Sale looms as Thomaston files
June 25, 2001-- Home Textiles Today,
Less than a week after warning its employees that shutting its doors permanently was an option if a buyer was not found soon, Thomaston Mills, Inc. filed for Chapter 11 bankruptcy protection last week.
However, the head of the firm Thomaston hired to find a buyer said a motion for the company to be sold to one of its bidders could come as early as this week.
The voluntary petition was filed on June 19 at the United States Bankruptcy Court, Middle District, in Macon, GA. The move places an exclamation point on what has proven to be a tumultuous half decade for the major mill.
"Our hopes are that we'll be able to complete the sale of all or part of the business," William Ott, acting president and ceo, told Home Textiles Today. "Lacking that, [the filing] provides us with a means to wind down the business in an orderly fashion.
"It's sad in one part because we hate to do this," he continued. "But in the end, it may help us to facilitate the sale.
"It's a necessary next step."
But all is not dim for Thomaston. The company put itself up for sale little more than a month ago, and after six weeks the possibility that a buyer will be found remains strong, said John Herman Jr., principal for the private investment company, Equity Partners Inc. of Wye Mills, MD, which was hired to find a buyer.
"I've had at least three written offers, and I'm expecting at least two more from significant players within the textiles industry and some outside players looking to get in," Herman told HTT. Offers have been made on the five plants separately as well as on some combination thereof, he said, adding that he expects to make a recommendation sometime this week to file a motion for the company to be sold.
Herman also said that he fully expected to see a continuation of the Thomaston name into the foreseeable future.
Ott said he was "cautiously optimistic" a deal could be worked out.
In an effort to reduce operating expenses, Thomaston shut down its Peerless, GA, plant less than two weeks ago, resulting in the layoff of 540 employees, leaving the company with a work force of more than 900 members. Within the past year, the company had also withdrawn from the denim, sales yarn and industrial markets, eliminating some 700 jobs in an effort to tighten its belt.
Thomaston's profitability eroded steadily over the past five years, and its 1996 net income of $615,000 turned out to be the last profit the company would report. A year later, Thomaston reported a net loss of $7.6 million, which widened to $11.5 million in 1998 and $41.7 million in 1999.
The new millennium brought no relief. Although losses decreased, they still amounted to more than $14.6 million for fiscal year 2000.
The first two quarters of the current fiscal year, which concludes in July, brought more indicators the company could not dig itself out of the hole. First quarter net losses totaled $3.6 million, more than double 1999's numbers, while second quarter net losses hit $5.9 million.
Days after Thomaston announced its second quarter numbers, Thomaston's three top executives resigned from their posts. Neil Hightower, George Hightower and Stewart Davis, all members of the Hightower family that has had a controlling interest in Thomaston since its founding, stepped down in February, further fueling speculation that the company was in trouble.
Soon thereafter, Bob Dale, Thomaston's vp, sales and marketing, was also released in a cost-cutting move. Dale had been credited with getting Thomaston products onto the shelves of retailers that the mill had previously not done business with.
"We're probably in a situation not unlike a lot of other people in this industry," Ott said, citing the economy, softening retail sales, global sourcing and a general credit tightening as factors that led to Thomaston's woes. "It's very tough out there.
"The first person to find some answers to the industry's problems will have a tremendous opportunity in this business," he said.
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