Banks take control from WPS' Green
July 9, 2001-- Home Textiles Today,
Approaching the final dips and turns in a roller coaster ride since taking control of WestPoint Stevens several years ago, chairman and ceo Holcombe Green Jr. is being stripped of his majority control of the major mill after a group of three banks seized more than 9.4 million shares of WestPoint stock after a Green-owned company defaulted on a $250 million loan.
And Green's position could soon get even more precarious. Two other banks in the original lending group have yet to act and are poised to pry away roughly six million more shares from Green — for a grand total of 15.5 million shares. By the time the final curtain is down, Green could have lost as much as 86 percent of his stake in the textiles giant, about 15.5 million shares of the roughly 18 million that he controls.
Before the banks started seizing Green's holdings, the ceo's roughly 18 million shares represented a 36 percent stake of the company's 49.6 million shares outstanding as of the close of the first fiscal quarter.
While Green takes a major haircut as the banks seize his stock, the deal has virtually no impact on the day-to-day operations of WestPoint Stevens — the problems are his, not the company's. At some point, the banks could ask for seats on the board of directors, or Green could step down as chairman. But since Green has never functioned as a day-to-day ceo, any impact is likely to be more cosmetic than real.
Green had used the 15.5 million shares as collateral on a loan made to WPS Investors L.P., a company he controlled. WPS defaulted on the loan last September, and the banks are seizing the stock in partial settlement of the debt. At the time of the loan, WestPoint stock was worth about $16 a share. More recently, the stock trades for less than $2 a share.
The banks involved in seizing the Green stock are First Union, Bank One and Calder & Co., a party related to Bank of Nova Scotia.
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