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WestPoint mulls its future

Eager to wipe the slate clean of debilitating debt of more than $2.1 billion — and at the same time gear up for further changes in top management, and possibly even strategic focus — WestPoint Stevens could very well be poised to make sweeping changes in its operations even before it emerges from Chapter 11 some months down the road.

Last week's bankruptcy filing offered WestPoint breathing room and the leverage to make the difficult decisions that current wisdom suggests must be made. The company may soon be in a position to spend the money to shut down plants and lay off workers; shut or sell off unproductive businesses; reassess licenses that may not be working; renegotiate fees and royalties; and perhaps most important, spend the funds necessary to form overseas alliances and accelerate the sourcing of many products that it can no longer cost-effectively produce within the U.S.

Under the gun since an abortive management bid to take the company private in 2000, its sales, profits and share price plunging in a trifecta freefall — the company may be eager, and newly enabled by bankruptcy laws, to get started on the task of rebuilding more rapidly than many industry observers expect.

The bankruptcy filing dissipates a cloud of doubt that has hung suspended over the company in recent years. Crucially, it has allowed the company to begin tapping into a $300 million debtor-in-possession (DIP) loan provided by a group of banks led by Bank of America and Wachovia Bank. A U.S. bankruptcy court in the Southern District of New York has given the company a green light to use up to $175 million of the DIP financing, and a hearing set for later this month in New York City should give it access to the rest of the $300 million.

Coming Up Short
WestPoint's largest unsecured creditors

Source: U.S. Bankruptcy Court Southern District of New York.
Bank of NY $525,000,000
Bank of NY 475,000,000
Ralph Lauren Home 3,025,097
Nanya Plastics 1,912,581
Parkdale Mills 1,086,311
Wellman 926,348
Atlas Down 563,248
Kosa Arteva Spec 509,455
Buhler Quality Yarns 482,478
Progress Energy Carolinas 457,482
DuPont Textiles & Interiors 455,694
CIT Grp (Hoffman Mills) 406,652
Johnston Industries 401,333
Unifi 366,588
E.I. DuPont de Nemours 361,336
Apex Mills 350,336
Jefferson Smurfit 346,420
Imex Vinyl Pkg 343,145
Belding Hausman 341,589
R.L. Stowe Mills 321,843
Total: $1,012,657,936


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