US baker Hostess Brands has reportedly hired restructuring advisers as it continues to struggle with changing consumer habits, high labour costs and rising raw material prices.

The Twinkies and Wonder Bread baker is working with law firm Jones Day and financial-services firm Perella Weinberg Partners to balance the books and handle creditors, The Wall Street Journal said yesterday, citing anonymous sources.

Texas-based Hostess has struggled since emerging from bankruptcy protection in 2009 and has been hit hard by high prices for sugar, flour and other ingredients, as well as the high costs inherent in having a heavily unionised workforce.

Trends for healthier eating have also affected its bottom line, despite efforts to offer consumers healthier choices, like reducing sodium levels in its bread portfolio.
Officials at Hostess and Jones Day were unavailable for immediate comment.

The sources told the WSJ that Hostess is trying to renegotiate hundreds of separate labour contracts to lower costs and could end up seeking bankruptcy protection to do so if unable to reach agreements with unionised workers outside of court.

Wall Street restructuring advisers usually look at a range of options for helping distressed companies, including raising new debt or equity or handing ownership stakes to creditors in lieu of the debt.

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