Ross Says Commitment To Burlington Long Term

Greensboro, NC, Aug. 13--New York financier Wilbur Ross said this week that he envisions having a "long-term" involvement with Burlington Industries after the Greensboro-based textile company emerges from Chapter 11 bankruptcy, according to The Business Journal of the Greater Triad Area. Ross said he hopes to recoup his investment primarily through Burlington's operating results going forward. He said that would require a multiyear commitment from investors--which include a variety of pension funds--that have the ability to be patient with the endeavor. "Our investors are major institutions who are long term in their orientation," Ross said in a phone interview with The Business Journal. "This is not a trading outfit, and we're much more of an investment operation. As long as the company is adding value, we'll be happy with it." He added: "You don't buy a company in bankruptcy and expect to get all your cash back in a year. We'll hold onto it as long as it makes sense ... but we don't have a mandatory time limit." W.L. Ross & Co. has agreed to pay $614 million to buy Burlington, an amount that Ross said will address all of the company's bankruptcy debt. The Ross deal, along with Burlington's emergence from bankruptcy, are expected to occur by Oct. 31. In being contacted, Ross agreed to discuss the latest disclosure statement that Burlington filed with the U.S. Bankruptcy Court in Delaware on Aug. 1. That filing came soon after a judge approved Ross' bid for the company. According to the statement, Burlington had between $794.5 million and $818.3 million in debt as of July 22. Ross estimated that Burlington also has $25 million in administrative expenses that must be paid before the company leaves bankruptcy. The filing said the Ross bid will address all those claims, paying the administrative costs and secured claims in full; unsecured claims will recover between 42 percent to 45 percent. Burlington shareholders will not be compensated for their investment. Offering additional insight into the financial aspects of his planned acquisition, Ross said around $353 million of his $614 million bid will likely come from the sale of Burlington's Lees carpet division to Mohawk Industries. But the purchase could still happen if the Lees sale falls through, the disclosure statement says. Ross said the balance of his bid price--around $261 million--will involve cash payment. W.L. Ross also owns about $80 million in Burlington bonds. Ross will recover a percentage of that investment under its $614 million bid. He said his company will end up doubling its initial investment, and that the funds will be used to indirectly offset some of the cash component of his bid. As to future capital, Ross said he will secure both letters and lines of credit for the new Burlington, though he still expects the credit to be "far less" than $100 million. Ross also was asked to discuss several items in the disclosure statement that discuss senior management. Five of Burlington's top executives have employment contracts that expire on Oct. 31, which coincides with the company's planned emergence from bankruptcy and sale to W.L. Ross. Those employees include John Ganley, president of the Burlington House division, and James McCallum, president of the Lees division. Chairman and CEO George Henderson--along with Chief Financial Officer Charles Peters Jr. and John Englar, senior vice president of corporate development and law--have contracts that run through Dec. 31. Burlington also has a $11.1 million severance fund for certain executives. Under the plan, those unnamed officers can collect severance for periods ranging from one year to three years depending on seniority and how they leave the company. Ross was the only party to initially bid for Burlington in its entirety, though several unnamed parties either expressed an interest in, or bid on, specific divisions or operations. Burlington had said during the bidding process in late July that it would only qualify bids made for the entire company. Still, targeted bid proposals by unnamed entities included: ·Three inquiries into buying the Burlington House division at prices ranging from $50 million to $70 million; ·Interest in buying the Apparel Fabrics division at $100 million to $160 million; ·A $58 million bid for the company's denim operations, excluding its joint venture interests; and ·Numerous inquiries and bids for the Lees division, with prices ranging from $200 million to $350 million.