Dan River Slated to Run Again
January 24, 2005-- Home Textiles Today,
Danville, Va. — A U.S. Bankruptcy Court judge has approved Dan River’s reorganization plan, allowing the company to exit Chapter 11 by Feb. 10, when it is slated to close financing.
According to Barry Shea, who becomes company president and CEO upon exiting bankruptcy, “We came in and out as quickly as anyone in this and have been actively trimming costs in the last nine months by closing several plants, cutting 2,000 jobs and repositioning our company to make it leaner and put it in good financial shape.”
Dan River closed four manufacturing plants and entered into court approved agreements for the sale of its engineered products division and other assets it deems no longer necessary for its continuing operations. Shea said the plan going forward is to “provide compelling product to customers at the right price. Where it is made is less important.”
The plan of reorganization, approved by a judge in the Northern District of Georgia, Newnan Division, states that Dan River will have indebtedness of approximately $90 million on the effective date of the reorganization plan, down from more than $270 million when the bankruptcy cases were filed last March. All of the company’s current common stock will be canceled and new common stock will be issued to certain of the company’s post-emergence lenders and to its unsecured pre-petition creditors. The plan states that current stockholders will receive no recovery.
The total exit financing is $140 million, $110 million of which is a revolving credit facility by Ableco Finance LLC.; $10 million, a term loan from Ableco; and an additional $20 million from a group of bondholders.
“When we filed our petition on March 31, 2004, we stated that we planned to emerge from bankruptcy around the end of the year. We are close to accomplishing this ambitious goal because of the support of several groups that I want to thank,” said Joseph Lanier Jr., chairman and CEO, who becomes non-executive chairman of the board upon emergence from bankruptcy.
“To our customers who had confidence in us, we will show our appreciation by offering you an unequaled combination of quality, fashion, customer support and value in our products. To our suppliers who continued to show faith in the company, we look forward to continuing a positive and mutually beneficial relationship. Finally, to our associates, I thank you for your loyalty, courage and efforts during this challenging time,” he added.