- Hostess announced Monday that the company had completed its debt refinancing, Food Business News reported.
- The company had its first lien term loan repriced to LIBOR plus 3% from LIBOR plus 3.50%. The company refinanced the $83 million left from the company’s second lien term loan, which had an interest rate of LIBOR plus 7.50%, by using an incremental $83 million first lien term loan priced at LIBOR plus 3%.
- The company anticipates about $8 million of annual interest expense savings due to the refinanced capital structure.
This is a major step forward for Hostess, which has struggled through bankruptcies in the past. The comeback began when investment firms Metropoulos & Co. and Apollo Global Management LLC purchased the Hostess snack cake brands out of liquidation in 2013. Since then, Hostess has overhauled its supply chain model, added bread back to its lineup once again, made its frozen foods debut with Deep Fried Twinkies and acquired an in-store bakery company.
In July, Hostess' owners sold a majority stake in the company to Gores Holdings Inc., a publicly traded special-purpose acquisition company (SPAC) sponsored by Gores Group LLC. Gores Holdings then took Hostess public earlier this month without needing to undergo an IPO because of the SPAC ownership structure.
Hostess has made minor adjustments to select products to better align them with consumers' health concerns. But the company has primarily pursued promoting the indulgent aspect of its portfolio. With many brands reformulating products to meet consumer demands for better-for-you snacks and desserts, Hostess recognized the role its products played as nostalgic sweet goods consumers still wanted.
Industry experts foresaw Hostess' success, with the Boston Consulting Group and IRI naming Hostess one of the fastest growing mid-sized CPG companies last year.