Fruit Of The Loom Has Potential Buyers: Newspaper
Updated: Friday, August 3, 2001 04:54 PM
By James Covert
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Fruit of the Loom Ltd. (FTLAQ, news, msgs) may have some friends interested in helping it out of bankruptcy.
The leading U.S. underwear manufacturer has been approached by at least two teams of buyers, the New York Post reported Friday.
Russell Corp. (RML, news, msgs) and Blackstone Group (X.BGP, news, msgs) are collaborating on a bid, and Gildan Activewear Inc. (GIL, news, msgs) has teamed up with Texas Pacific Group (X.TPG, news, msgs) for a bid, the New York Post said.
In addition, Bain Capital Inc. (X.BCI, news, msgs) and VF Corp. (VFC, news, msgs) are rumored to be interested in Fruit of the Loom.
The 130-year-old Chicago company, which makes BVD briefs and Wilson athletic apparel, filed for Chapter 11 bankruptcy in December 1999 after struggling with manufacturing and inventory problems and losses for several quarters.
Last week, the company reported a second-quarter net operating loss of $2.1 million after consolidation charges for closing factories, compared with a loss of $11.4 million in the year-earlier period. The company recorded a $9.5 million operating loss in its first quarter.
The narrowed losses reflect reduced production costs and lower selling, general and administrative expenses, the company said. The cost improvements "more than offset the impact of volume and price reductions," Fruit of the Loom said in a press release last week.
The company in June settled with the also bankrupt Warnaco Group to regain a distribution license. And last month, Fruit of the Loom kicked off a new national advertising campaign.
As the company repairs its operations, it could become an attractive acquisition target, said David Shapiro, a retail analyst at Standard & Poor's in New York.
"In general, there's consolidation going on in the apparel industry, and it's not surprising that someone would be interested in a well-known brand name," Shapiro said.
In a March 22 disclosure statement, investment adviser Lazard LLC estimated Fruit of the Loom's reorganization value between $920 million and $1.15 billion.
In March, Fruit of the Loom filed a reorganization plan in bankruptcy court in Wilmington, Del., that is backed by committees of its secured lenders and noteholders holding about $1.2 billion of pre-petition debt. The plan would allow it to emerge from bankruptcy with a much lighter debt load.
Under the plan, secured creditors would get 99% of the reorganized company's common stock and up to $300 million in senior unsecured notes. Stockholders would get nothing.
Shares of Fruit of the Loom on Friday closed 3 cents, or 13%, higher at 26 cents on volume of 700,000 shares.
-By James Covert, Dow Jones Newswires; 201-938-5360; james.covert@dowjones.com |
