Burlington Gets More Time To Reorganization Votes

Greensboro, NC, August 6--Textile company Burlington Industries Inc. received more time to solicit votes in favor of a reorganization plan centered on its recently approved sale to W.L. Ross & Co. for $614 million. In an order last Thursday, Judge Randall Newsome the U.S. Bankruptcy Court in Wilmington, DE, gave Burlington Industries until Nov. 30 to get votes from its creditors without threat of a competing plan being filed. Burlington Industries' exclusive solicitation period ended July 31, though the period doesn't lapse until the court rules on extension requests. The order, recently obtained by Dow Jones Newswires, doesn't prevent Burlington Industries from seeking further extensions, but the company said in a separate court filing that it wants to complete the Chapter 11 process as soon as possible to ensure creditors get the highest return possible. In a separate order filed Friday, the bankruptcy court shortened the regular notice period for a hearing on approval of the disclosure statement, which outlines Burlington Industries' Chapter 11 plan. The hearing has now been set for Aug. 25. Objections are due Aug. 21, the order said. W.L. Ross raised its original $608 million offer for Burlington Industries to top Oak Tree Capital Management LLC at a July 28 auction and Judge Newsome approved the deal Thursday. Mohawk Industries Inc. will purchase Burlington Industries' carpet business for about $352 million. Burlington Industries, which filed for Chapter 11 in November 2001, decided on the auction after its planned sale to Berkshire Hathaway Inc. (BRKA) for $579 million fell apart in February. Burlington plans to establish a trust to distribute funds from the sale to creditors, the disclosure statement said. The company estimates there will be about $592 million in assets in the trust when the plan takes effect. Under the proposed plan, priority and secured claims would be paid in full, the disclosure statement said. Claims, excluding default interest, of the company's pre-Chapter 11 bank lenders totaling about $380 million would also be paid in full. Unsecured creditors, whose claims total $405 million to $425 million, can expect a recovery of about 42% in cash, the disclosure statement said. Burlington's 53.5 million common shares would be canceled under the plan, with equity holders receiving no distribution. No voting deadline or confirmation hearing has yet been scheduled.

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