Southwest planes flying after computer glitch

CHICAGO — Southwest Airlines was operating normally Saturday afternoon after a system-wide computer failure caused it to ground 250 flights for nearly three hours late Friday night.

Full service was restored just after 2 a.m. EDT Saturday, but the Dallas-based airline experienced lingering delays in the morning as it worked to clear a backlog of flights and reposition planes and crew.

The airline — the country's largest domestic carrier — canceled 43 flights Friday night and another 14 Saturday morning.

Southwest is the latest airline to ground flights because of a large computer outage. But its problem was minor compared to those experienced by two competitors — thanks in part to its late-day timing.

In April, American Airlines grounded all of its flights nationwide for several hours due to computer problems. The airline ultimately canceled 970 flights. And last year, United Airlines had two major outages: one in August delayed 580 flights; another in November delayed 636 flights.

The problem was detected around 11 p.m. EDT Friday, Southwest spokesman Brad Hawkins said. It impaired the airline's ability to do such things as conduct check-ins, print boarding passes and monitor the weight of each aircraft. Some flights were on the taxiway and diverted back to the terminal, Hawkins said. Flights already in the air were unaffected.

Most of Southwest's cancelations Friday night were in the western half of the country, according to airline spokeswoman Michelle Agnew. Saturday's cancelations were scattered across the U.S. They included planes leavings from Minneapolis, Chicago, Phoenix, Denver and San Diego, according to flight tracking service FlightAware.

Southwest flies an average of 3,400 flights each day.

Agnew said in an email Saturday morning that the airline's technology team is "still working to confirm the source of the issue."

Shortly after 2 a.m., Southwest posted on its Twitter page that "systems are operating and we will begin work to get customers where they need to be. Thanks for your patience tonight."

Agnew said the computer system was "running at full capacity" by early Saturday. Before that, though, officials used a backup system that was much more sluggish.

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AP Airlines Writer Scott Mayerowitz in New York contributed to this report.

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US to Hong Kong: Don't delay Snowden extradition

WASHINGTON — The Obama administration on Saturday sharply warned Hong Kong against slow-walking the extradition of Edward Snowden, reflecting concerns over a prolonged legal battle before the government contractor ever appears in a U.S. courtroom to answer espionage charges for revealing two highly classified surveillance programs.

A formal extradition request to bring Snowden to the United States from Hong Kong could drag through appeal courts for years and would pit Beijing against Washington at a time China tries to deflect U.S. accusations that it carries out extensive surveillance on American government and commercial operations.

The U.S. has contacted authorities in Hong Kong to seek Snowden's extradition, the National Security Council said Saturday in a statement. The NSC advises the president on national security.

"Hong Kong has been a historically good partner of the United States in law enforcement matters, and we expect them to comply with the treaty in this case," White House national security adviser Tom Donilon said in an interview with CBS News. He said the U.S. presented Hong Kong with a "good case for extradition."

However, a senior administration official issued a pointed warning that if Hong Kong doesn't act soon, "it will complicate our bilateral relations and raise questions about Hong Kong's commitment to the rule of law." The official was not authorized to discuss the matter by name and insisted on anonymity.

Hong Kong's government had no immediate reaction to the charges against Snowden, a former National Security Agency contractor who admitted providing information to the news media about the programs. Police Commissioner Andy Tsang told reporters only that the case would be dealt with according to the law. A police statement said it was "inappropriate" for the police to comment on the case.

A one-page criminal complaint against Snowden was unsealed Friday in federal court in Alexandria, Va., part of the Eastern District of Virginia where his former employer, government contractor Booz Allen Hamilton, is headquartered, in McLean. He is charged with unauthorized communication of national defense information, willful communication of classified communications intelligence information and theft of government property. The first two are under the Espionage Act and each of the three crimes carries a maximum sentence of 10 years in prison on conviction.

The complaint is dated June 14, five days after Snowden's name first surfaced as the person who had leaked to the news media that the NSA, in two highly classified surveillance programs, gathered telephone and Internet records to ferret out terror plots.

Snowden told the South China Morning Post in an interview published Saturday on its website that he hoped to stay in the autonomous region of China because he has faith in "the courts and people of Hong Kong to decide my fate."

A prominent former politician in Hong Kong, Martin Lee, the founding chairman of the Democratic Party, said he doubted whether Beijing would intervene yet.

"Beijing would only intervene according to my understanding at the last stage. If the magistrate said there is enough to extradite, then Mr. Snowden can then appeal," he said.

Lee said Beijing could then decide at the end of the appeal process if it wanted Snowden extradited or not.

Snowden could contest extradition on grounds of political persecution.

Hong Kong lawyer Mark Sutherland said that the filing of a refugee, torture or inhuman punishment claim acts as an automatic bar on any extradition proceedings until those claims can be assessed.

"Some asylum seekers came to Hong Kong 10 years ago and still haven't had their protection claims assessed," Sutherland said.

Hong Kong lawmakers said that the Chinese government should make the final decision on whether Snowden should be extradited to the United States.

Outspoken legislator Leung Kwok-hung said Beijing should instruct Hong Kong to protect Snowden from extradition before his case gets dragged through the court system.

Leung urged the people of Hong Kong to "take to the streets to protect Snowden."

The Obama administration has now used the Espionage Act in seven criminal cases in an unprecedented effort to stem leaks. In one of them, Army Pfc. Bradley Manning acknowledged he sent more than 700,000 battlefield reports, diplomatic cables and other materials to the anti-secrecy website WikiLeaks. His military trial is underway.

Sen. Bill Nelson, D-Fla., a member of the Senate Armed Services Committee, welcomed the charges against Snowden.

"I've always thought this was a treasonous act," he said in a statement. "I hope Hong Kong's government will take him into custody and extradite him to the U.S."

But the Government Accountability Project, a whistle-blower advocacy group, said Snowden should be shielded from prosecution by whistle-blower protection laws.

"He disclosed information about a secret program that he reasonably believed to be illegal, and his actions alone brought about the long-overdue national debate about the proper balance between privacy and civil liberties, on the one hand, and national security on the other," the group said in a statement.

Michael di Pretoro, a retired 30-year veteran with the FBI who served from 1990 to 1994 as the legal liaison officer at the American consulate in Hong Kong, said "relations between U.S. and Hong Kong law enforcement personnel are historically quite good."

"In my time, I felt the degree of cooperation was outstanding to the extent that I almost felt I was in an FBI field office," di Pretoro said.

The U.S. and Hong Kong have a standing agreement on the surrender of fugitives. However, Snowden's appeal rights could drag out any extradition proceeding.

The success or failure of any extradition proceeding depends on what the suspect is charged with under U.S. law and how it corresponds to Hong Kong law under the treaty. In order for Hong Kong officials to honor the extradition request, they have to have some applicable statute under their law that corresponds with a violation of U.S. law.

Disclosure of the criminal complaint came as President Barack Obama held his first meeting with a privacy and civil liberties board and as his intelligence chief sought ways to help Americans understand more about sweeping government surveillance efforts exposed by Snowden.

The five members of the little-known Privacy and Civil Liberties Oversight Board met with Obama for an hour in the White House Situation Room, questioning the president on the two NSA programs that have stoked controversy.

One program collects billions of U.S. phone records. The second gathers audio, video, email, photographic and Internet search usage of foreign nationals overseas, and probably some Americans in the process, who use major Internet service providers, such as Microsoft, Google, Apple, and Yahoo.

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Voters in Mass. city approve Wynn casino deal

EVERETT, Mass. — Voters in Everett overwhelmingly approved an agreement between city officials and Las Vegas casino mogul Steve Wynn, who wants to build a $1.2 billion resort casino at the site of a former chemical plant on the Mystic River.

Saturday's vote was the first binding referendum on a casino proposal since passage of the state's expanded gambling law in 2011.

The host community agreement was backed by a better than 6-1 margin, according to the city clerk. Passage was required before Wynn could apply to the state gambling commission for one of the three casino licenses allowed under the law.

"The decision of the Massachusetts Legislature to require community approval of gaming developments was a wise one," Wynn said after the vote in a statement released by his firm, Wynn Resorts. "It is rooted in the common sense notion that for any development to be meaningful, it must have robust support within the community.

"The voters of Everett have spoken clearly and decisively. The vote heightens our enthusiasm and dedication to this fine project," added Wynn, whose prominent Las Vegas properties include Bellagio and The Mirage.

The deal struck with Mayor Carlo DeMaria and other city officials calls for Wynn to make $30 million in advance payments to Everett and more than $25 million in annual payments if the casino is built.

In the agreement, Wynn also promised to mitigate traffic impacts in the city and complete a multimillion-dollar cleanup of pollution at the site, plus give hiring preference to Everett residents for the estimated 8,000 temporary and permanent jobs the project would bring.

Wynn turned his focus to Everett, a city of about 42,000 residents just north of Boston, after an earlier proposal to build a casino in Foxborough ran into opposition from many residents and officials.

City Councilor Michael McLaughlin, whose district includes the proposed casino site, said he was thrilled by the resounding vote of support for the project but acknowledged many hurdles remain.

"This is the first step of many milestones we have to cross," McLaughlin said. "This gives us the momentum and the energy to go forward."

One challenge facing Wynn and Everett officials is convincing neighboring communities to also sign on to the casino proposal. Somerville Mayor Joseph Curtatone is among those who have expressed major reservations about the plan.

McLaughlin said he hopes to sit down with Curtatone and others in the coming weeks and try to convince them that the proposed development will bring regional economic benefits.

No organized group formed in Everett to oppose the plan, but some residents were wary of a casino bringing traffic gridlock, crime, and other social ills.

"This is just round one of a very long fight," said Evmorphia Stratis, a local artist who emerged as an unofficial spokeswoman against the project, of Saturday's vote. She called casinos a "predatory business."

Wynn's plan could be in competition for the eastern Massachusetts casino license with proposals from Suffolk Downs and Foxwoods Resorts, which is backing a proposed casino in Milford. Host agreements have not been signed yet in those communities and votes have not been scheduled.

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Crowdfunders push SEC for investor OK

The startup community is anxiously awaiting SEC regulations that would allow crowdfunders to invest in a company instead of receiving a reward like a sticker, but some, including one state official, want to make sure the rules are clear and prevent fraud.

"If they're going to have this, the rules need to be laid out," Secretary of State William F. Galvin said.

The regulations, part of the JOBS act, originally were due by Jan. 1, but have been delayed by the Securities and Exchange Commission. Title III of the JOBS act, called the Crowdfund Act, will provide an exemption to the current requirement that companies offering stock or other investment opportunities register with the SEC, which can be resource and time intensive. The SEC has not yet written the specific rules to regulate the exemption, although it has said the rule-making process is a top priority.

In the public comments section on the SEC's website, Galvin has submitted several letters outlining potential concerns.

"We want to make sure the potential for misrepresentation is not there," Galvin said. "There has to be some protections there to make sure it wouldn't be abused."

Instead of individual companies registering with the SEC, the funding portal, likely to take the form of a website, would register. The portal would be required to take anti-fraud measures, among other responsibilities.

Once the rules are in place, the potential for new companies will be huge, according to Tanya Prive, founder of RockThePost, an online funding site for startups.

"It democratizes the process of funding for startups," she said. "The power of fundraising is going to be substantially increased."

Still, not everyone is convinced that crowdfunded investments are smart. "I think it's bad for everybody," said Daniel Isenberg, the executive director of the Babson Entrepreneurship Ecosystem Project. "This will lead people to unexpectedly lose more money than they think. It will be lots and lots of people losing small amounts of money."

"Equity crowd-funding can't work," he said.

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Upstarts raise money for startups

Some recent graduates — hoping to escape from student debt, start a business or learn new skills — are using an innovative crowdfunding site to promise a percentage of their future earnings in exchange for cash in the short term.

Rachel Honeth Kim, a Harvard Business School graduate living in San Francisco, is raising $100,000 so she can pay off her loans and jump-start her business. To get the cash, she signed on with the crowdfunding site Upstart.com. She committed to paying back the money over 10 years, through a percentage of her income that will depend on the final amount of money she raises.

"The biggest thing for me was the financial implications of going out on my own," she said. "The only thing that's kind of been holding me back is the debt I have."

Kim quit her job four weeks ago, and started Nailed Kit, a custom nail art kit for parties. "It's so liberating to finally be able to take the plunge," she said.

What makes Upstart different than many other crowdfunding services is the investment in people's future earnings.

"It's actual investment in a person as opposed to stock or companies," said founder and CEO Dave Girouard, a former Google executive.

Unlike Kickstarter, where backers support a specific product, Upstart backers invest in the people behind the business or product. If the first business fails, as many startups do, the relationship between backer and the young entrepreneur, or "Upstart," remains the same, but so does the financial obligation.

This is why, Girouard said, many Upstarts use the money to pay off debt or learn a new skill, such as coding, instead of funding a specific project or product.

"They might be pursuing something where they might not be making money" but it will pay off in the future, he said.

Trina Spear, a Harvard Business grad who successfully raised $20,000 through Upstart, used the money to pay for her move from New York City to Los Angeles, where she started a business.

Her company, Figs Scrubs, a fashionable and tailored line of medical scrubs that donates a set of scrubs to doctors in need for every set sold, was invested in further by some of the backers that supported Spear initially, she said.

"The money wasn't the primary reason I was doing it," she said, adding the partnerships she has made with backers has been invaluable. Girouard calls Upstart one part bank, three parts social network.

Backers must be accredited investors in the eyes of the Securities and Exchange Commission, with a minimum net worth or annual income, but Girouard hopes to open up investments to more people. So far, about 200 backers have invested about $1.4 million in 100 people, Girouard said.

Upstart provides a fundraising goal based on a proprietary income prediction model where higher potential earners can raise more money through the site. A Harvard Business School graduate who finished their MBA in 2012 can raise $43,400 in exchange for 3 percent of their income over the next 10 years, but an art history major who graduated from Boston College can raise $14,700 for the same income percentage, for example.

"Computer science majors from great schools earn a lot of money, it's relatively predictable," Girouard said, in response to concerns about putting a monetary value on people. "We don't try to position things as a judgment on a person. We're sensitive to that."

Spear likened the practice to an advance on a book deal, or a record contract.

"Why is it that companies can finance their growth through both equity and debt, but people can only finance their growth through debt?" she said.

Kim said she's optimistic about the payoff from Upstart.

"The worst case scenario is I pay my student debt," she said. "Anybody who has an idea should have an opportunity."

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Lenders are watching buyers’ credit up to the closings

WASHINGTON — You can call it Big Brother. You can call it high-tech snooping. But be aware: If you are applying for a mortgage in the coming weeks, you can be sure that your credit will be checked and re-checked — possibly monitored daily — to make certain no hints of new debts pop up before you close on the loan.

Just as the federal monitoring of phone traffic that's been in the headlines lately was a direct outgrowth of 9/11, pre-closing credit monitoring is a byproduct of the housing crash. Lenders are terrified of being forced to "buy back" loans from investors Fannie Mae or Freddie Mac because borrowers had more debts than they disclosed at the time of application.

As a result, virtually all banks and mortgage companies now use some form of commercially available program to keep tabs on credit files between the date of your loan application to your settlement. One of the three national credit bureaus, Equifax, offers a popular service that monitors applicants 24/7 and can detect even subtle hints that a home purchaser is planning to add on new debt before the closing.

Say your mortgage application was just approved. In the documents you laid out all your credit obligations and just barely passed the lender's crucial "debt-to-income" ratio test. You're feeling upbeat about the prospect of moving to a new home and you start thinking of things you need to buy: Furniture for the living and family rooms. New beds. TVs. Audio equipment.

So you visit a couple of stores and take up their offers for low interest-rate credit lines. You apply for what could come to as much as $14,000 worth of new debt, all to be paid off monthly.

Ping! In Equifax's computer maze, your credit "inquiries" to merchants trigger alerts. Your lender or mortgage broker is notified immediately that you are pursuing additional credit. And in this case, that $14,000 in potential new payment obligations could knock your debt-to-­income ratio over the cliff.

Lenders say clients can mess up transactions in all sorts of ways. Annie Austin, a senior loan officer with Cobalt Mortgage in Bellevue, Wash., says one borrower went out and bought a new Porsche on credit after getting his loan application approved, despite warnings not to incur new debt before closing.

Paul Skeens, president of Colonial Mortgage Group in Waldorf, Md., says that although he hands a prudent "do not do this" list to every applicant, some bor­rowers ignore it or forget that they've got credit-related situations they never disclosed, such as co-signed student loans, applications for overdraft coverage on checking accounts or even that the down payment cash they claimed as their own was actually lent to them by someone else and must be repaid. One borrower, Skeens­ recalled, had received home purchase money on the side from a "loan club" that would require $600 a month to pay off. Oops!

According to Equifax Vice President Raymond White, undisclosed debts — or fresh inquiries for additional credit never disclosed to the lender — now turn up in "nearly one out of five" mortgage applications. Yet under Fannie Mae and Freddie Mac rules, any increase in the total debt-to-income ratio of more than three percentage points, or that pushes the ratio beyond 45 percent, can put the lender into a vulnerable position. If the mortgage later goes bad, Fannie and Freddie can force the lender to buy it back — ­financial torture for any bank.

White says that failure to disclose debts on mortgage applications is an equal opportunity problem, seen in all market segments, including well-off borrowers who have excellent credit. Research by Equifax found that people with high credit scores are significantly more likely to have undisclosed debts — or new credit obligations in the works before settlement — than other applicants.

"The higher the FICO score you have," said White in an interview, "the more likely you are to buy something" — or apply for new credit — that triggers an alert. It's counterintuitive, he agrees, and it's probably because consumers with higher FICOs feel more confident about their credit and may have more resources to handle new debts.

Bottom line: From application to closing, don't shop for new credit. It's entirely possible someone is watching. And you are suddenly a person of interest.

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Journalist, editor, publisher John Dotson dies

BOULDER, Colo. — John L. Dotson Jr., a longtime journalist, editor and newspaper publisher who championed diversity in the newsroom, has died at age 76.

Dotson's family confirmed in an email to The Associated Press that he died Friday in Boulder, Colo., of mantle cell lymphoma. During his long career, Dotson served as an editor at Newsweek and the publisher of two newspapers, including The Akron (Ohio) Beacon Journal when it won a Pulitzer Prize in 1994.

Dotson was an early advocate for minorities and women journalists, joining others in establishing the Institute for Journalism Education in 1977, now the Robert C. Maynard Institute for Journalism Education. The organization pushed for diversity in newsrooms throughout the country.

Dotson was publisher and president of The Beacon Journal from 1992 until his retirement in 2001.

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Vt. gov asks for US review of oil pipeline change

MONTPELIER, Vt. — Vermont Gov. Peter Shumlin has asked Secretary of State John Kerry to require a detailed federal environmental review if the owner of an oil pipeline than runs through Vermont seeks to reverse its flow and move so-called tar sands crude from Montreal to Portland, Maine.

In a letter, Shumlin asked for a presidential permit for the pipeline and an impact statement to assess the environmental costs of reversing the pipeline.

Vermont Deputy Natural Resources Secretary Justin Johnson said the Shumlin Administration is concerned that extracting and burning tar sands oil from western Canada would add to climate change. The letter also said the state's economy and environment would be hurt if the pipeline ruptured and oil spilled.

"So we just want to make sure that if this process goes forward all the environmental factors have been considered and that we have a good understanding both on the federal level and the state level what the risks and the rewards would be," Johnson told Vermont Public Radio (http://bit.ly/1c1bOoO).

The pipeline line now carries conventional crude oil northwest from a terminal in Portland, Maine to refineries in Montreal.

The head of the Portland Pipe Line Corp. has said there are no current plans to reverse the flow of the pipeline, but he's also said he's looking for new business and the pipeline could safely carry tar sands oil.

Vermont's District 7 Environmental Commission has also determined that the project needs a new Act 250 land-use permit if the flow is reversed to carry tar sands, but the pipeline company has asked the commission to reverse that decision.

Pipeline officials did not return a call seeking comment.

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Information from: WVPS-FM, http://www.vpr.net

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VW mum on prospects for Tenn. plant expansion

CHATTANOOGA, Tenn. — Volkswagen calls its Chattanooga plant a global model for energy conservation and efficient production. But executives remain tightlipped about whether the facility is in line to produce a new crossover SUV for the German automaker.

A decision about production of the new model could come as soon as the quarter that begins in July, and local and state officials hope the company decides to double down on the plant that currently employs about 2,500.

A delegation of local officials traveled to VW headquarters in Wolfsburg, Germany, earlier this month to make the case for expanding the Chattanooga plant, which began making the Passat sedan in 2011.

"We are always looking for ways to work with them and encourage their growth in Chattanooga," Mayor Andy Berke, who was on the Germany trip, said in an email.

Economic incentives are likely to play a large role in the decision, just as they did when Chattanooga beat out sites in Alabama and Michigan for the plant in 2008. Tennessee's total incentive package was estimated at $577 million.

"No doubt it takes incentives," Hamilton County Mayor Jim Coppinger was quoted by the Chattanooga Times Free Press as saying after the trip.

Supporters say the returns have more than justified the incentives. A recent University of Tennessee study estimates the plant has spurred the creation of 12,400 jobs — at the plant, with suppliers and at related businesses. The report said the facility creates more than $643 million in annual income and a $53 million annual increase in state and local tax revenues.

If Volkswagen bypasses the Chattanooga plant, it won't be for lack of available space. Jan Spies, VW's head of factory planning, noted at a recent media roundtable in Chattanooga that the facility was laid out to accommodate a doubling of its current size.

"It is designed to be mirrored, it is designed to be expanded and within that we have lots of flexibility to play with whatever should be inside," he said.

Spies said the Chattanooga plant set a new standard for Volkswagen, which has 100 plants worldwide.

"The layout here is fantastic," he said. "We've copied it more than any other layout so far."

But the Chattanooga model doesn't fit all production needs, said Spies, remarking, "As soon as you come to building cars that have a much higher complexity, this layout will not be the best."

For example, the recent expansion of a plant in Gyor, Hungary, required a different design to accommodate the wider range of luxury vehicles made there by Audi, he said. Unlike the Chattanooga plant, which makes only four-door Passat sedans, the Hungary facility is also able to produce two-door cars and station wagons and can produce vehicles with a larger number of customizable options and equipment.

VW unveiled its CrossBlue concept at the North American International Auto Show in January. The crossover would be a first in the U.S. market: a plug-in hybrid SUV with a diesel engine and two electric motors. Volkswagen said it can travel 14 miles in all-electric mode before a diesel engine would kick in.

VW later introduced a CrossBlue Coupe concept at the Shanghai auto show that uses gasoline and electric motors.

Spies declined to speculate on how extensive a task it would be to design expanded operations at the Chattanooga plant while maintaining current energy conservation and production standards.

"It is very much dependent on what we do," he said. "Just on the hypothetical level, you could occupy lots of planners."

Proponents of an expansion at the Chattanooga plant also hope there are no lingering bad feelings over a state law enacted earlier this year that allows workers to store guns in their cars while parked in their employers' parking lots. Frank Fischer, the plant's chairman and CEO, was a vocal opponent of the law.

The state attorney general said in a legal opinion released last month that under the law, employers would still be allowed to fire workers who violate gun bans. A sign at the entrance to the Volkswagen parking lot in Chattanooga notifies workers and visitors that guns are banned.

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Hostess: Twinkies to return to shelves July 15

NEW YORK — Hostess is betting on a sweet comeback for Twinkies when they return to shelves next month.

The company that went bankrupt after an acrimonious fight with its unionized workers last year is back up and running under new owners and a leaner structure. It says it plans to have Twinkies and other snack cakes back on shelves starting July 15.

Based on the outpouring of nostalgia sparked by its demise, Hostess is expecting a blockbuster return next month for Twinkies and other sugary treats, such as CupCakes and Donettes. The company says the cakes will taste the same but that the boxes will now bare the tag line "The Sweetest Comeback In The History Of Ever."

"A lot of impostor products have come to the market while Hostess has been off the shelves," says Daren Metropoulos, a principal of the investment firm Metropoulos & Co., which teamed up with Apollo Global Management to buy a variety of Hostess snacks.

Hostess Brands Inc. was struggling for years before it filed for Chapter 11 bankruptcy reorganization in early 2012. Workers blamed the troubles on years of mismanagement, as well as a failure of executives to invest in brands to keep up with changing tastes. The company said it was weighed down by higher pension and medical costs than its competitors, whose employees weren't unionized.

To steer it through its bankruptcy reorganization, Hostess hired restructuring expert Greg Rayburn as its CEO. But Rayburn ultimately failed to reach a contract agreement with its second largest union. In November, he blamed striking workers for crippling the company's ability to maintain normal production and announced that Hostess would liquidate.

The shuttering triggered a rush on Hostess snack cakes, with stores selling out of the most popular brands within hours.

About 15,000 unionized workers lost their jobs in the aftermath.

In unwinding its business, Hostess sold off its brands in chunks to different buyers. Its major bread brands including Wonder were sold to Flowers Foods, which makes Tastykakes. McKee Foods, which makes Little Debbie snack cakes, snapped up Drake's Cake, which includes Devil Dogs and Yodels.

Metropoulos & Co. and Apollo bought Twinkies and other Hostess cakes for $410 million.

Apollo Global Management, founded by Leon Black, is known for buying troubled brands then selling them for a profit; its investments include fast-food chains Carl's Jr. and Hardee's. Metropoulos & Co., which has revamped then sold off brands including Chef Boyardee and Bumble Bee, also owns Pabst Brewing Co.

That could mean some cross-promotional marketing is in store.

"There is certainly a natural association with the two," Metropoulos said. "There could be some opportunities for them to seen together."

The trimmed-down Hostess Brands LLC has a far less costly operating structure than the predecessor company. Some of the previous workers were hired back, but they're no longer unionized.

Hostess will also now deliver to warehouses that supply retailers, rather than delivering directly to stores, said Rich Seban, the president of Hostess who previously served as chief operating officer. That will greatly expand its reach, letting it deliver to dollar stores and nearly all convenience stores in the U.S.

Previously, he said Hostess was only able to reach about a third of the country's 150,000 convenience stores.

Production was also consolidated, from 11 bakery plants to four — one each in Georgia, Kansas, Illinois and Indiana. The headquarters were moved from Texas to Kansas City, Mo., where Hostess was previously based and still had some accounting offices.

In the months since they vanished from shelves, the cakes have been getting a few touchups as well. For the CupCakes, the company is now using dark cocoa instead of milk chocolate to give them a richer, darker appearance.

Seban stressed that the changes were to improve the cakes, not to cut costs. Prices for the cakes will remain the same; a box of 10 Twinkies will cost $3.99.

Looking ahead, Seban sees Hostess expanding its product lineup. He noted that Hostess cakes are known for three basic textures: the spongy cake, the creamy filling and the thicker icing. But he said different textures — such as crunchy — could be introduced, as well as different flavors.

"We can have some fun with that mixture," he said.

He also said there are many trendy health attributes the company could tap into, such as gluten-free, added fiber, low sugar and low sodium.

During bankruptcy proceedings, Hostess had said that its overall sales had been declining, although the company didn't give a breakout on the performance of individual brands. But Seban is confident Twinkies will have staying power beyond its re-launch.

As for the literal shelf-life, Seban is quick to refute the snack cake's fabled indestructibility.

"Forty-five days — that's it," he said. "They don't last forever."

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Follow Candice Choi at www.twitter.com/candicehoi

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