Posted on 09/25/2003 11:26:37 AM PDT by Willie Green
For education and discussion only. Not for commercial use.
GREENSBORO, N.C. - Cone Mills Corp., the world's largest maker of denim fabric, late Wednesday filed for Chapter 11 bankruptcy on the eve of its annual shareholders meeting.
Cone Mills said it has accepted an offer from financier Wilbur Ross - announced Sept. 16 - to buy the company's assets for $90 million.
The 112-year-old company makes the fabric for Levi's jeans, among others. It employs more than 3,000 people in five factories in North Carolina and South Carolina along with a joint venture in Mexico.
Cone Mills headquarters will remain in Greensboro, the company said, where it "expects to maintain a significant U.S. employee base, including a substantial number of manufacturing jobs," the release said.
Chief executive John L. Bakane has blamed a flood of Asian textile imports for the company's struggles.
"Unfortunately, the size and scope of this challenge shows no sign of diminishing, since appeals to Washington from textile industry leaders seem to have fallen on deaf ears, with U.S. trade policies continuing to unfairly favor these overseas competitors," Bakane said.
Denim sales at Cone Mills have continued to decline during the third quarter, and the company failed to make a recent scheduled bond interest payment of $4.1 million.
In July, Cone Mills announced a second-quarter loss that it blamed on rising textile imports and dramatically falling sales. The company reported a net loss of $3.6 million, or 18 cents per share, which compared with a profit of $3.1 million, or 8 cents a share, for the second quarter last year.
Shareholders on Thursday were expected to battle over competing slates of candidates for the board of directors.
One slate has been put forward by the company's board of directors, and another by director Marc Kozberg, who represents investors who have been critical of Cone's leadership.
"I would think there will be some very tough questions and people will raise their voices," says Sam McNeil, a managing director of River Capital Advisors in Charlotte, which works with financially distressed companies.
Cone Mills said it expects to complete the sale to Ross within 90 days. It is subject to approval by a federal bankruptcy judge in Delaware, where the Chapter 11 petition was filed.
Proceeds from the sale likely won't be sufficient to provide any money for shareholders, the company said.
Cone Mills arranged $35 million in financing from GE Capital to fund operations, and does not expect any business interruptions.
Ross already has a deal to acquire Burlington Industries, which also makes denim, for $614 million, pending approval from a federal bankruptcy judge next month.
"Unfortunately, the size and scope of this challenge shows no sign of diminishing, since appeals to Washington from textile industry leaders seem to have fallen on deaf ears, with U.S. trade policies continuing to unfairly favor these overseas competitors," Bakane said.
Thanks for the ping. Surely those 'deaf ears' in Washington wouldn't include Senator Elizabeth Dole now would they? Her campaign ads showed her in a factory so we allll know Elizabeth cares < /sarcasm>
Good to see the joint venture in Mexico as well. At least part of President Bush's new voter base will be employed. Lord knows how many more conservatives he's going to lose between now and 2004
Ping for NC. With this and the latest tobacco fiasco that even the tobacco industry doesn't approve of, can someone please tell me why I should vote for another 'chosen' candidate from this administration? The last 'chosen' one could care less....
We need jobs, not thirteen more weeks of unemployment benefits. We need a government willing to reward industry that chooses to remain in the US and willing to tax the crap out of those that leave the borders after using every tax loophole and incentive they could muscle from Sam. We need provisions that if a corporation moves an industry to another country, they must either pay huge tarriffs to offset the economic damage they've done or submit to a minimum five-year ban of selling their foreign-made products in the U.S. as a means of giving that market share to another domestic company who will pay taxes and pay wages that pay taxes.
We need a government with the common sense to realize that by not protecting its taxable industry/worker, there will eventually be no source of income to maintain government, or the burden to support that government will become so unbearable for the taxpayer they are forced to revolt. We also need a government with the wisdom to refuse services to illegal aliens that unduely burden the system without adequate contribution, and instead, provide basic, deserved services to our armed service personnel.
We're all headed that way anyhow. We can go quietly and willingly or yell to the top of our lungs as the ship sinks. Just depends on which you think makes you feel better.
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