WPS files comeback plan
January 21, 2005-- Home Textiles Today,
WEST POINT , Ga. – WestPoint Stevens has filed its plan of reorganization and is looking to emerge from bankruptcy in late March.
The plan is a debt-for-equity swap that wipes out some $2.15 billion in outstanding debt and awards ownership of more than 86 percent of the company's new common stock to first and second lien holders – a group that includes high-profile financial engineer Carl Icahn.
"The company would emerge debt-free, with the exception of exit financing to cover working capital needs," said Lorraine Miller, senior vice president, finance and external communications.
WestPoint has an exit facility to fund up to $300 million, but Miller said it will probably need to tap only about half that amount.
The plan also projects a revenue decline this year of roughly $300 million, for a 2005 sales target of $1.32 billion. WestPoint is planning to walk away from unprofitable business this year to mind the bottom line, Miller said.
The company is focused on "rationalizing' its domestic production and beefing up its sourcing capabilities, she added. To the latter end, the company will leverage its Asian sourcing office in Shanghai and will explore joint ventures or direct investment opportunities, she said.
Chip Fontenot will remain CEO of the company when it emerges from bankruptcy, Miller said.
WestPoint recently began the process of overhauling its operations by announcing it was cutting nearly 2,500 jobs, closing several plants and consolidating its bedding and some bath production by late March or early April. Executives believe the overhaul brought the mill closer to winning creditor approval of its business plan.
WestPoint filed for bankruptcy protection from its creditors on June 1, 2003 .