Burlington Gets Approval To Hire Two Investment Ba
Greensboro, NC, May 30--Burlington Industries has received permission to hire two different investment banking firms through an order from the bankruptcy court handling its Chapter 11 case.
The textile company sought in April to hire Miller Buckfire Lewis & Co. and Dresdner Kleinwort Wasserstein Inc. as advisers for a possible sale of the company.
Burlington filed for bankruptcy protection in November 2001, listing assets of $1.2 billion and liabilities of $1.1 billion.
The order of May 22 included some clarifications in the proposed agreement, prompted by objections from Burlington Industries' unsecured creditors and the U.S. Trustee's Office, which questioned the compensation plan for the bankers.
Changes incorporated in the documents were intended to make clear that transaction fees would be paid to the advisers only after a reorganization plan is confirmed or a sale consummated with a bidder the bankers contacted, according to the order.
Under the advisory agreement, the advisers would receive fees of $250,000 a month for the first four months and $150,000 for every month they are engaged after that. If a deal is struck between Burlington Industries and a bidder contacted by the bankers, the advisers would get a transaction fee of $2 million plus 2.5% of any bid amount over $579 million.
Miller Buckfire is to get 60% of any fees paid and 40% is to go to Dresdner Kleinwort. Burlington said in its motion seeking approval to hire the advisers that the fee structure to which the company agreed is typical for hiring financial advisers and bankers in Chapter 11 cases.
Bids for Burlington Industries must be made by July 10 and an auction is scheduled for July 21.
In a separate court filing, Burlington Industries asked for court approval to pay $1 million and issued a $1.77 million letter of credit to American International Group Inc. for workers' compensation, auto liability and general liability insurance. The company said it needs to replace coverage it has with Kemper Insurance Cos. because several ratings agencies lowered their financial strength ratings of Kemper recently and Burlington has contracts that require it have an insurer with an "A" rating.
A hearing on the insurance coverage is set for June 12, court papers said.
