Berkshire Out, Mohawk May Bid On Lees

Greensboro, NC, Feb. 28--Berkshire Hathaway has dropped its offer to buy Burlington Industries after the bankruptcy court rejected some of the terms of the deal. Thursday the bankruptcy court denied a motion to authorize Burlington to pay Berkshire Hathaway a $14 million break up fee should Burlington sell most of its assets to another entity. Also on Thursday, Mohawk Industries appeared at the bankruptcy court and indicated it will bid on Burlington's carpet division. Burlington’s management and its bank lenders had backed Berkshire’s $579 million cash deal, which was struck on February 11. The deal however was voted down by the company's unsecured creditors, led by private investor Wilbur Ross, founder of buyout firm WL Ross & Co., which manages funds holding about $81 million in unsecured Burlington bonds. Burlington’s CEO George Henderson said the company is reviewing its alternatives in light of these developments, including the process to soliciting new proposals. Berkshire Hathaway chief Warren Buffet said, "We're sorry to have to terminate our offer." Under terms of the agreement, Berkshire was to have paid all of Burlington's secured creditors in full, but just 34% to 35% of unsecured creditors' claims. The deal would have eneabled Burlington to emerge from bankruptcy debt free.

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