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Guilford files for Ch. 11; refinances $270M in debt

Guilford Mills announced last week that it had agreed to refinance its debt and file for pre-arranged Chapter 11 bankruptcy protection.

Guilford currently has $270 million in debt. Under the restructuring, which still must be agreed to by Guilford's senior lenders, the debt will shrink to roughly $145 million and the company's unsecured trade creditors will be paid in full.

According to a statement released by the company, Guilford expects automotive sales to make up 70 percent to 75 percent of the company's annual sales.

Under the pre-arranged reorganization, some of Guilford's lenders will receive approximately $30 million of debtor-in-possession revolving credit. Also, all of the company's currently outstanding common stock will be cancelled. In turn, current senior lenders and existing shareholders will receive shares of company common stock representing 90 percent and 10 percent, respectively, of the total outstanding common stock.

Guilford has posted losses of more than $200 million over the last 27 months, $160.8 million from 2001 alone. Figures for the company's opening quarter of fiscal 2002 did not bring good news, as sales totaled $137.6 million, a loss of 20.7, percent or $36 million, from the same time period a year earlier.

The company has also closed four plants, downsized another and totally eliminated its dyeing and finishing operations in the space of a year. In addition, more than 1,700 jobs were eliminated in the face of growing pressure from low-cost Asian imports and a U.S. economy in the middle of a recession.

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