Slam dunk for Icahn WPS bid
June 29, 2005,
NEW YORK — Carl Icahn has won WestPoint Stevens, beating back multiple challenges by the Steering Committee of first lien lenders which tried to overturn last week's auction for the bankrupt mill.
"It was 100 percent — everything we wanted," offered a jubilant Peter Wolfson, Icahn's attorney, shortly after the bankruptcy court's session ended after 7 p.m. Wednesday.
Icahn's bid, valued at $703.5 million dollars, includes a cash infusion of $187 million, most of which will flow to keep WPS' operations liquid.
In a highly unusual two-hour-long ruling from the bench, U.S. Bankruptcy Court Judge Robert Drain rejected virtually all of the Steering Committee's substantive objections and found Icahn's bid to be the highest and the best. Drain declared the auction to be "fair and at arm's length." He said the best way to determine the value of the company is to "expose it to the market," which was accomplished by the auction.
Steering Committee lawyer Sidney Levinson declined comment on the decision, which came after four days and nearly 25 hours of arguments. He said he needed to meet with his group before any decisions would be made about an appeal or other actions.
The decision provides for payments to both first and second tier debt holders, along with administrative claims connected with the bankruptcy.
Now that he has it, what will Icahn do with the struggling mill?
"We'll have to study it," Icahn said. "This company is going to require a lot of capital. Our comeout is going to be about $150 million with no debt and that will make for a very strong balance sheet.
"But it will probably require more capital … We'll probably have to put more capital in the company."
Icahn declined to speculate about the potential source of those funds, however, his plans for the new company includes taking it public.
The auction was approved under the terms of a Section 363 sale, however, it could still fall within a pending reorganization plan, though not considered likely.
The decision marks the beginning of the end of WestPoint's two-year-old, highly contentious bankruptcy odyssey. Over the past year multiple reorganization plans were rejected, leading to a showdown between Icahn and the Steering Committee lead by Wilbur Ross.
Efforts to reach Ross Wednesday night were unsuccessful.
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