<p>Bed and bath textile manufacturer WestPoint Stevens, which filed for Chapter 11 bankruptcy protection in 2003, announced Tuesday that it has agreed to sell the company to an investor group that includees major creditors.</p><p>The agreement calls for the sale of substantially all of the assets of WestPoint Stevens, with equity in the new company distributed to holders of outstanding senior secured debt.</p><p>The investor group consists of WL Ross & Co., which has holdings in steel and other industries, and the textile company's senior credit facility, including Contrarian Capital Management and CP Capital Investments, WestPoint Stevens said in a news release.</p><p>Unsecured creditors could receive a small distribution and all shares of WestPoint Stevens' common stock would be cancelled with no payment, the company said. The agreement calls for a closing no later than July 31 and a breakup fee of $5 million in the event of a sale to a higher bidder.</p><p>Details of the agreement will be set forth in papers being filed with the U.S. Bankruptcy Court and the Securities and Exchange Commission, the company said.</p><p>President M.L. "Chip" Fontenot said it was "a major step toward the successful reorganization of our company on a debt-free basis."</p><p>Wilbur Ross, the head of WL Ross & Co., said he foresaw "efficient domestic manufacturing with international joint ventures to create a truly global home fashions company."</p><p>WestPoint Stevens, founded almost 200 years ago, sells a range of bed linens, towels, blankets, comforters and accessories under brand names including Patrician, Martex, Utica, Lady Pepperell and Chatham.</p><p>It has been hurt in recent years by a flood of foreign textiles and announced in January that it would cut 2,465 jobs and close plants in four states because of the end of worldwide quotas limiting cheap imports.</p><p>At the time, the company, which filed for Chapter 11 protection in June 2003, said it was closing plants in Burlington, N.C., Clemson, S.C.; Middletown, Ind. and Drakes Branch, Va.</p><p>A year ago, it announced the closure of two plants in the west Georgia town of LaGrange, a loss of 550 jobs. The company also closed its Roanoke Rapids, N.C., towel-making complex, the South's first major unionized textile mill and the inspiration for the award-winning 1979 film "Norma Rae" that starred Sally Field.</p><p>Under the agreement announced Tuesday, the new company will conduct a rights offering, underwritten by the investor group, to raise $207.5 million of equity capital.</p><p>All of WestPoint Stevens' senior debt holders will have the equal right to participate, and in certain circumstances second lien facility holders could participate in the rights offering, the company said.</p><p>The new company will repay WestPoint Stevens' debtor-in-possession loan, satisfy certain administrative claims and assume ordinary payments and post-petition liabilities, including bankruptcy emergence costs.</p>
