Cone files for Ch. 11 as prelude to Ross buy
By Furniture Today Staff -- Furniture Today, September 29, 2003
Greensboro, N.C. — Textiles giant Cone Mills filed for Chapter 11 bankruptcy last week as part of a planned transaction to sell its assets to W.L. Ross & Co.
Cone said it expects the deal with Ross to be completed within 90 days. The transaction is valued at $90 million, including cash and assumed loans and liabilities.
The mill is the world's largest denim producer, and its Cone Jacquards division makes decorative fabrics, including upholstery covers.
Cone said it has arranged for $35 million in post-bankruptcy petition financing from GE capital, to fund operations until the Ross deal is completed. The company said it will conduct business as usual, with no delays in meeting its commitments to customers.
Earlier, Cone officials had said a bankruptcy filing likely would leave no funds to distribute to shareholders in the company. A list of unsecured creditors wasn't immediately available last week from the U.S. Bankruptcy Court in Delaware, where the company filed.
The Ross deal is subject to bankruptcy court approval. Earlier this year, Ross agreed to acquire another Greensboro-based textile company, Burlington Inds., and said it plans to operate the Cone and Burlington denim operations jointly.
"This transaction is the best available option for the company's customers, employees and communities," said John Bakane, Cone Mills chief executive officer. "By joining forces with W.L. Ross & Co., we will be much better positioned to meet the enormous challenge of low-cost imports while remaining an important employer in the textile industry."
In announcing the Chapter 11 filing, the company said it "expects to maintain a significant U.S. employee base" and will keep its headquarters in Greensboro.
"The U.S. textile industry remains under intense pressure from a flood of Asian imports," Bakane said. "Unfortunately, the size and scope of this challenge shows no sign of diminishing, since appeals to Washington from textile industry leaders seem to have fallen on deaf ears, with U.S. trade policies continuing to unfairly favor overseas competitors."
