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Glenoit gets green light from banks

Don Hogsett -- Home Textiles Today, April 2, 2001

NEW YORK — Getting a big dose of good news from its bank lenders, Glenoit Corp. has been given a six-month extension of its bankruptcy financing, and an extra $122 million in seasonal financing to keep the troubled company going through the end of the year.

More importantly, the deal gives the company the wiggle room it needs to negotiate the sale of the company, either whole or in pieces, as it works its way through Chapter 11.

Tom O'Gorman, president, acknowledged that the company has been in sale talks since filing its pre-packaged bankruptcy petition last year. "Since we filed for bankruptcy last August, we have held discussions with a number of parties that have expressed some degree of interest in the company. It would be accurate to say that we are exploring the sale of the company. Parts could be sold, or it could be sold in its entirity. I fully expect that eventually all of Glenoit will be sold."

And to help the process along, said O'Gorman, Glenoit has hired investment advisor Carl Marks "to prepare valuations on various parts of the company and the company as a whole."

While its once big fleece and apparel fabrics business has been battered by low-cost foreign imports, its two big home fashions divisions, Ex-Cell Home Fashions and American Pacific, remain highly attractive, and highly profitable, assets to potential acquirors.

Indeed, through the first nine months of last year, the most recent period for which financial data is available, Glenoit's robust home fashions business sharply outperformed its peers despite a broad industry slowdown. Sales during the third quarter jumped up by almost a third, rising by 29.9 percent, to $208.6 million from $160.5 million, adding $48 million to the top line. At the same operating profits in the home fashions business rose by 17.6 percent, to $17.3 million from $14.7 million, generating a strong operating margin — operating profits measured as a percentage of sales — of 8.3 percent.

Despite the strong contribution from home fashions, Glenoit posted a substantially narrowed loss of $3.9 million for the nine-month period, a big improvement over a year-ago deficit of $9.3 million.

"We are still in the process of evaluating offers, and that could still take some time yet," said O'Gorman. Is he interested in selling the company entire or in pieces? "We're looking at all the possibilities."

O'Gorman said there is currently no timetable for Glenoit to emerge from bankruptcy. "It depends on the success of the activity we've been talking about."

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