Greensboro, NC, Oct. 21--A leaner, profitable Guilford Mills Inc. said yesterday that it is considering being bought as a means of attracting more capital investment according to the Winston-Salem Journal.
The textile manufacturer, based in Greensboro, said that its board of directors has retained Goldman Sachs & Co. as its financial adviser to explore ways to increase shareholder value that could include selling the company.
Guilford emerged from bankruptcy in October 2002 just 6 1/2 months after filing for Chapter 11 protection with debtor financing already in place. It mostly makes automotive-interior fabrics, as well as products in technical textiles and select apparel businesses.
"The company has enjoyed profitability since emerging from bankruptcy and our management has been encouraged by the performance," said David Taylor, the chief financial officer of Guilford Mills.
"The decision by the board is that this could be an opportune time to explore a change in ownership. This decision is certainly not being driven by poor financial performance, and people should not read anything dire into this announcement."
The manufacturer reported $1.5 million in net income in its third quarter which ended June 30. This, placed it within $300,000 of its goal of $2.7 million for fiscal 2003. It lost about $130 million over the first three quarters in fiscal 2002.
"The decision to devote our resources primarily to automotive interior fabrics puts us in an industry sector that doesn't have the same sort of import pressures that other elements of the textile industry do," Taylor said.
Guilford's board did not set a timetable for exploring its financial options.
Taylor said it could choose not to take any action.
Analysts said that Guilford's owners, who were the company's largest creditors prior to the bankruptcy filing, might feel the time is right to explore a buyer for the manufacturer.
According to a 2002 filing to the U.S. Securities and Exchange Commission, Guilford said that Prudential Financial Inc. owned 38 percent of its stock and Wachovia Corp. owned 16 percent.
"These banks and firms are not the owners of Guilford by choice, but out of necessity for their investment," said Tony Plath, a finance professor at the University of North Carolina at Charlotte. "They didn't buy Guilford for a long-term investment, but rather to regain an investment.
"Guilford has streamlined itself into a profitable company because it's concentrating on a fabric sector that sells to the wholesale part of the trade and is not exportable in terms of production."
Plath said he would not be surprised to see Wilbur Ross, the chairman and chief executive of private-equity firm WL Ross & Co., emerge as a leading candidate to purchase Guilford. Ross could not be reached for comment yesterday.
Ross is expected to win by Oct. 31 final U.S. Bankruptcy Court approval to purchase Burlington Industries Inc. for $614.1 million and has placed a bid of $90 million for bankrupt manufacturer Cone Mills Corp. Both these companies are also based in Greensboro.
"He already is interested in a sizable stake in the textile industry and buying Guilford would offer him some diversity and a profitable product line," Plath said.
