WestPoint bidders duking it out

NEW YORK -- Attorneys for Wilbur Ross and the Steering Committee of first lien lenders are trying to block Carl Icahn from walking away with WestPoint Stevens in court today.

Icahn last night won the auction for WestPoint Stevens with a final bid of $703.5 million. He beat the last Ross bid of $697.5 million, which was not accepted by the bankrupt mill.The issues being litigated today concern the use of credit bidding by the Steering Committee; whether the committee has the right to credit bid all of the first lien debt; who shares in the distribution -- specifically if any of the second lien holders can receive a payout if the first lien debt has not been completely paid; and finally, whether Icahn -- who holds a majority of the second lien debt and a portion of the first lien debt -- has standing to participate in the auction.Key components of the final Icahn bid incorporated, among other things, $312 million in a new capital infusion into the post-bankruptcy company (including a direct cash payment of $187 million), a $125 million rights offering; and a 35 percent issuance of new stock to first lien holders.Icahn’s $187 million in cash would give him more than 50 percent control of the new company.The core argument this morning centered on the percentage of that control premium that was employed by Rothschild, the financial advisor to WestPoint.

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