United Refining Energy Corp. has won a bankruptcy auction for the assets of Metro Fuel Oil Corp. with a $27 million bid, Dow Jones DBR Small Cap reported today. According to papers filed on Wednesday, United Refining emerged as the winner of a two-day auction held Monday and Tuesday for the assets with its $27 million cash offer and commitment to hire at least 75 percent of Metro Fuel's workers. Castle Oil Corp. has been designated the backup bidder with a $20 million cash offer.
The union representing Hostess Brands Inc.'s fired bakery workers held talks with companies bidding for the Twinkie maker's assets, the union’s leader said, Bloomberg News reported yesterday. "We've engaged with potential future owners and we're willing to work with them," said David Durkee, president of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union. He did not specify which companies the union contacted or what was discussed. The union signed a confidentiality agreement allowing it to pursue the talks and will fight to be part of Hostess’s future, Durkee said. Hostess, founded in 1930, is liquidating its brands, recipes, plants and other assets after failing to reach an agreement with the striking union on concessions to help the company emerge from its second bankruptcy.
Unsecured creditors of A123 Systems Inc., a bankrupt maker of batteries for electric cars that had U.S. government backing, will likely collect around 65 cents for each dollar they are owed, Reuters reported yesterday. The money largely comes from the sale of most of the company's assets to a unit of China's largest auto parts firm, Wanxiang Group. The $260 million sale sparked outrage among some members of Congress, who warned it was a transfer of sensitive technology developed with U.S. taxpayer money. However, the deal had the support of A123's committee of unsecured creditors and was approved last month by a U.S. government panel that oversees foreign investment.
American Airlines parent AMR Corp. and US Airways Group Inc. are hashing out the last major details of a merger agreement that would create the world's largest airline and are racing to finalize a deal, the Wall Street Journal reported today. If the deal is reached, the new company could have a market capitalization of more than $10 billion and would vault ahead of United Continental Holdings Inc. as the biggest U.S. airline by traffic. The all-stock deal would be executed as a reorganization plan that takes American out of chapter 11 protection. American has resisted a deal at various points in favor of emerging from bankruptcy protection as an independent airline. Significant points of the deal, including how to split ownership of the airline and how to arrange board seats and management ranks, remain unresolved. The boards of both airlines have not yet convened to consider the deal, although American representatives yesterday discussed whether to schedule such a meeting.
Attorneys for Pitman Family Farms filed court papers on Tuesday in which they claimed that bankrupt Zacky Farms has sped up the sale and delivery of more than $1 million worth of whole turkey inventory to Stater Bros. Markets, a private grocery retailer based in Southern California, Reuters reported yesterday. The sale of the inventory originally had been scheduled from Jan. 30 through March 8. Instead, according to Pitman's attorneys, "Zacky revised the delivery schedules to deliver five or six loads a day" so all of the meat would be delivered to the retailer weeks before the bankruptcy court's expected approval of the sale of Zacky Farms. The agreement to buy Zacky Farms out of chapter 11 was based on Pitman having access to that inventory of frozen birds "to help offset losses that will be incurred after the approved sale," according to the court papers.
While the Twinkie's demise nearly came about at the hands of corporate America's machinations, its survival depended on a bankruptcy liquidation that made the 83-year-old brand salvageable, according to a New York Times DealBook analysis yesterday. Its first owner, Continental Baking Company, bought companies left and right in the 1920s, including the Taggart Baking Company, maker of Wonder bread, in 1925. Continental Baking continued its acquisition spree and by 1968 it was a motley assortment of baking brands that fed on America's tastes for sweet and easy food. It was then acquired by Harold Geneen's ITT, a conglomerate that sold not only Twinkies but also munitions. There, the brand sat for 16 years until Continental Baking was sold in 1984 for $475 million to Ralston Purina. By then the baking business had entered a slow growth phase as inflation in baked goods, which had allowed the company continually to raise prices, subsided. Ralston Purina was unable to produce growth in the brands and ended up selling the bakery for about $400 million in 1995 to Interstate Bakeries. Interstate Bakeries was itself a mongrel of many brands put together by serial acquisitions. The company entered bankruptcy in 2004. More than four years later, it emerged, now owned by Ripplewood, which put up $130 million to acquire it. It was then that the company rebranded itself as Hostess Brands. Despite the company's cost cuts, and its reductions in employee headcount by about 10,000, that was still not enough to stave off bankruptcy. Hostess in 2012 filed a plan to liquidate the company and fire almost all its 18,000 employees. Instead of trying to work out a compromise by reorganizing in bankruptcy, the company used the bankruptcy process to escape all its past burdensome debts.
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Natural gas driller Norse Energy Corp. USA plans to take out a $5 million bankruptcy loan to keep paying rent to the owners of 130,000 acres of land outside Syracuse, N.Y., while state environmental regulators write new hydraulic-fracturing rules, Dow Jones DBR Small Cap reported today. It is unclear how much of the proposed $5 million loan would pay to maintain the company's seven nonproducing wells or pay off bondholders who've extended about $21 million to the company. Read more. (Subscription required.): http://bankruptcynews.dowjones.com/Article?an=DJFDBS0020130206e926itt1n…
Ally Financial Inc., the U.S. auto lender that is majority-owned by the U.S. government, is working to repay $5.9 billion in preferred stock owned by the U.S. Treasury "in the near future," Chief Executive Officer Michael Carpenter said, Reuters reported yesterday. The preferred stock is part of the $17.2 billion that the government poured into Ally, the former auto lending arm of General Motors Co., during a series of crisis-era bailouts. Part of the investment was restructured into a 74 percent common equity stake. After Ally reported a $1.44 billion fourth-quarter profit, Carpenter told analysts on a conference call that repaying the preferred stock involves talks with the Federal Reserve. The regulator wants to make sure that Ally and other large banks have enough capital to survive a severe economic downturn as part of annual stress tests that are now under way.
Overseas Shipholding Group Inc., the largest U.S. tanker operator, won approval to borrow $25 million to maintain ships and to make payments to two lenders that funded construction of its vessels, Bloomberg News reported yesterday. Bankruptcy Judge Peter Walsh said yesterday that he would approve the loans after a group of Overseas's lenders dropped their opposition to the financing. The New York-based company filed for bankruptcy last year after global shipping rates fell and the company gave up trying to win a federal loan guarantee. Overseas listed assets of $4.15 billion and debt of $2.67 billion in its chapter 11 filing.
