WL Ross-Led Group Seeks To Acquire WestPoint Stevens
An investor group led by New York City-based WL Ross & Co. LLC has agreed to purchase the assets of West Point, Ga.-based home textiles manufacturer WestPoint Stevens Inc. The group also includes holders of a majority of the company's senior credit facility.
WestPoint Stevens filed for Chapter 11 bankruptcy protection in June 2003, and filed a reorganization plan with the bankruptcy court in January 2005. It now also has filed an asset purchase agreement as an alternative to that plan, according to Lorraine D. Miller, senior vice president, finance and external communications, WestPoint Stevens. The agreement calls for distribution of equity in the new company to holders of outstanding senior secured debt and a rights offering to raise $207.5 million of equity capital. Among other details, the companys' common stock would be cancelled with no payment, and the company would emerge from bankruptcy debt-free.
The agreement also sets a closing date of no later than July 31, 2005. Ross's group is positioned as the stalking horse in an open bidding process that must be approved by the bankruptcy court. A $5 million breakup fee will be payable to the group if a higher bidder prevails. The WestPoint Stevens acquisition would be WL Ross's third textile acquisition in the United States, following purchases in late 2003 and early 2004 of Greensboro, N.C.-based Burlington Industries Inc. and Cone Mills Corp., which were consolidated into the International Textile Group (ITG).
WestPoint Stevens' history mirrors the story of today's textile industry, in which consolidation, acquisitions and mergers, and refocused manufacturing strategies have become necessary in order to compete successfully in the current global market. The present company is itself the product of mergers and acquisitions involving textile giants West Point Manufacturing Co., Pepperell Manufacturing Co. and J.P. Stevens & Co. Inc. While West Point was formed in the South just after the Civil War to bring economic opportunities to the region and foster competition with Northern manufacturers, both Pepperell and J.P. Stevens were founded some years earlier in New England and later built mills in the South, which offered lower labor and other costs. This situation can be likened to the present-day shifting of manufacturing operations to and product sourcing from lower-wage countries.
"We expect that WestPoint would expand its business and would supplement its highly efficient US manufacturing with manufacturing in other lower-wage-cost countries," said Wilbur L. Ross, chairman, WL Ross, commenting on his vision for the company's future. Asked whether the company might one day be consolidated with ITG, he added, "[T]heres no obvious synergy between the two. Each is a large enough company to be independent."