Union moves to scuttle P'tex deal
May 12, 2003,
Trying to save jobs in a battered American textiles industry, a textile workers' union is trying to block the much-discussed — though not publicly announced — sale of Pillowtex Corp. to Springs Industries Inc., a move that would likely trigger the shutdown of Pillowtex's giant Kannapolis, NC, manufacturing complex.
Pillowtex employs about 8,000 workers, roughly half of them in the sprawling — but aged and under-utilized — manufacturing complex originally built by Cannon Mills in the early 20th century, and later reconfigured by subsequent owners Fieldcrest Mills and Pillowtex Corp.
"A purchase by Springs would result in the loss of thousands of jobs and the absorption of some of the best brands in the home textiles industry into Springs' infrastructure and mills," said Raynor, president of the largest textiles and apparel workers' union in North America, with more than 250,000 members in the United States and Canada.
In an 11th hour drive to block a Springs acquisition — and the likely shutdown of what, to Springs, would be a costly and redundant manufacturing facility — Raynor pumped up the volume and took the union battle public. He said he had lined up at least one other potential investor, and that Springs and Pillowtex had reluctantly agreed to allow other suitors to sign up on the Pillowtex dance card.
The union said it has "found a potential investor willing to operate Pillowtex as a viable company." And after Raynor threatened to organize hundreds of union members to march on Springs Industries, both Pillowtex and Springs waived their preliminary purchase agreement to allow "two potential buyers brought forward by the union" to pore through the Pillowtex books and prepare potential bids.
"As long as they're permitted due diligence, then we have good reason to believe that if either company is permitted to bid then we think Springs will back out," said Raynor.
"We are committed to the negotiating process and an effort to work with these buyers," Raynor added. "We are confident that one of these new companies will be able to make a successful bid for the company and preserve Pillowtex jobs."
And throwing a small olive branch in the direction of Springs, Raynor added, "We compliment Springs' top corporate leadership for allowing jobs to come before their own financial interests."
So who has Raynor lined up as a potential white knight? Reportedly, one leading contender is a New York-based "vulture fund," Cereberus Capital Management. The so-called vulture funds are investment companies that specialize in buying the assets of distressed companies, hoping to turn them around and later turn a profit by selling them off for more than they paid. Perhaps ironically, given the investment company's mission, the name has its roots in Greek mythology, where Cereberus was the three-headed dog who stood at the gates of Hades.
Another name whispered about is that of Jody Vitale, a North Carolina-based investor whose family once owned Perfect Fit Industries and who has made occasional forays into the industry.
Pillowtex, fresh out of bankruptcy and still losing money despite shucking off a crushing debt load, put itself into play in March saying it had hired investment banker Credit Suisse First Boston to help it pursue "strategic options," including a possible sale of the company.
"We're not making any statement beyond that," said Karen Cobb, Pillowtex spokeswoman.
As of press time late Friday, Springs' officials had not responded to phone calls requesting comment.