Latest on PWTXE: $350-$400 Million now on the buyout - it also says "unscured creditors would receive some benefit" ... what does that mean for we common stock holders? (from today's paper):
Pillowtex suitor makes offer
N.C. textile company has 7,850 employees
ADAM BELL, SARAH JANE TRIBBLE STAN CHOE
Staff Writers
The British firm seeking to buy Pillowtex Corp. said Friday it offered $350 million to $400 million for the troubled textile company, and claimed that without this deal Pillowtex could be liquidated.
In a phone interview, Joshua Rowe, chairman of fabric company Broome & Wellington in Manchester, England, also said he prefers to keep Pillowtex's plants open, depending on their profitability. But he cautioned he needs to get a better understanding of the operation before seeing what jobs could remain.
"If the options are liquidation or us, there's no comparison," Rowe said.
The 116-year-old Kannapolis towel, sheet and bedding maker is Cabarrus County's largest employer and one of the state's biggest textile firms, with 7,850 employees. Pillowtex put itself up for sale to avoid returning to bankruptcy, as an industry that helped build the Carolinas withers from crippling competition and mounting debt.
Also Friday, workers still seethed over Pillowtex's decision to delay their vacation bonuses. The main Pillowtex union demanded that the company issue the pay immediately. Pillowtex said it cannot do that. And it is not commenting on talk of any possible sale, company spokeswoman Karen Cobb said.
Several people following Pillowtex expressed skepticism about the size of the British offer.
"That's a shocker. ... everyone else has been in the ($200 million range) or ($300 million) at the highest," said Harris Raynor, southern regional director of the Union of Needletrades, Industrial and Textile Employees.
Broome & Wellington's deal has been in the works for three weeks, Rowe said. He said he has not heard back from Pillowtex on the offer, and does not think its creditors have gotten together to discuss it.
"I can't explain to you why nothing has happened. Our offer makes sense," Rowe said.
Broome & Wellington is little known in the United States. Founded in the mid-1940s, it has about 350 employees in Europe, an additional 140 in the United States and many thousands of people working for subcontractors, Rowe said.Its U.S. unit is Homestead Fabrics Ltd., and acquiring Pillowtex would enable the company to expand in the market.
Broome & Wellington's main business is selling unfinished fabric to the textile industry, according to its Web site.
The Pillowtex deal would not be the company's largest, Rowe said. Because the company is a privately held partnership, he said he could not disclose financial details.
Rowe did say the proposal for Pillowtex is structured in a way that secured creditors would get paid, and unsecured creditors also would receive some benefits.
The union's Raynor agreed that Broome & Wellington appears to be the main suitor now, after others have fallen off. "It's like a teenage romance. Every day, something else comes up," he added.
Raynor also said UNITE is eager to work with any buyer willing to preserve jobs. Homestead is known around Herkimer, a town in central New York, where the company bought the home-furnishings business of Greensboro-based Guilford Mills Inc. last year.
When announcing the deal, officials from both companies said Homestead would close the manufacturing and distribution operations, which employed about 335.
But Nancy Reese, Herkimer's deputy town clerk, said Homestead still has a distribution center in the town. Homestead has been a good corporate citizen, even though people were sad to see the manufacturing plant close, she said.
Pillowtex continues to struggle financially. Its losses last year hit at least $98.8 million.
When it emerged from bankruptcy more than a year ago, Pillowtex had lowered its debt to $205 million from $1.1 billion before seeking court protection.
The turnaround was financed by a $112 million term loan from a group of pre-bankruptcy lenders led by Bank of America Corp. and a three-year $200 million revolving credit line from Congress Financial Corp., a unit of Wachovia Corp.
In March, Pillowtex said it had worked with its term lenders to extend credit until June 30 -- after the company announced a similar waiver three months before.
Congress Financial remains the lead agent for a group of lenders on the revolving credit line, according to a company filing. The loan officer on the account declined to comment.
Charlotte's Bank of America also declined to comment, as did Oaktree Capital Management, the Los Angeles group that controls one-fifth of Pillowtex's stock and occupies two of four seats on its board.
Still, negotiations are intense. A shutdown would devastate the Kannapolis area as well as thousands of families. Local and state leaders are trying to work with the parties to avoid one of the biggest layoffs in N.C. history.
Gov. Mike Easley, who grew up in the same community as Wachovia Chairman and Chief Executive Ken Thompson, has made calls to Pillowtex creditors -- including Wachovia and Bank of America.
U.S. Sen. John Edwards, D-N.C., said in an interview Friday evening that he phoned Bank of America Chairman and Chief Executive Ken Lewis this week. Edwards asked Lewis to do everything the bank could to keep as many plants open.
When asked what he thought would ultimately happen with Pillowtex, the presidential candidate said, "It's very much in flux. It's unpredictable."
On Thursday, Pillowtex said it was not sending out vacation bonuses to 5,300 unionized bed-and-bath division workers who had expected to receive that money next week. Paying them at that time would violate covenants from its lenders, Cobb said.
The company also said it is ending retiree medical coverage July 1, affecting about 3,700 people, though most will be able to sign on with comparable plans.
Brenda Miller, a Rowan County resident and 15-year mill veteran, said many people were counting on the bonuses to help pay the bills. "It's been a bad situation for a long time and it keeps getting a little worse," she said. |
