Burlington Emerges from Bankruptcy

Greensboro, NC, Nov. 13--Burlington Industries Inc. ended its nearly two-year stay in bankruptcy yesterday with little fanfare and what its new owner believes is a viable strategy in the highly competitive textile industry, according to the Winston-Salem Journal. Private-equity firm WL Ross & Co. paid $614.1 million for the assets of Burlington, based in Greensboro. Burlington entered Chapter 11 bankruptcy protection on Nov. 15, 2001, with $800 million in debt. It received U.S. Bankruptcy Court approval for its reorganization plan on Oct. 30. As part of Burlington's reorganization plan, it has sold its Lees Carpets division to Mohawk Industries for $352 million. The company has secured an $85 million line of credit based on its assets from CIT Business Credit Inc. "The Burlington employees who have stayed with the company during the bankruptcy no longer have to worry about the solvency of their employer," said Wilbur Ross, the chairman of WL Ross & Co. Ross named himself as Burlington's chairman on Oct. 22. "It will go forward in a much more sound financial structure, and under the leadership of (chief executive) Joseph Gorga, it should have a bright future. That's certainly been our belief all along and why we put a fair amount of money into it," Ross said. At its peak in the early 1980s, Burlington employed more than 80,000 people in 149 plants across the world, and its stock traded for more than $80 a share. During Burlington's time in bankruptcy, it eliminated at least 6,650 jobs and closed seven plants. Burlington will have about 6,850 employees, including about 1,550 in the Triad. The purchase price and an additional $20 million in other assets will be used to pay Burlington creditors. Under the company's recovery plan, unsecured creditors will receive about 42 cents on the dollar for their claims, and shareholders of the company will receive nothing, court papers showed. Ross reiterated his goal of making Burlington viable through the development of technology-based fabrics and a renewed marketing campaign. "One means of competing against the anonymous foreign imports will be to prove to the consumer there is a notable difference in quality in Burlington products," he said. Ross has also bid $90 million for Cone Mills Corp., another Greensboro textile manufacturer in bankruptcy. The bidding deadline for Cone is Jan. 29. "A combined entity would be by far the biggest denim producer that exists," Ross said. "One of the advantages of a big, consolidated manufacturer is that it can afford the time, effort and money to do more research and development." Richard Hastings, the chief retail analyst for Bernard Sands, said he thinks that Burlington has improved its chances for success because of Ross' ownership. "The reinvigoration of the brand will take some effort, but I believe it can be revived," Hastings said. "Combined with Cone Mills, and maybe one day with other big mills, it could increase volume, get some dominance of a market channel and find itself in good shape. "But don't look for Burlington to resume being a job resource in the region," he said. "Those days are over."