Mills Up For Grabs?

Here's a thought to chew on. Could it be possible within the year the big three textiles mills could all come under new ownership?

First, the case of WestPoint Stevens. High-profile financial engineer Carl Icahn is now said to hold about one-third of the mill's first-lien bank debt as well as a chunk of second-lien debt. Holders of secured bank debt, as opposed to bond holders, are first in line when it comes to getting something in a bankruptcy restructuring, usually exchanging their bank debt for common stock.

WestPoint is aiming for a first quarter 2005 emergence from bankruptcy, and company executives have said previously that they would prefer to operate as a private entity, if possible. Could Icahn be WestPoint's Big Daddy?

Dan River, which has been operating under Chapter 11 protection since this past March, recently said it could emerge from bankruptcy as early as January with a much cleaner balance sheet and a new, $10 million senior secured credit facility on top of an existing $110 million debtor-in-possession revolving credit facility and a $35 million DIP term loan.

All but written off for dead by many in the industry —even before it entered bankruptcy — Dan River is now the subject of armchair speculation. Could it attract the attention of a turnaround financier like Wilbur Ross, who began putting together a U.S. textiles empire by snapping up Burlington Industries in late 2001 and Cone Mills in March as each of them came out of bankruptcy?

Finally, there is the case of Springs Industries — the country's largest home textiles company. This is where the whispering classes (i.e., the financial types) are really having a field day.

When Springs went private, the plan to was to double sales and come back into the market with an IPO, probably in 2005. The environment isn't looking too IPO-friendly for textiles companies these days. So, the thinking goes, selling out becomes a possible alternative.

Ross's name surfaces here as well. As does the notion that a large overseas company might acquire the business — even possibly Springs' joint venture partner Coteminas, the largest textiles manufacturer in Brazil.

All of that said, one must acknowledge that would-be investors do a lot more tire-kicking than they ever sink into deal-making. But with 2005 setting up as a year of profound change for the industry, it's likely that at least one of these companies could change ownership. And thus will unfold yet another chapter, perhaps the enduring one, in the annals of U.S. home textiles manufacturing.