Bankrupt snack food maker Hostess Brands is trying to get union workers to approve its most recent proposal.
The company, which is attempting to reorganize, will offer the unions a quarter of its equity and two seats on its new nine-member board in exchange for wage and benefit cuts and changed working rules, Fortune notes.
In addition to the equity stake and seats on the board, the latest five-year contract proposal would trim wages 8% this year, but offer a 3% increase next year. Workers would be required to contribute more for health insurance and pension plan contributions would be suspended until 2015, and reduced sharply thereafter.
The maker of Twinkies, Wonder Bread and Ding Dongs filed for bankruptcy protection in January. In order to emerge from bankruptcy it needs to renegotiate contracts with its unions. This is Hostess’s second run through bankruptcy. It is staggering under $1 billion in debt.
Hostess’ creditors have signed off on the new contract proposal.
While union leaders refused to officially accept the proposal, workers from the Teamsters as well as the Grain Millers International and Confectionery Tobacco Workers union will vote on the proposal in the next two months.
Hostess officials say that if the new offer is not approved, they will liquidate the company.
Union officials told their members that while they could not endorse the deal, they felt that the workers should vote on it since rejection of the terms almost certainly means an end to their jobs.
If the contract proposal is approved, the company could emerge from bankruptcy in December.