The doors are locked and the sign says closed on the Hostess Bakery Thrisftshop on Dollarway Road after the parent company of Hostess closed its business. (Special to the Commercial/William Harvey)
Cookies & Sweets Bakeries LLC of Pine Bluff filed a motion in U.S. Bankruptcy Court in New York Monday to purchase legendary snack foods maker Hostess Brands Inc., which is currently in liquidation proceedings.
James Davis, the owner of Cookies & Sweets, operated a store in The Pines mall until 2010, when he became embroiled in a lawsuit filed against his business by then-mall owners Pines Mall Partners, over the failure of Davis to pay rent beginning in February 2010.
Jefferson County District Judge Robert Wyatt Jr. found for Pines Mall Partners and awarded damages in the amount of $39,729 plus court costs and attorney’s fees. The ruling was sustained on appeal to the Arkansas Court of Appeals by Davis in a Dec. 14, 2011, ruling by Judge Rita W. Gruber.
Davis testified at trial that he began to withhold rent after he became concerned about the financial condition of the mall.
Davis said Wednesday from his home in Detroit, Mich., that the purchase of Hostess is part of his strategy to take his cookies and cakes to a global level.
“When I opened the store in the mall in Pine Bluff I was limited in what I could do,” Davis said. “I was baking and manufacturing dough; everything a small Hostess would do. I knew that I needed to expand and grow to a global level and export my products. I had people from different parts of the country as well as Europe and Canada tell me that they enjoyed my products so I knew that I had a good product.”
Davis said that after his business at the mall ended he had time to reflect upon what the next phase of his career would be.
“When I shut down that was time for me to step outside the business and search for a way to grow it on a national level,” Davis said. “Detroit has a program to help businesses develop and export their product and I am taking advantage of that.”
Davis said that he decided to try to purchase Hostess or a portion of the company once it entered bankruptcy proceedings.
“I saw this as a great opportunity,” Davis said. “They already have all of the infrastructure in place and are liquidating everything. I saw this as a great opportunity to step in and acquire the company. I contacted a lawyer in New York and haven’t heard back so I decided to go on and file the motion for a continuance to buy Hostess Brands.”
Davis said that he is considering an Initial Public Offering to raise funds for the purchase of Hostess.
“Hostess had $2.5 billion in revenues last year and this underlines the possibility of a multi-billion dollar value in an IPO,” Davis said. “With Zynga and Facebook look at what they did. With Hostess Brands under Cookies & Sweets we will be bigger than Facebook.”
“An IPO raises money; that’s all it does,” Davis said. “In recent IPO’s, investment bankers have come in and given a lot of money to businesses and when it goes public they take it out again. What I am trying to do with an IPO is establish a way to go public with no money. The purpose of going public is to raise money. It is a way to raise money without going to a bank.”
Davis said that he is also open to partnering with investment bankers.
“I was waiting to file my paperwork with the Securities and Exchange Commission because someone can come in and make a direct offer,” Davis said. “I am looking at potential investors.”
Davis said that he had hoped to file the motion before Hostess laid off its employees.
“I tried to catch them before they laid off their employees but I was a little late,” Davis said. “I will have to wait on the judge to approve it and once he does, he will authorize Cookies & Sweets to go through the negotiating process.”
Davis said that even if he is unsuccessful in acquiring the whole company he will attempt to buy at least part of it.
“Hostess plans to break off each product division and sell each one,” Davis said. “There are around 15 product lines. I could still buy some of the plants.”
Davis spent some time as a student at the University of Arkansas at Pine Bluff and has good feelings for the region.
“There are only 49,000 people in Pine Bluff and when I was there I saw a lot of opportunity for growth,” Davis said. “I saw Arkansas as a great opportunity. I would like to build a plant in Pine Bluff.”
Davis has big plans for the future.
“It is my vision to go global,” Davis said. “I’m talking way more than the products Hostess is currently selling. The world has more than seven billion people and Hostess was only catering to 333 million. The company will probably be 10 times that and take the workforce from 18,500 to 50,000.”
“I think it will be a good marriage between Cookies & Sweets and Hostess,” Davis said.