Guilford Mills still waiting on refinancing; unit sold

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Posted 12:30PM on Tuesday, February 19, 2002

CHARLOTTE, N.C. - Guilford Mills Inc. remained quiet Tuesday about its future as a deadline to refinance $275 million in debt passed last week for the embattled textile company. Chief executive officer John Emrich said he will not make any announcement until a decision is made by its senior lenders about what to do with the company's debt. The lenders have extended the deadline several times as the company struggled with overseas competition and a weak economy. The most recent deadline was Friday. As a deadline approached last month that ultimately was extended, Guilford Mills said it could have been forced to seek bankruptcy protection unless the debt was restructured. Meanwhile, the Greensboro-based company announced Monday that its has sold its Guilford Home Fashions division to Homestead Fabrics Ltd., which does not intend to keep on any of the 335 Guilford workers. Terms of the deal were not disclosed. Guilford Home Fashions employs workers in Herkimer, N.Y., and New York City. The Guilford Mills subsidiary has laid off 125 people over the last few weeks as operations began winding down, Guilford Mills said. "We tried very hard to sell Guilford Home Fashions as an ongoing business," Emrich said in the news release. "But I'm sorry to say we were unsuccessful. I know this will be very hard on our associates and their families." Homestead Fabrics is a subsidiary of British-based Broome & Wellington, which specializes in sourcing products for the textile industry. "We have the necessary financing to continue all of Guilford Home Fashions' existing programs and add new ones," said David Greenstein, one of the principals of Homestead Fabrics. "We're confident that Guilford Home Fashions will be an excellent fit with our expertise in providing turnkey, private label programs." In another development, Guilford Mills' stock, which has been delisted from the New York Stock Exchange, began trading Monday on the OTC Bulletin Board under the symbol GFDM.OB. Several weeks ago, Emrich said he was hopeful the textile maker could avoid filing for bankruptcy protection after getting its latest last-minute extension from its senior lenders. Last week, the company said it had informed federal regulators it expects to post a $15.1 million loss for the quarter that ended Dec. 30. Guilford Mills has closed several plants, cut 1,725 jobs and exited several businesses to try to right itself. Guilford Mills, an automotive fabric supplier and textile producer for home furnishings and specialty markets, has gone through a major restructuring as the economy deteriorated and the company faced cheaper textile imports.