BRATTLEBORO — It's time, once again, to make the doughnuts. And the bread.
A saga with as many twists as a cruller came to an end on May 27 with the news that a family-owned Canadian baker is buying the recently closed Koffee Kup Bakery of Burlington and its subsidiary, Vermont Bread Company of Brattleboro.
Mrs. Dunster's Bakery, a Sussex, New Brunswick–based company that distributes its breads, doughnuts, muffins, and cookies across Atlantic Canada and Maine, made the purchase announcement within hours of getting word from the Vermont Economic Progress Council it would receive up to $2.4 million in Vermont Employment Growth Incentive (VEGI) money to restart the Koffee Kup and Vermont Bread plants.
No purchase price was announced.
Rosalyn and Blair Hyslop, the co-owners and co-CEOs of Mrs. Dunster's, said that Koffee Kup and Vermont Bread will be part of a new entity, the North Atlantic Baking Company, and that they will continue to bake and market the products previously made by Koffee Kup and Vermont Bread.
The North Atlantic Baking Company was incorporated on May 25 with John Mazzuchi, a Middlebury attorney, as its agent.
The deal includes the Koffee Kup bakery and distribution operation in Burlington, the Vermont Bread Company bakery on Cotton Mill Hill, and Superior Bakery in North Grosvenor Dale, Conn. The Hyslops have indicated, however, they will likely sell the Connecticut bakery.
“We are hopeful to have this completed within a few days, to quickly get employees back to work and products back on the shelves.” the Hyslops said in a May 27 news release.
They said they “have dreamed for many years of expanding our reach to the rest of New England. We are ready to devote our experience, passion and resources to this project, and are excited to work with these talented and experienced employees in a positive, family-oriented workspace.”
The good news ended a turbulent few weeks for 150 Koffee Kup workers in Burlington and 100 Vermont Bread workers in Brattleboro who were thrown out of work on April 26 without warning or explanation.
“We're happy we're going to get going again,” said former Vermont Bread Plant Manager Mike Griswold. He had been retained to show the Brattleboro bakery to prospective buyers.
Griswold said he had a chance to meet the Hyslops. “They're good people,” he said.
That sentiment was echoed by Adam Grinold, executive director of the Brattleboro Development Credit Corporation, which helped facilitate the sale.
“It's a good outcome for everyone involved,” said Grinold. “Since the announcement, I've heard from a lot of business people from New Brunswick, and they all said that Mrs. Dunster's is a great business with a great culture.”
Many suitors
Mrs. Dunster's was one of several bidders for Koffee Kup after it was put on the market.
American Industrial Acquisition Corporation (AIAC), a New York-based investment firm, bought Koffee Kup on April 1 and agreed to provide up to $2.5 million in financial support.
However, three weeks later, AIAC decided to shut down Koffee Kup's operations just after lenders at Key Bank received an email from Koffee Kup's outgoing CEO suggesting a sale to “a third party is much less messy and the bank will earn out more at the end than the best liquidation scenario,” according to a copy obtained by VtDigger.org.
AIAC claimed that Koffee Kup had “suffered substantial financial losses and was unable to find a way out of their troubles.”
The sudden closure prompted a $3 million class action suit filed by Koffee Kup employees in federal court, alleging that AIAC had violated the provisions of federal Worker Adjustment and Retraining Notification Act of 1988 by not giving employees proper notice.
In the swirl of lawsuits after the sudden closure, a court-appointed receiver, Ronald Teplisky, was put in charge of selling Koffee Kup's assets.
There were several bidders, and it looked like East Baking Company, based in Holyoke, Mass., had the inside track to buying the bakeries.
East Baking asked for and received approval to apply for the VEGI program, which is incentive-based with funds contingent on the grant recipient meeting and maintaining job growth and payroll targets over the course of several years.
Not long after, Mrs. Dunster's also applied for state incentive money and got the green light from VEPC to participate in the VEGI program on May 27.
In a statement to VtDigger, VEPC officials said that “while the closing of Koffee Kup and Vermont Bread is something nobody wanted to see, we are encouraged that multiple buyers have quickly emerged to try and revive these Vermont brands. Given the reported financial troubles these brands had experienced over the last few years, both companies approved by VEPC are now able and interested in this purchase.”
Shortly after releasing that statement, Mrs. Dunster's sent their news release confirming the acquisition.
East Baking expressed its disappointment in losing out on Koffee Kup.
“We find it highly unusual that a company that is heavily subsidized by the Canadian government would be subsidized by the people of Vermont to buy an iconic U.S. brand,” East Baking spokesperson Jeff McCarroll said in a May 27 statement. “We are happy for the employees going back to work and sad for the ones who will not.”
Grinold said he was not surprised at how much interest there was in Koffee Kup and Vermont Bread.
“The baking industry is a small world, and word got out quickly,” he said. “BDCC worked closely with Key Bank and the receiver to link them up with potential buyers and walk the potential buyers through the VEGI process.”
Lots of work to do
The Hyslops said that North Atlantic Baking is negotiating a leasing agreement with the receiver that they hope to have completed shortly “to allow us to quickly get employees back to work and products back on the shelves while we work through the formal transferring of assets, the details of which have been largely agreed to."
Griswold said he had gotten many calls from Vermont Bread employees eager to get their old jobs back.
“A few people had found other jobs, but most of them just want to come back,” he said.
But Griswold said that not everyone who wants to come back will have jobs waiting for them when Vermont Bread reopens.
Griswold said that while Koffee Kup and Vermont Bread products have been off the grocery shelves for a little more than a month and that he keeps getting calls from people asking where their favorite bread and English muffins have gone, it is going to take time to get those products back into the stores.
“We'll be making the same products, but we'll have to start the distribution system from scratch,” he said. “It's going to be a slow process to get it back to where it was.”
Grinold said BDCC plans to work with the new management team, as well as state officials, “to help them create new jobs.”
Mrs. Dunster's Bakery was established by Ingrid Dunster in the 1960s as Mrs. Dunster's Donut Company. It was bought by the Hyslops in 2014.
Koffee Kup, founded in 1925, purchased Vermont Bread in 2013.