Kannapolis, NC, July 8--The story sounds straightforward enough: Broome & Wellington, a British textile firm, seeks to buy beleaguered Pillowtex Corp. for more than $350 million to expand its U.S. operations, as reported in the Charlotte Observer.
But analysts on both sides of the Atlantic are puzzled. What they can't figure out, they say, is why a little-known company would pay so much for a struggling textile company with expensive U.S. manufacturing.
"I find that most strange," said Trevor Kelly, director of the Textile Institute International in Manchester, England. Although his association is based in the same city as Broome & Wellington, Kelly said last week that he had never heard of the company. "It leaves my nose twitching. It doesn't feel right."
A resolution to some of the uncertainty surrounding Pillowtex could come this week. On Friday, Pillowtex's banks regain the right to begin seizing the Kannapolis based company's assets, after Pillowtex last week defaulted on a five year loan from lenders led by Bank of America Corp.
Whether Pillowtex is sold or liquidated might make little difference for its 4,300 employees.
"What are we going to do? There are no jobs out there," said Ola Mae Deese of Cleveland, who works at Pillowtex Plant 11 in Rowan County. "That's what we worry about."
Pillowtex is in the unenviable position of having high costs and weak sales, so minus a dramatic sales increase, the only way to make money is to cut costs.
Supporters of the British deal say it could buy time in which to figure out a way to preserve as many jobs as possible.
But an examination of Pillowtex's would-be owner led to more questions than answers. Broome & Wellington is a fabric trader, not a manufacturer. An earlier U.S. subsidiary was dissolved for nonpayment of taxes. Its current U.S. subsidiary's main facility is a 100 person distribution center in upstate New York, and it sells some of its inventory over eBay.
Broome & Wellington was founded in the mid 1940s in Manchester, the hub of England's textile industry. It was in nearby Lancashire that the British textile industry got its start because of its proximity to coal and available work force.
Broome & Wellington has no factories. Instead, the company says, it is Europe's largest importer of unfinished fabric, known as greige goods. It sells those fabrics to finishing plants that produce home textile products, such as sheets.
It is, in effect, a fabric trader, said Kelly of the Manchester Textile Institute.
"There must be probably 100, 200, 300 similar types of companies around," he said. "From what we see here in Manchester, they are not a well-known company at all."
In two interviews last month with The Observer, Broome & Wellington Chairman Joshua Rowe declined to discuss the privately held partnership's business in detail.
He expressed optimism his proposed buyout would preserve Pillowtex jobs. "It would be such a tragedy to see (Pillowtex get liquidated), and it'd be unnecessary," he said, adding that it was too soon to say how many jobs might be kept.
He also declined to discuss details of his offer, though he estimated it at $350 million to $400 million. Rowe did not respond to e-mailed inquiries last week for this article.
Indeed, Broome & Wellington has kept a low profile. Its only mention in the Financial Times of London, in records going back 20 years, was in 1997, when it filed a complaint with the European Commission.
The company opposed a plan to levy anti-dumping duties on unbleached cotton imported into Europe.
The company is not a member of the British Textile and Apparel Confederation, Britain's leading textile trade group, which claims 80 percent of U.K. textile companies as members. Nor is it a member of the British Interior Textile Association, which represents home furnishings companies.
"This is something of a mystery, this company," said Peter Kilduff, a British-born former textile professor at the University of Leeds in northern England, who now teaches at UNC Greensboro. "If it was one of the established players, I would definitely know their name and what they were about."
