Bankrupt Fruit of the Loom said to find buyer
thedeal.com
by Josh Kosman and Katie Anderson
Posted 06:25 PM EDT, Sep-7-2001
Creditors controlling bankrupt Fruit of the Loom Ltd. chose a buyer late last week, according to several sources close to the process.
Though the buyer's identity could not be learned, some observers speculated that Berkshire Hathaway Inc. filed a late bid that bested three competing proposals that were likely not better than $750 million each. A spokeswoman for Omaha-based Berkshire declined to comment.
Two competitors — a team of private equity firm the Blackstone Group and Russell Corp., and a team of Texas Pacific Group and Gildan Activewear Inc. — have been told they have not won the auction for the maker of underwear and other apparel, several sources said. New York-based Blackstone declined comment. A spokeswoman for Fort Worth-based Texas Pacific did not return calls.
A third bidder — Head NV, a tennis gear company in Rotterdam, The Netherlands — was also in the hunt. The company went public in 2000 and said it will use the proceeds of its offering to repay debt and fund future acquisitions. Company officials could not be reached.
A Fruit of the Loom press officer declined to comment other than to say a sale is "always a possibility."
Berkshire, the investment company chaired by investor Warren Buffett, has shown interest in Grand Cayman Island-based Fruit of the Loom before. In early 1985, Berkshire Hathaway amassed a 6.09% in Northwest Industries, Fruit of the Loom's former owner. In early 2001, Berkshire bought 87% of Shaw Industries Inc., a carpet maker, indicating its interest in textiles.
"If a guy like Buffett is announced as buying it, it gives the company a tremendous advantage," said Morris Beschloss, an industry consultant. "Fruit of the Loom will have instant credibility and it will give its customers instant confidence that Buffett is in charge and they will get their bills paid."
He added that Fruit of the Loom still has a great brand and that the company has recently moved its manufacturing facilities overseas helping to keep costs down.
Questions for bidders surrounded the Ebitda of Fruit of the Loom. For the trailing 12 months ended June 30, the company had $120 million in Ebitda. But officials there say on a pro forma basis, which doesn't include adjustments for discontinuing poorly performing operations, Ebitda is $220 million.
Fruit of the Loom's Dec. 29, 1999 Chapter 11 filing was made in the U.S. Bankruptcy Court in Wilmington, Del., and the court would have to approve whatever winner the company's creditors choose. |
