Net asset sale closes, minus 5, for $121 mil.

Brent Felgner, November 10, 2003

Pillowtex Corp. will seek to directly sell off five of its facilities excluded last week from the closing of its asset sale to GGST LLC.

The liquidation consortium was permitted to omit those properties from its purchase under the terms of its asset purchase agreement with Pillowtex, which went into effect following its successful $128 million bid during last month's auction of the defunct mill. The exclusions resulted in a $7 million reduction in the purchase price, bringing the net price to $121 million.

Left out of the sale were properties in Eden and Kannapolis, NC (except for the IT building); Dallas; Hanover, PA; and Tunica, MS. GGST retains the rights to all equipment located at all Pillowtex facilities.

Pillowtex filed for bankruptcy July 30 and immediately announced its intention to wind down operations and liquidate. The move came after well over a year's unsuccessful efforts to refinance or sell the company outright.

Still undecided are the fates of Pillowtex's brands — Royal Velvet, Charisma, Fieldcrest and Cannon, among them — that are currently being marketed on behalf of GGST by Group 3 Design. By all accounts the brands continue to represent the core value of Pillowtex's assets.

GGST LLC was formed specifically to be the stalking horse bidder for Pillowtex, an effort that became successful following an active and mildly controversial 10-hour auction Oct. 2. GGST was founded by SB Capital Group (Schottenstein), Gibbs International, Gordon Brothers Retail Partners and Tiger Capital Group. Home textiles manufacturer Franco Mfg. later affiliated with GGST and became a participant in the auction.

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