Springs seeks approval on $1.2B privatization
August 31, 2001,
Fort Mill, SC — In its waning days as a public company, century-old textiles giant Springs Industries is clearing the decks for a radical transformation when it asks shareholders later this week to green-light a $1.2 billion plan to take the company private under the helm of financier and former White House official David Stockman.
The deal is expected to energize a family-controlled major mill characterized by its conservative management style and provide it with the energy, and a barrel full of cash, to fuel the rapid growth of the company through an anticipated string of acquisitions.
The deal, and Stockman's investment, have the potential to remake not only Springs but an entire smoke-stack industry that has been swamped by imports, hobbled by crippling debt loads, clobbered in a grueling retail environment and punished by an unforgiving Wall Street that has washed its hands of the American textiles industry.
Importantly, the deal comes as a strong vote of confidence in an industry all but given up for dead by most banks and private investors, who are now denying the industry the capital it needs to invest and grow and climb out of a long trough.
Stockman, the prime mover in the deal, is former Reagan White House budget director and the father of "trickle-down" economics. He first approached Crandall Bowles, Springs chairman and ceo and a member of the founding Close family, last fall with the idea of joining forces to buy out the company and take it private. Once the deal is approved by shareholders, Stockman will own a 44 percent stake in the major mill, and members of the Close family will have increased their holdings to 56 percent.
The deal is also widely viewed as an exit strategy for members of the founding Close family, who may wish they could put their money where it might generate a greater return. In four or five years, if Stockman and Springs succeed in their dream of creating a strong, profitable, global textiles player, they could take the company public once again, enabling them to cash out by selling stock in a revitalized textiles giant to investors who may, by then, be ready to embrace a renewed textiles sector.
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