Guilford warns of bankruptcy possibility
January 17, 2002,
Greensboro, NC — With losses more than tripling, sales falling off by more than 20 percent and in violation of restrictive debt covenants, textiles producer Guilford Mills warned that it could be forced into bankruptcy if it was unable to refinance about $270 million in debt or win some breathing room from lenders.
Guilford said that unless it could refinance by Jan. 18, or unless lenders waive existing covenants, it would be in default under senior loan agreements, giving creditors the right to call in their loans and liquidate the collateral — "substantially all of the company's domestic assets," according to Guilford.
Sales in the closing quarter fell by 21.3 percent, to $145.5 million from $185.0 million, led by a steep 46.5 percent drop in apparel fabrics. Sales fell off by 6.2 percent in the automotive fabrics unit, to $77.2 million from $82.3 million.
And despite a solid 9 percent increase in its rapidly growing bedding business, waning sales of home fashions fabrics generated a 5.3 percent drop in sales for Guilford's home unit, to $19.3 million from $20.4 million. But thanks to the strong bedding business, fueled by the Jockey Home program, home fashions remained the strongest of the company's three core product divisions.