Guilford Mills seeks bankruptcy

Posted 10:22AM on Tuesday 5th March 2002 ( 23 years ago )

GREENSBORO, N.C. - Guilford Mills Inc. said Tuesday it will file for Chapter 11 bankruptcy protection under a plan approved by lenders that reduces its debt, reduces existing shareholders' stake in the textile maker and completes its transition to a producer of automotive fabrics. Once one of the nation's leading makers of clothing and home furnishing fabrics, Guilford Mills will retain an apparel operation only in Mexico. The agreement in principle with a syndicate of lenders led by Wachovia Corp. cuts $270 million in outstanding loans to about $145 million. Guilford Mills said it will cancel its existing common stock and replace it with new shares. Lenders will receive 90 percent of the company's equity, while existing stockholders get 10 percent. The company's board of directors will be changed to reflect the new ownership ratio. The company's unsecured vendors, who are owed nearly $25 million, will be paid in full under the plan. ``The reorganization will preserve a portion of the company's equity for our current shareholders and protect our unsecured trade creditors,'' president and chief executive officer John A. Emrich said. The company, which first disclosed plans to seek a prepackaged bankruptcy plan last month, said it expects to file for Chapter 11 protection within the next few weeks and to emerge from bankruptcy proceedings by early summer. In a prepackaged bankruptcy, the debtor and creditors negotiate a turnaround plan before filing for bankruptcy protection. The petition can then be confirmed with much less time and expense. The company plans to focus on supplying the automobile industry with material for car seats, roofs and other interior components, a business it considers less vulnerable to cheap imports. The company says it holds 25 percent of the U.S. market share in car-seat fabrics and more than 70 percent of the share for materials for auto roofs. The company reported a $160.8 million loss in its most recent fiscal year ended Sept. 30. Its shares sank to 26 cents last month before being dropped from the New York Stock Exchange. Burlington Industries Inc. and Malden Mills Industries Inc. are among the textile companies that sought bankruptcy protection last year. Greensboro-based Galey & Lord Inc. - which produces khaki, denim and corduroy - filed for bankruptcy-court protection last month. --- On the Net: Guilford Mills Inc.: http://www.guilfordmills.com

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