Brands drove up Pillowtex bid price
October 3, 2003,
New York — "We sold the company," said a smiling but clearly exhausted Michael Harmon as he emerged from Pillowtex’s attorney’s offices late last night following a 10-hour auction marathon. The winning bid was posted by the original stalking horse bidder, GGST LLC, for $128 million — $72 million more than it originally offered.
GGST, a consortium of four companies brought together for the Pillowtex asset liquidation, prevailed over about a dozen other bidders in the auction. In the end, it outbid another liquidation joint venture headed by PT Partners and The Petters Company by just $500,000.
Harmon, president and cfo of the bankrupt mill, was accompanied by chairman and ceo Michael Gannaway and a small group of others. Harmon said he was happy that the value of Pillowtex’s brands was recognized and reflected in the sale price.
"We’re very pleased," he said in a brief interview in the lobby of Debevoise & Plimpton, the company’s bankruptcy attorneys. But does the sale price reflect all he had hoped the company and its brands would bring? "We’re very pleased," he repeated. "Let’s leave it at that."
Indeed, it appears that the brands helped drive up a significant part of the final price, departing participants in the auction indicated.
The end came shortly after 7:00 p.m. as the second round of bidding — the all asset portion — finished and the follow-on component sale began. But no additional component bids were forthcoming, apparently because the component bidders realized the effort was futile, said numerous participants. The component bids, in their aggregate, would have had to beat the GGST offer for the entire company. The follow-on auction segment ended almost as soon as it began.
Component bids — including the brands — had gone as high as $62 million in the first round of bidding, according to Rick Chance of Trenwirth Securities, brought in as an advisor from the creditor’s committee.
"Every component [of the asset bidding] was maxxed out," said Bill Melvin, ceo of National Retail Liquidators, part of the PT Partners consortium.
"We’re going home with nothing," said a frustrated Jeff Gordon of the group, as he left the building with several associates.
Representatives of GGST declined comment as they hurried from the building.
The sale must still be approved by the U.S. bankruptcy court in an Oct. 7 hearing before it can be consummated.
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