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BRATTLEBORO — Koffee Kup Bakery and its assets may soon be in the hands of a New Brunswick husband and wife who own the largest family-owned and operated commercial bakery in Atlantic Canada.

On Thursday morning, the members of the Vermont Economic Progress Council voted to approve an application for a Vermont Employment Growth Incentive submitted by Mrs. Dunster’s Bakery, headquartered in Sussex, New Brunswick.

VEPC authorized the application for up to $580,068 in incentives for the Burlington Bakery and up to $1.22 million for the Brattleboro facility.

By Thursday afternoon, the deal appeared to have been sealed.

“We are thrilled to announce today that we have formed a new company, called North Atlantic Baking Company,” wrote Blair Hyslop, who co-owns Mrs. Dunster’s with his wife, Rosalyn, in a news release announcing the sale. “We have been advised that North Atlantic Baking Company is the preferred purchaser of the Koffee Kup assets and we are focused on moving quickly to conclude negotiations which will lead to restarting operations very soon.”

The Hyslop’s will acquire Koffee Kup in Burlington, the Vermont Bread Company in Brattleboro, and Superior Bakery in North Grosvenor Dale, Conn.

“Our plan is to operate the two Vermont Bakeries and enter discussions with third parties with the intent to sell the Superior Bakery in Connecticut,” wrote Blair Hyslop.

“We are very excited to be welcoming Blair and Rosalyn Hyslop of North Atlantic Baking Company to Vermont,” said Adam Grinold, executive director of the Brattleboro Development Credit Corporation. “They bring strong business experience and a highly regarded business culture to the two iconic Vermont brands of Koffee Kup Bakery and Vermont Bread.”

Grinold said it will be exciting to see former Vermont Bread employees return under the new ownership.

The news release states North Atlantic Baking Company “will continue to market the same baked goods that made the company a household name throughout New England under the Koffee Kup and Vermont Bread Company brands.”

The new company is negotiating a leasing agreement with the receiver to facilitate a quick return to baking in the Burlington and Brattleboro bakeries, he wrote.

“We are hopeful to have this completed within a few days,” wrote Hyslop. “The lease agreement will 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.”

The Hyslops will continue to run Mrs. Dunster’s, while also becoming co-owners and co-CEOs of the North Atlantic Baking Company.

“We are excited to see the company once again become family owned,” stated Rosalyn Hyslop in the news release. “We already deliver our fresh baked goods to every store in New Brunswick, Nova Scotia, Prince Edward Island, and the state of Maine several times a week with Mrs. Dunster’s and 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.”

“We look forward to working with the team of hardworking employees and distributors who produce and deliver the delicious assortment of baked products to market every day,” wrote Blair Hyslop. “We intend to continue their tradition of delivering high quality breads, rolls, English muffins and donuts to our loyal customers, while at the same time helping the company meet its full potential.”

Mrs. Dunster’s was the second interested buyer that received approval to apply to the VEGI program.

On May 6, the VEPC approved an application from East Baking Company, based in Holyoke, Mass., for incentives up to $1.2 million. The VEPC board also approved a VEGI application for nearly $1.2 million in incentives for the Burlington facility.

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“We, of course, were highly interested in acquiring Koffee Kup Bakery and its assets,” wrote Jeff McCarroll, vice president of East Baking Company, in an email to the Reformer. “We are happy for the employees going back to work and sad for the ones who will not.”

McCarroll wrote that East Baking Company was disappointed that the state offered incentives to a Canadian company, but Megan Sullivan, executive director of VEPC, said the incentives are performance based, meaning the buyer will receive no incentive dollars until they have met job growth and payroll targets in Vermont and continue to maintain them over the years to come.

“While we can’t always prevent the closure of a company, VEPC is committed to diligently using this program to spur job growth and encourage companies to relocate or grow their operations in the state, that wouldn’t have done so otherwise,” said Sullivan.

On April 1, Koffee Kup Bakery, which purchased Vermont Bread in 2013, was acquired by American Industrial Acquisition Corporation. But only 25 days later, employees of locations in Brattleboro, Burlington, and North Grosvenor Dale, Conn., arrived for their regular Monday morning shifts only to be told to go home, that they no longer have jobs.

The closure was blamed on an inability to find investors to take on debt accumulated by Koffee Kup over the past four years, said Jeff Sands, a “turnaround” specialist at Dorset Partners and the senior advisor in North America for American Industrial Acquisition Corporation.

“Four years of losses are the culprit,” said Sands. “Everyone wants a villain storyline, but there’s just not one there. This one just wasn’t salvageable.”

The closure was so abrupt, a class action suit was filed by employees in federal court, alleging AIAC had violated the federal Worker Adjustment and Retraining Notification Act of 1988.

Employees suffered another blow when final paychecks were deposited directly into checking accounts and then yanked back out after a dispute over who was responsible for paid time off compensation. That matter has ended up in Chittenden Superior Court.

In 2014, the Hyslops purchased Mrs. Dunster’s Bakery, which was established by Ingrid Dunster in the 1960s as Mrs. Dunster’s Donut Company.

According to Huddle, since purchasing Mrs. Dunster’s, the Hyslops have expanded by purchasing McBuns retail stores in Moncton, Kredl’s Corner Market in Hampton, and Snairs Bakery on Prince Edward Island and in Nova Scotia. Last year, Mrs. Dunster’s opened a new 37,000 square-foot bakery in Moncton, a city in New Brunswick, to make fresh-baked breads, rolls, pastries and pizza shells for grocery stores and restaurants across the Maritimes and Maine, as well as frozen baked goods for shops nation-wide, according to a story published by Huddle last November.

Mrs. Dunster’s has been growing at a rate of 30-to-40 percent annually in the last five years, Blair Hyslop told Huddle.

“The last year before Covid, we grew at 50 percent, that one year, so it’s been a remarkable, remarkable ride,” he said. “At one point, in sixty days, we added 100 employees.”

Half of that growth came from its core business, and the other half came from the multiple acquisitions the company has been making since 2015 around the Maritimes.

Bob Audette can be contacted at raudette@reformer.com.