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Buffett in Burlington bid

Don Hogsett -- Home Textiles Today, February 17, 2003

Still actively building a portfolio in home goods suppliers and retailers, Warren Buffett and his Berkshire Hathaway investment vehicle have made a bid for bankrupt textiles producer Burlington Industries Inc.

After selling the Burlington House home fashions division, the mill remains active in upholstery and mattress ticking , in addition to its larger denim and apparel businesses.

Preparing to exit Chapter 11, Burlington filed a plan of reorganization last week saying it had accepted the offer from Omaha, NE-based Berkshire Hathaway, which agreed to acquire all of the company's equity for about $579 million in cash, which will be used to pay off Burlington creditors.

But the Buffett deal faces a challenge from a buyout company, W.L. Ross, which made an earlier bid for Burlington, offering to pay $439 million for secured debt and another $28 million in administrative claims, but which also called for the issue of $250 million in new debt.

Investor W.L. Ross, who operates the investment company, has challenged the Buffett bid and could up the ante in a bidding war.

Under Buffett's plan, Burlington would emerge from bankruptcy without debt operating under the Berkshire umbrella. Additionally, unsecured creditors would receive cash and other assets equal to 35 percent of their claims.

Burlington said the Ross proposal depends on obtaining $250 million in new debt for Burlington, while the Buffett offer is a cash bid, with no financing necessary.

Burlington said the Buffett deal could still be undone by a higher offer, and the textiles producer said it wants to hold an auction April 21. Any new bidder would have to top the Berkshire offer by $19 million.

Buffett made news last year by buying Fruit of the Loom, which has licensed its name out to home textiles produces, including Haywin Textile Products.

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