Ross Sees Bright Future for WPS
March 7, 2005,
New York — If investor Wilbur Ross has his way, WestPoint Stevens just might rise like a phoenix from the ashes of bankruptcy, taking wing as a low-cost global textiles producer through an alliance of joint ventures abroad.
As Ross builds up a domestic textiles empire through a collection of companies that includes Burlington Industries and Cone Mills — like WestPoint, bankrupt companies once given up as all but dead — he's inclined, he said, to keep WestPoint separate. Burlington and Cone have been knitted into Ross' International Textile Group, but he said he sees no synergies with WestPoint.
“The two will be kept separate. WestPoint is clearly large enough to function as a separate, free-standing entity. And there's really no overlap between the companies, no synergies,” he said.
Though textiles is an industry that other investors have fled in recent years, Ross said he's pleased so far with his investments. “We're very happy with ITG (International Textile Group). If we weren't, we certainly wouldn't have considered WestPoint.”
Just what does he see in WestPoint? “We think WestPoint has some very good brands — the ones they have developed internally, and the licenses they have, like Disney and Ralph Lauren. And they have very efficient domestic manufacturing facilities. Combine that low-cost domestic production with joint ventures abroad, and you can make a geographic map of productivity that spans the globe. There is so much potential to this company once you relieve it of the terrible debt.”
How did he come to put the deal together, did he go to WestPoint, or did they approach him, looking for a white knight? “Sort of neither and both,” said Ross. “The main holders of the bank debt are people we've known for a long time, and they came to us. And then we started talking to WestPoint management, and it all evolved out of that.”
Ross said it's premature to talk about WestPoint's management structure and how it might evolve once it emerges from bankruptcy. “We really don't have the whole picture on management.”
But one thing he does know, he states emphatically, “Chip has done a very good job stabilizing the company in a very volatile situation.”
Once it emerges, will WestPoint remain a public company or go private? That all depends, said Ross, on what happens with the rights offering that's a part of the deal to buy WestPoint. If holders of the bank debt or second-lien debt exercise their right to buy into the $207.5 million offering, it could very well remain a public company with a broad shareholder base. But if no one else opts to buy in, Ross said he and his investor group are prepared to pony up the $207.5 million, which would leave the company with just five owners, effectively taking it private.
Either way, “The goal, ultimately, is for it to be a public company.”
Ross emphasized that he and the other four members of his investment group are in no hurry to make a killing on WestPoint, the way he did when he cashed out of an earlier venture. Only three years after putting together a consortium of American steel companies at a cost of $2.2 billion, he sold the International Steel Group for $4.5 billion, more than doubling his investment.
“We don't need to cash things in quickly,” Ross emphasized. “Our partners are generally people like pension funds who tend to be long-term investors. As long as they see some accretion in value, there is no compelling need to cash in.”
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