Teamsters accept Hostess deal, BCTGG does not

Hostess’s largest union, The International Brotherhood of Teamsters, which represents 7,500 of Hostess’s 19,000 employees, narrowly votes to accept (53.6% in favor) collective-bargaining agreements that will cut employees’ pay and limit their participation in controversial pension plans. Teamsters General Secretary-Treasurer Ken Hall said in a statement that the voting process—which kicked off Aug. 25—presented Hostess workers with a “difficult decision.”

HALL: Our members are frustrated at being in the position to bail out the company again, but overall were willing to accept modifications with the hope that Hostess will recover and be in a better position in the years to come.

However the Bakery, Confectionery, Tobacco Workers & Grain Millers International Union vote does not pass. Chief Executive Gregory Rayburn last month said that Hostess would immediately liquidate if either one of its two largest unions voted against the proposal, he said that the company will instead launch a bankruptcy court effort to force the BCTGM to accept the new labor deal. Rayburn said the change in plans stemmed from his concern that BCTGM employees were given “bad information” during the voting process.

RAYBURN: Leadership basically led employees in the union to believe that there’s a white knight buyer out there for the company, and there’s not

He added that union leaders had also told employees that the company was prepared to come back with another, better offer, but that was also false.

Hostess’s offer to the unions would lead to about $200 million in average annual savings over the five-year contract. That includes about $40 million a year in wage concessions—wages and commissions would be slashed by 8% in the first year of the contract and then climb higher in subsequent years—and about $75 million a year in pension-cost savings.

The company is poised to exit its controversial multi-employer pension plans, financially shaky funds that Rayburn once called a “gatekeeping issue” in the case, and then re-enter them under certain conditions that Rayburn said would mitigate their risk. Other savings come from cuts to employee health and welfare benefits.

The company is also promising the unions a 25% equity stake and $100 million of third-lien debt upon Hostess’s exit from bankruptcy.