by the two funds, Silver Point and Monarch, which generally buy corporate debt at discounts in hopes of turning companies around.
What the hedge funds want is some degree of capitulation from a union whose members will otherwise lose thousands of jobs in liquidation," Fortune's David Kaplan wrote in an extensive article in July. "If the hedge funds don't get it, they've concluded, the company isn't worth saving."
"Union bosses" and "Wall Street vultures" blamed for Hostess' demise - Political Eye - CBS News
