Joan Fabrics Nears End of Run
Carole Sloan -- Home Textiles Today, April 23, 2007
What was once the country's largest decorative fabrics mill — Joan Fabrics — is now up for sale, as a whole or piecemeal, following the April 9 Chapter 11 filing for the company and its wholly owned subsidiary, Madison Avenue Designs.
Last week, Carl Marks Advisory Group (CMAG), which assumed control of the business several weeks prior to the filing, said "it will facilitate the sale of the company or its assets."
At the time of the filing, CMAG's Richard Heller, now coo of Joan Fabrics, said, "Joan Fabrics has many positive advantages as a business … their quality products, strong customer base, and excellent design team provide a solid foundation for the business to be restructured and emerge successfully from Chapter 11."
In papers filed with the bankruptcy court in Delaware, Joan said it had contacted approximately seven potential purchasers of various lines of business and entered into confidentiality agreements with six of them.
Also on that date, the company entered into debtor-in-possession (DIP) financing agreements with their lenders, led by Bank of America as its administrative agent and CIT, its factor, for more than $10 million.
Founded in 1932, Joan operates four manufacturing facilities in North Carolina — weaving jacquard in Siler City and Connelly Springs; weaving velvet in Hickory; and finishing fabric in Cramerton. The company also weaves jacquard in Texel, Mexico at a factory in which it holds an 80% stake.
The company became the top fabric mill for decorative fabrics in 1997 when Joan Fabrics, headed by Elkin McCallum, acquired the Mastercraft division from Collins & Aikman for $310 million, a move that propelled it into the No. 1 slot with total sales of about $500 million.
The Mastercraft purchase included Mastercraft; C&A Home Fabrics, which became Home Fabrics; and Doblin Fabrics; as well as C&A's yarn division, and Act-Ti tie linings.
The current company's decorative jacquard fabric brands are Mastercraft, Home Fabrics, Circa/Doblin, and Contract/Guild360. The Joan Velvets business is currently being phased out, according to the filing.
At the time of the 1997 Mastercraft purchase, McCallum also was 50% owner of Tyngsboro Group which included Tyngsboro Textiles, Dutton Yarns, and Western Avenue Dyes. Penny Richards, a 25% owner, was president, and McCallum's daughter Kerry owned the other 25% percent. At the time, the Tyngsboro business did about $150 million, with more than half of that in decorative fabrics. Tyngsboro's name was changed later that year to Main Street Textiles.
In the Chapter 11 filing on April 10, the company stated that its sales had fallen from $345 million in 2003 to $124 million in 2006, largely the result of competition from imports, it said.
In March, McCallum stepped down as president and ceo of Joan, retaining the position of chairman of the board. On April 12, McCallum also stepped down from the board. His career started with Joan Fabrics in the factory in 1962; he became president in 1983.
Also in March, McCallum, along with eight others, was charged with fraud in a civil lawsuit filed by the Securities and Exchange Commission relating to transactions concerning Collins & Aikman.
In its bankruptcy filing, Joan Fabrics (and Madison Avenue Designs) cited assets as between $1 million and $100 million, with liabilities in the same range. Unifi was the largest creditor at $4.8 million, followed by Pension Benefit Guaranty Corp. at $3.3 million, American Fibers and Yarns at $1.3 million, and Valdese Manufacturing Co. at $813,000.
Other supplier companies include Staubli, $540,493; R.L. Stowe Mills, $537,153; Carolina Mills, $487,489; Kennetex, $239,598; Crypton, $174,579; Giorini Silvano, $170,826; Parkdale, $148,362; Lonfil America Chenille Yarns, $117,798; and Applied Textiles, $112,961.
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