Feuerstein raising cash to retain Malden Mills
February 3, 2003,
Aaron Feuerstein, the charismatic, controversial ceo of Malden Mills, has apparently raised most of the cash he needs to take control of the company his family has owned for a century, and keep his job.
And in good news for Feuerstein, the company and its workers, Feuerstein has apparently raised most of the cash to do just that.
"That's correct," Malden bankruptcy spokesman David Costello told Home Textiles Today. "Most of the money has been raised, and we are quite hopeful that we will have all of the funding necessary to retain control of the company."
Costello added, "That's two very good pieces of news for Malden — it will be coming out of bankruptcy soon, and Aaron Feuerstein, who has done so much for the company and its workers, will remain in control. The company has worked very hard for this and has been through an awful lot over the past few years, and it's really gratifying to see this coming to such a good conclusion."
Malden Mills, which produces manmade fleece under the Polartec brand, said the company and its lenders, led by GE Capital, have now agreed in principle to a plan of reorganization that could allow Malden to exit Chapter 11 some time during the second quarter.
Malden and its creditors had been publicly squabbling over the terms of a potential reorganization, and a U.S. bankruptcy court judge here had given the company until Feb. 18 to deliver a final plan that creditors could support.
Under the terms of a plan that creditors now say they "vigorously recommend,' Feuerstein has an exclusive option to buy out the interest of the secured lenders and unsecured creditors in order to retain ownership of the company. Failing that, Feuerstein will cede to lenders the ownership of an old-line New England textiles mill that his family has controlled for nearly a century.
Malden, headquartered in Lawrence, MA, and one of the last vestiges of a once thriving New England textiles industry — before most of the mills moved south in search of cheap labor and cheap water — filed for Chapter 11 protection from its creditors on Nov. 29, 2001, driven there by the high cost of servicing the company's debt, which was taken on to rebuild the company's main manufacturing plan after it was destroyed in a fire seven years ago.
Feuerstein became something of a national hero seven years ago, after the fire, when he reached into his own pocket and the company's reserves to to keep idled workers on the payroll while the plant was being rebuilt.
Ironically, it was the high cost of rebuilding the plant, coupled with a fleece market that came under increasing pressure from low-cost foreign imports, that led to the bankruptcy filing.
Feuerstein commented, in a prepared statement, "I am thankful to our lenders, in particular GE Capital, as well as our unsecured creditors for working with us toward a plan of reorganization designed to insure Malden Mills' future success. The past year has been one of the most challenging in our company's history." But that punishing year behind it, he added, "I am looking forward to successfully emerging form Chapter 11 and expect our best days to lie ahead."