Cone Mills enlists JP Morgan

Don Hogsett, Jeff Linville, March 12, 2001

GREENSBORO, NC -Dropping a strong hint that it's put itself up for sale-without actually having to say so-financially troubled Cone Mills, which hasn't made a nickel since 1994, said it has hired JP Morgan as a strategic advisor to "provide guidance on all aspects of its strategic plan and capital structure."

Weighed down by ongoing restructuring charges, century-old Cone, the world's largest producer of denim fabrics and the nation's largest commission printer of home fashions fabrics, posted a sharply widening loss of $29.0 million during the fourth quarter of last year vs. a smaller loss of $5.7 million the year before. And the loss would have been even deeper but for a $14.9 million tax credit.

For all of last year, Cone recorded a loss of $25.3 million. Without the big tax break, the company produced a pre-tax loss of $41.8 million. That's a sixth straight year of losses for Cone, which has lost $66 million since 1995. In addition to last year's $25.3 million loss, Cone generated a $19.1 million deficit in 1999; a $6.7 million loss in 1998; a $9.4 million loss in 1997; a $2.2 million loss in 1996; and a $3.3 million loss in 1995.

In its core denim business, Cone has struggled in recent years with a worldwide glut of denim fabrics, sharp downward pricing pressure and wavering sales of jeans to U.S. consumers. At the same time, its home fashions business was battered by a downturn in print sales, as consumers increasingly favored heavily textured jacquard fabrics.

In a series of drastic actions over the past several years to rebuild business and regroup operations, Cone ousted its long-time ceo Pat Danahy, replacing him with cfo John Bakane; and launched a sweeping restructuring, shutting down some operations and cutting more than a thousand jobs.

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