Icahn ups WestPoint stake

NEW YORK — Clearly seeing value in a company, and an industry, that others have walked away from, high-profile financial engineer Carl Icahn has reportedly increased his stake in WestPoint Stevens as the textiles titan gets ready to emerge from bankruptcy, possibly by early next year.

Icahn bought a chunk of WestPoint's second-lien bank debt in May, and is now said to have taken an even larger position in the company, buying about a third of its first-lien bank debt from Q Investments, a private investment firm based in Fort Worth, Texas.

The move would put Icahn in a position to engineer an outright takeover of the company as it emerges from Chapter 11, swapping his debt for shares in the reorganized company. Holders of secured bank debt, as opposed to bond holders, are first in line when it comes to getting something in a bankruptcy restructuring, usually exchanging their bank debt for common stock.

Mary Gilbert, managing director of Imperial Capital, a Beverly Hills, Calif., investment firm which tracks the company, said WestPoint's first-lien bank debt totals about $456.7 million, which would value a one-third stake at about $162.2 million.

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