Sale Of Burlington Likely This Month

Charlotte, NC, July 9--Five months after investor Warren Buffett flirted with buying Burlington Industries Inc., the Greensboro-based textile giant is on the verge of being sold, according to the Charlotte Observer. Bids on the company are due Thursday, and a Delaware bankruptcy court is expected to approve the winning bidder later this month. But for now, whether Buffett and his company, Berkshire Hathaway Inc., will re-enter the fray is a mystery. And other potential buyers are rumored to be interested in buying Burlington, once the world's largest textile company. The results of the bidding this week could result in Burlington being sold piecemeal or emerging from bankruptcy protection intact, though details of the differing plans--or even who the bidders are--might not be known for weeks. Unlike struggling Pillowtex Corp. of Kannapolis, which is on the verge of again filing for bankruptcy protection after missing a debt payment last week, Burlington has shown signs of being able to stop the hemorrhaging. In its last quarter, Burlington reported that two of its four divisions posted a profit. The company reduced its net loss for the quarter to $16 million, compared with a $75 million loss in the three-month period a year earlier. Burlington had posted a net profit in the quarter ending in December 2002. "If you could operate Burlington or Burlington's assets without a heavy debt load, it would be a nice business," said Thomas Lewis, a textile analyst with C.L. King & Associates. The company employs about 7,600 at ten plants, including six in North Carolina. Burlington is one of four major N.C. textile companies to have filed for bankruptcy protection in the last three years. Of the four, only one--Guilford Mills Inc.--has successfully re-emerged after converting into primarily an automotive-interior supplier. In South Carolina, high-tech fabric maker Polymer Group Inc. of North Charleston successfully emerged from bankruptcy protection in March. Pillowtex emerged in May 2002 but quickly stumbled. Galey & Lord Inc. has been haggling with creditors in bankruptcy court and has not yet presented a reorganization plan. Despite signs that the economy might be improving, textile companies continue to be battered by low-cost imports coupled with recent slowdowns in retail sales. Analysts say more layoffs in the industry could be on the way. At Burlington, the company's future hinges on the identity of the new buyer. An investor such as Buffett could be inclined to keep most of the company intact, while a buyer in the textile industry might be more inclined to consolidate and close plants, analysts have said. Berkshire Hathaway bid $579 million in February for Burlington, but withdrew its offer when the bankruptcy court rejected a proposed break-up fee, to be paid if the deal fell through. Keith Trauner, an analyst with Fairholme Capital Management LLC of Short Hills, N.J., says he doubts Buffett will enter another bid. "I'd hate to say never, but historically Berkshire won't bid against itself," said Trauner, whose firm owns about 2,000 Berkshire shares. But other companies might be interested. Two representatives of Mohawk Industries attended a Burlington bankruptcy hearing in February. The company declined comment Tuesday. In March, Reuters reported that Cone Mills Corp. of Greensboro was contemplating a bid for part of Burlington. A Cone spokesman did not return a call Tuesday. And W.L. Ross & Co., a buyout firm that opposed the original Berkshire bid, could be a contender. At the time, W.L. Ross chairman Wilbur Ross had presented a competing offer, though he told CBSMarketWatch in April that he might not bid again.

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