Apollo Global Management LLC (APO), the buyout fund led by billionaire Leon Black, is planning to take a dividend from Hostess Brands Inc. after buying the maker of Coffee Cakes and Twinkies out of bankruptcy 14 months ago.
Apollo and co-owner C. Dean Metropoulos & Co. are seeking $175 million from Hostess, according to a statement from Standard & Poor’s. The payout won’t affect the company’s rating of B- and will leave it with $40 million in cash and $60 million in available credit.
The buyout funds bought the Kansas City, Missouri-based baker in March 2013 for $410 million. C. Dean Metropoulos leads the bakery after turning around struggling brands such as Chef Boyardee and Bumble Bee Tuna.
Charles Zehren, an Apollo spokesman at Rubenstein Associates, declined to comment on the deal. Hannah Arnold, a spokeswoman for Hostess at LAK Public Relations Inc., didn’t immediately respond to requests seeking comment on the proposed dividend.
Since relaunching, Hostess has used less cash than S&P originally forecast and earnings before interest, depreciation and amortization have exceeded previous estimates, the credit rater said. S&P is maintaining its “highly leveraged” financial risk profile on Hostess because of its ownership by the private equity sponsors.
The company’s brands include Ding Dongs, Suzy Q’s and Sno Balls. It advertised its return to the market as “The Sweetest Comeback in the History of Ever.”
A predecessor filed for bankruptcy in January 2012, less than three years after emerging from a previous period of court protection. The latest bankruptcy, which included other divisions in addition to the Hostess baked goods unit, came after a strike by bakers and left asset buyers free of union contracts and $1.3 billion in debt.
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