Springs turns the page
September 10, 2001-- Home Textiles Today,
Now private, No. 2 mill takes aim at top spot
Rock Hill, SC — After six months of feverish preparation, Springs Industries last week finalized its bid to revert to private ownership in a shareholder meeting here that lasted less than 20 minutes.
Shareholders voted with an 84.4 percent majority to accept a recapitalization proposal from Heartland Springs Investment Company, a subsidiary of Heartland Industrial Partners, the private equity firm headed by financier David Stockman. They received $46 per share through the transaction. Heartland, which committed $225 million toward the purchase, claimed a 44 percent stake in the textiles company. And the founding Close family members will hold the 56 percent majority stake. The deal is valued at $1.2 billion.
Thus the country's second largest home textiles company inaugurated yet another chapter in its 114-year history, and simultaneously closed the books — both literally and figuratively — on its three-and-a-half decades as a public company.
"Operating as a public company requires putting the focus on quarter-to-quarter performance," chairman and ceo Crandall Bowles said during a press conference after the vote. "It often forces operating decisions that you wouldn't make if you were focused on the long-term."
Earlier, she noted that the decision to withdraw from public trading was prompted by the same factors that compelled Springs to pursue an IPO in 1966: to improve the company's ability to broaden its product offerings; to gain better access to capital; and to position Springs to better deal with the threat from foreign imports.
Today, of course, Springs is an importer itself, with nearly $450 million worth of product — mostly greige goods — sourced abroad. Last year, the company paid $5.7 million to acquire a Mexican operation that fabricates window blinds. In 1999, Springs acquired Regal Rugs, a bath and accent rug importer and manufacturer, for $35 million. And in recent weeks, Springs struck an exclusive partnership agreement with Brazilian textiles manufacturer Coteminas for bedding and bath supplies, the mill's first such strategic alliance.
There is little doubt that Springs as a private company will push to significantly to grow its $2.3 billion business, with acquisitions likely to constitute at least part of the expansion formula. When asked last week how soon Springs would begin to move on acquisition targets, Bowles replied that the company first needed to digest the Heartland deal.
"We've said many, many times we'd like to have a bigger market share," she added. "Coteminas will give us access to some product that we can't produce on our own. Nobody wants to add capacity in this market."
With the privatization vote just several minutes old, Bowles also addressed the possibilities for a potential Heartland exit strategy: an IPO, partial sale or another recap. For the moment, however, the priority for both Heartland and the Close family is setting the stage for long-term growth and market dominance.
"They're very patient," she said.
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