REFILE-UPDATE 3-Failed talks with union spell end to Twinkie-maker Hostess

Tue Nov 20, 2012 11:00pm EST

By Tom Hals

Nov 20 (Reuters) - Hostess Brands Inc will proceed with a plan to go out of business after the maker of Twinkie snack cakes said last-minute talks with striking workers broke down on Tuesday.

Hostess and its striking bakers union were pressed by New York Bankruptcy Judge Robert Drain into mediation to try to end the walkout and save the company and its 18,500 jobs. Drain acted as a mediator during the private talks.

Hostess, which also makes Wonder Bread and Drake's cakes, will ask Drain to approve a plan to begin a piece-meal lidquidation of the 82-year-old company. It has said that its operations were crippled by the bakers' strike and that winding down is the best way to preserve its dwindling cash.

Hostess plans no further comment prior to an 11 a.m. ET hearing on Wednesday.

A representative of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), which went on strike Nov. 9, did not immediately respond to a request for comment.

Ken Hall, the general secretary of the Teamsters, Hostess' largest union expressed disappointment at the failed talks. The Teamsters had accepted an 8 percent cut in wages in an attempt to save the company.

"This is a tragic outcome and our thoughts and prayers go out to all Teamster Hostess members and all Hostess employees," Hall said in a statement.

The BCTGM leaders have said they believe there are buyers prepared to bid for the company, and bankers and analysts expect the company's best-known brands to live on under a new owner or owners.

Bankers have said rivals including Flowers Foods and Mexico's Grupo Bimbo were very likely to be interested in parts, but not all of, the brands. Neither company could be reached for comment.

Private equity firms have also shown interest. Sun Capital Partners is interested in bidding for all of Hostess, according to a source familiar with Sun's plans, and Metropolous & Co is also interested, according to Daren Metropolous, a principal at the firm.

Officials at Sun did not respond to requests for comment.

Hostess runs 33 bakeries, 553 distribution centers, about 5,500 delivery routes and 527 bakery outlet stores throughout the United States. Bakery operations ceased last week, though product deliveries to stores continued in order to sell already-made products.

The company has blamed union wages and pension costs for contributing to its unprofitability. Hostess Chief Executive Gregory Rayburn has also said the company's labor contracts have deterred would-be bidders for the company and its assets.

In addition to its unionized workforce, analysts, bankers and restructuring experts have said that a fleet of inefficient and out-of-date factories has also eaten up costs. They have said some brands may be more valuable once they were separated from the factories and sold to non-union competitors.

The case is In re Hostess Brands Inc, U.S. Bankruptcy Court, Southern District of New York, No. 12-22052.

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PRESS DIGEST - Wall Street Journal - Nov 21

Wed Nov 21, 2012 1:51am EST

Nov 21 (Reuters) - The following are the top stories in the Wall Street Journal on Wednesday. Reuters has not verified these stories and does not vouch for their accuracy.

* Federal prosecutors charged a Wall Street portfolio manager in what they described as the most lucrative insider-trading scheme ever, but their ultimate target appeared to be one of Wall Street's most successful and prominent investors: hedge-fund giant Steven Cohen. ()

* Hewlett-Packard Co said on Tuesday it had been duped into overpaying for one of its largest acquisitions, contributing to an $8.8 billion write-down and a huge quarterly loss. The company said that an internal investigation had revealed "serious accounting improprieties" and "outright misrepresentations" in connection with U.K. software maker Autonomy, which HP acquired for $11.1 billion in October 2011.()

* Former UBS AG trader Kweku Adoboli was found guilty of fraud and sentenced to seven years in prison in connection with a $2.3 billion loss that hobbled the Swiss bank and triggered an upheaval there whose repercussions continue to this day. ()

* News Corp, owner of Harper Collins Publishers, has expressed interest to CBS Corp about acquiring its Simon & Schuster book business, according to people familiar with the talks. The people described the discussions as preliminary and cautioned that a deal isn't imminent. ()

* Hostess Brands Inc will continue down the path to a full liquidation after a last-ditch mediation session with its striking bakers' union failed to save the Twinkie maker. ()

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Second Tinkler firm to be wound up, exposes coal baron to creditors

Wed Nov 21, 2012 2:54am EST

* Patinack-related firm to be wound up over A$17,000 debt

* Follows liquidation order on Tues for another Tinkler firm

* Court action exposes Tinkler to personal liability

* Tinkler faces another potential wind-up action on Friday

By Jane Wardell

SYDNEY, Nov 21 (Reuters) - Liquidators were appointed for the second time in as many days to a company owned by Australian mining magnate Nathan Tinkler, deepening the young tycoon's financial troubles in the wake of his failed bid to take Whitehaven Coal private.

A court ordered liquidators for Patinack Farm Administration Pty Ltd, one of 12 firms associated with his horse racing business, over an unpaid debt of A$17,000 ($17,600). A spokesman for Tinkler said, however, the amount had now been paid in full and the coal baron would be filing to reverse the order.

But the action, coming just after an order to wind up another unit, Mulsanne Resources Ltd and ahead of a similar hearing on Friday, has exposed to Tinkler to personal liability and raised questions over the future of his 19.4 percent stake in Whitehaven, Australia's largest independent coal miner.

A former coal mining electrician, Tinkler, 36, turned a A$1 million bet on a coal deposit into a billion dollar fortune, spending millions on racehorses, sports clubs, luxury homes and fast cars.

But coal prices have since slumped and his stake in Whitehaven, a holding that represents the bulk of what remains of his wealth, has shrunk to below A$600 million from A$1.1 billion at its peak.

Sources have previously told Reuters the stake is heavily leveraged and lenders have been looking at options including pressing for the sale of shares or converting some of the loans to equity.

"The options seem to be running out," said Matthew Trivett, an analyst at Patersons Securities in Brisbane.

Trivett said there shouldn't be a lack of buyers at Whitehaven's current price of around A$2.80, down from a 2012 peak above A$5.60 in April.

"At current levels, Whitehaven looks quite attractive for large funds," he said.

In August, Tinkler pulled a $5.5 billion bid to take the company private, with sources saying he failed to raise enough equity to finance the deal.

COURT ACTIONS

On Tuesday, the New South Wales Supreme Court ordered that Mulsanne, also a private company, be wound up over a A$28.4 million debt owed to junior coal company Blackwood Corp Ltd over a stalled shares deal.

If liquidators find that Mulsanne does not have enough assets to cover the Blackwood liability, Tinkler could face charges or fines for insolvent trading under Australian corporate law.

Tinkler's main company, Tinkler Group Holdings Pty Ltd, is also facing a potential wind-up action by security firm Internet Fraud Watchdog at a court hearing scheduled for Friday.

Tinkler had managed to settle other lawsuits on the court steps to avoid liquidation or a public expose of his finances. In those deals last month, Tinkler's companies paid A$17 million to property firm Mirvac Group and A$2 million to mining services company Sedgman Ltd.

The Tinkler Group said the liquidation of Mulsanne did not affect its other operations, which include the Hunter Sports Group, the owner of The Jets A-league soccer team and home to former England striker Emile Heskey, but declined to comment further.

Tinkler, who had long held a dream to make it big in the "sport of kings", had splashed out more than A$300 million since 2007 to build his Patinack horse racing business, including A$19 million on 59 horses at one sale in 2008.

Last week, Patinack said it will sell hundreds more of its horses and shut down a major stable to cut costs after a rapid expansion in recent years.

Tim Allerton, Tinkler's Sydney-based spokesman, said the debt over workers' compensation cover owed by the farm's administration unit to the state of Queensland was due to an administrative error made by an associate company.

($1 = 0.9640 Australian dollars) (Editing by Lincoln Feast and Edwina Gibbs)

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Blackwood shares tumble after wind-up order against Tinkler company

SYDNEY | Mon Nov 19, 2012 7:12pm EST

SYDNEY Nov 20 (Reuters) - Shares in Australian junior coal miner Blackwood Corp Ltd fell 25 percent on Tuesday after liquidators were appointed to a company owned by struggling mining magnate Nathan Tinkler to recover A$28.4 million ($29.6 million) owed to Blackwood.

Blackwood sought wind-up orders against Mulsanne Resources Pty Ltd after talks failed to reach a deal for the payment of outstanding funds.

Tinkler had agreed to purchase a one-third stake in Blackwood, but failed to make the payment.

Shares in Blackwood were down 25 percent at A$0.135 at 1202 GMT. (Reporting By Jane Wardell; Editing by Richard Pullin)

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UPDATE 1-Liquidators appointed to Australian mining magnate's company

Mon Nov 19, 2012 9:49pm EST

* Mulsanne Resources to be wound up over $29.6 mln debt

* First time a Tinkler company has been liquidated

* Court action exposes Tinkler's finances to scrutiny (Updates with detail, comment from Tinkler Group, Blackwood)

By Jane Wardell

SYDNEY, Nov 20 (Reuters) - Liquidators have been appointed to a private company owned by struggling Australian mining magnate Nathan Tinkler over a A$28.4 million ($29.6 million) debt, exposing the coal baron to extensive scrutiny of his finances.

The New South Wales Supreme Court ordered on Tuesday that Mulsanne Resources Pty Ltd be wound up, suspending Tinkler's powers as a director of the company and giving liquidators access to its books to recover the money owed to junior coal company Blackwood Corp Ltd.

A former coal mining electrician, Tinkler, 36, turned a A$1 million bet on a coal deposit into a billion dollar fortune, spending millions on racehorses and sports clubs. But his wealth has plummeted as coal prices have slumped.

The court order marks the first time one of Tinkler's many companies has been liquidated. He has previously avoided wind-up actions against a number of his other companies by settling out of court at the last minute.

"The Tinkler Group has no comment but stresses the liquidation of Mulsanne Resources Pty Ltd does not affect our other operations," Tinkler's umbrella company said in an emailed statement.

If liquidators find that Mulsanne does not have enough assets to cover the Blackwood liability, Tinkler could face charges or fines for insolvent trading under Australian corporate law.

Blackwood, which has a current market value of less than A$25 million, turned to the courts after Tinkler failed to pay for a one-third stake in the coal explorer that he agreed to buy in July.

The company planned to use the funds to pay for drilling of its coal tenements, and sought the court wind-up order after talks with Tinkler over the payment failed.

A source close to the talks, who was not authorised to speak on the record, said Tinkler had been unable to provide a guaranteed payment plan.

Blackwood said it would monitor the investigation by the court-appointed liquidators from Ferrier Hodgson Chartered Accountants. Its shares plummeted 25 percent to A$0.135 after the court decision.

The liquidators are required to provide reports to creditors, which must be lodged with the Australian Securities and Investments Commission.

Tinkler's Ocean Street Holdings Pty Ltd and guarantor Buildev Pty Ltd agreed last month after the threat of legal action to pay property firm Mirvac Group A$17 million over a disputed land purchase.

A trio of other Tinkler firms - Tinkler Group Holdings Pty Ltd, Hunter Ports Pty Ltd and Bolkm Pty Ltd - also agreed in October to pay mining services company Sedgman Ltd a A$2 million debt to avoid a separate lawsuit.

Most of Tinkler's wealth is tied up in a heavily leveraged stake in Australia's largest independent coal miner, Whitehaven Coal. The value of that 19.4 percent holding has slumped to around A$600 million from A$1.1 billion at its peak.

The publicity shy Tinkler recently moved with his family to Singapore, and there are signs of trouble elsewhere in his diverse empire.

His horse breeding and racing company, Patinack Farm, said last week it will sell hundreds more of its horses and shut down a key stable to cut costs after a rapid expansion in recent years.

($1 = 0.9608 Australian dollars) (Reporting By Jane Wardell; Editing by Richard Pullin)

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PRESS DIGEST - Wall Street Journal - Nov 20

Tue Nov 20, 2012 1:48am EST

Nov 20 (Reuters) - The following are the top stories in the Wall Street Journal on Tuesday. Reuters has not verified these stories and does not vouch for their accuracy.

* Moody's stripped France of its triple-A rating, following in the footsteps of Standard & Poor's and delivering a stinging critique of President Hollande's attempts to turn the economy around. ()

* Intel Corp was hit with the surprise departure of its longtime Chief Executive Paul Otellini as the company, which makes most of the chips found in personal computers, pushes to restore its sway over the high-tech sector amid an industry shift to smartphones and other mobile devices. ()

* JPMorgan Chase named finance executive Marianne Lake to succeed Douglas Braunstein as chief financial officer of the largest U.S. bank. The appointment, effective early next year, makes Lake one of the most powerful women on Wall Street. ()

* Honeywell International Inc said on Monday it expects the bulk of looming U.S. defense cuts to be implemented, and in a sharp break with rivals said it welcomes the reductions. ()

* U.S. hedge fund Jana Partners LLC launched a proxy battle for change at Canada's Agrium Inc naming five candidates for election to the company's board, including Jana managing partner Barry Rosenstein. ()

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Citi to pay $360 mln to end $1 bln Lehman collateral dispute

Sun Nov 18, 2012 10:36pm EST

Nov 18 (Reuters) - Citigroup Inc has agreed to pay $360 million to the brokerage estate of Lehman Brothers to resolve a dispute over $1 billion in collateral that the investment bank was forced to post in the days leading up to its bankruptcy in 2008.

According to a settlement reached on Friday with the trustee liquidating Lehman Brothers's U.S. b rokerage unit, Citigroup will also relinquish its claim to $75 million that was contingently paid to the estate at the beginning of the liquidation, court documents showed.

The trustee, James Giddens, filed the claim against Citigroup and its subsidiaries early last year, arguing that the $1 billion was obtained under coercion and that the amount should be part of a general asset pool to be divided among creditors in accordance with bankruptcy law.

Citigroup had countered the trustee's claims saying that it is entitled to keep the $1 billion under the Bankruptcy Code's "safe harbor" provisions, which shield certain financial transactions from being included in the creditors' asset pool.

"For the benefit of customers and other creditors, we continue to resolve disputes and marshal assets for the estate, and this agreement accomplishes both," Giddens said in a statement.

In a New York court filing, Giddens said that the protracted litigation over the collateral dispute, along with associated legal costs, would not be in the best interests of the Lehman estate. Lehman's agreement with Citigroup is subject to court approval.

Lehman emerged from bankruptcy in March, and has paid out or plans to pay out $33 billion of an expected $65 billion to creditors, recovering an average of 21 cents on the dollar. The company is also being wound down.

In October, the U.S. brokerage unit and a European unit of the former Lehman Brothers Holdings Inc said they settled litigation over $38 billion of asset claims, a major step toward customers and creditors recovering money.

The cases are In re: Lehman Brothers Inc, U.S. Bankruptcy Court, Southern District of New York, No. 08-01420; and In re: Lehman Brothers Holdings Inc in the same court, No. 08-13555.

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UPDATE 2-Airline SAS, seeking to survive, reaches deals with most unions

Mon Nov 19, 2012 1:49am EST

* Deal reached with all unions except two

* SAS aims to slash costs, secure bank loans

* Airline hit by competition from discount, regional airlines

By Johan Ahlander and Anna Ringstrom

COPENHAGEN/STOCKHOLM, Nov 19 (Reuters) - Scandinavian airline SAS reached agreements with most unions on wage cuts and pensions on Monday, and was pushing hard in talks with two remaining labour groups as it sought to ensure the group's survival.

The airline, hit by competition from lower-price rivals, last week announced plans to cut some salaries by up to 17 percent, lower overall headcount to about 9,000 from 15,000 and reduce costs.

The airline had said a deal with unions, which also includes changes to work hours, must be reached by Sunday but talks carried over into Monday with a gruelling all night session.

Agreements were reached with unions representing pilots from Norway, Denmark and Sweden plus unions for cabin staff in Sweden and a smaller cabin staff group from Norway.

But talks were still going on with the main cabin staff unions from Norway and Denmark.

"It is very, very positive (progress so far), but we are still missing two of them. First when we have everything in place can we go further," said SAS spokeswoman Elisabeth Manzi.

Analysts have questioned whether the measures will secure the independence of the airline in the long term as its structure was designed more to secure jobs and Nordic solidarity than generate profits.

It has struggled to compete with discount carriers like Ryanair and regional rival Norwegian Air Shuttle . SAS management has said that if the cost cuts are carried out, the airline has a sound base for the future.

Amid fears aired widely in Scandinavian media that lack of a deal might lead to an immediate bankruptcy application, Manzi said the airline had told crews to ensure airplanes were fully fuelled so as to be able to return home if necessary.

The airline was also giving cash to flying staff to ensure they could get access to hotels if there was a bankruptcy.

However, she declined to say how long SAS's cash would last if loans with the banks were not agreed to.

The governments and six banks have said they will lend SAS about 3.5 billion Swedish crowns ($515 million) if the airline can secure a deal with the unions to slash costs.

SAS expects cost cuts to improve earnings by 3 billion crowns while asset sales would strengthen the company's balance sheet another by 3 billion crowns.

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PRESS DIGEST - Wall Street Journal - Nov 19

Mon Nov 19, 2012 2:00am EST

Nov 19 (Reuters) - The following are the top stories in the Wall Street Journal on Monday. Reuters has not verified these stories and does not vouch for their accuracy.

* Citigroup Inc is on track to eliminate 300 sales-and-trading jobs globally in 2012, according to people briefed on the process. The cuts follow a 5 percent reduction in Citigroup's securities-and-banking unit last year, a move that culled 900 jobs. The sales-and-trading business is part of the securities unit, which employs roughly 17,000 people. ()

* U.S. companies are scaling back investment plans at the fastest pace since the recession, signalling more trouble for the economic recovery. ()

* The trustee unwinding Lehman Brothers Inc reached an agreement with Citigroup that ends a long-running legal fight over more than $1 billion that Lehman deposited at the bank the week it filed for bankruptcy protection. ()

* Surf and skate apparel retailer Billabong International Ltd said on Monday the head of its Americas division, Paul Naude, was considering a buyout of the company. ()

* Cisco Systems Inc said on Sunday that it will acquire closely held Meraki Inc in a cash deal valued at about $1.2 billion. ()

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Bankrupt Alabama county's leaders report headway toward deal

Fri Nov 16, 2012 5:54pm EST

Nov 15 (Reuters) - Negotiators for Alabama's bankrupt Jefferson County and Wall Street creditors are making modest headway but still have a long way to go before reaching a deal to end America's biggest municipal bankruptcy, county leaders said on Friday.

After meeting creditors of the county's sewer system, Jefferson County Commission President David Carrington and Commissioner Jimmie Stephens gave no details but said more negotiating sessions were expected in New York in early December.

"Yesterday's meetings with the sewer creditors in Los Angeles were productive, but much more work needs to be done before there can be a consensual agreement," Carrington and Stephens said in a written statement.

Home to Birmingham, Alabama's biggest city, Jefferson County on Nov. 9, 2011, filed a $4.23 billion Chapter 9 municipal bankruptcy caused mainly by more than $3 billion of soured sewer system debt, political corruption and the loss of a local jobs tax worth about $60 million a year.

The county has defaulted on debt payments, laid off hundreds of government workers and cut back on police, repairs, medical and other essential services.

Under Chapter 9, the county gets much relief from lawsuits and creditors but is obliged to develop a plan of adjustment sketching out how it will satisfy creditors and fund future operations.

The plan must ultimately be approved by a U.S. bankruptcy judge, and Carrington has said he hopes to have the plan ready sometime this winter.

Last week, Carrington, Stephens and other county commissioners approved a sewer-system rate hike of about $2 a month for most customers. The rate hike will be the first since 2008 and equals a rise of about 5.2 percent over five years, based on the county's average monthly sewer bill of $38 for about 126,000 customers.

Wall Street creditors say the rate hike was too little and asked Judge Thomas Bennett, who is overseeing the case, to allow them to press for bigger increases in a state court. Bennett has not ruled on that request.

Bondholders, including some who still draw payments from the sewer system's revenues after expenses, argued that the county's rate hike badly trailed national trends of increases of more than 26 percent over five years.

A tentative agreement reached prior to last November's bankruptcy filing fell apart. That deal might have delivered a $1 billion reduction in the county's debts.

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