Buffett bidding to buy bankrupt Burlington
Susan M. Andrews -- Furniture Today, February 17, 2003
Greensboro, N.C. — Warren Buffett plans to take another step into home furnishings when his company, Berkshire Hathaway, acquires fabric producer Burlington Inds. in a $579 million cash deal expected to close in June, pending approval by a bankruptcy court.
The deal faces opposition, however, from WL Ross & Co., a buy-out firm that says its offer is better and plans to oppose Buffett's deal.
Burlington filed Chapter 11 in November 2001 with liabilities of $1.1 billion. It had a net loss of $100.8 million in its last fiscal year.
Burlington's secured creditors would be paid in full, according to an agreement between Burlington and Berkshire Hathaway. Unsecured creditors would receive cash and other assets equal to about 35% of their claims.
"Burlington will be a company with no debt, talented and dedicated management, and a workforce second to none," Buffett said.
Burlington sold most of its home furnishings businesses last year, including the upholstery fabric business acquired by Tietex International, leaving just ticking, top-of-the-bed and contract fabrics. Burlington has been focusing on its Lees Carpet division and Nano-Tex, a producer of high-tech fabrics in which Burlington held a majority interest.
Berkshire Hathaway owns furniture retailers Nebraska Furniture Mart, Omaha, Neb.; R.C. Willey, Salt Lake City; Star Furniture, Houston; and Jordan's Furniture, Avon, Mass. The company also owns rug major Shaw Inds.
Wilbur Ross, founder of WL Ross & Co. and chairman of Burlington's creditor's committee, said his company's offer was for about 45 cents on the dollar to Burlington's unsecured creditors, compared to Berkshire's reported offer of about 35 cents.
