- THE MAGAZINE
GREENSBORO, N.C. -- Burlington Industries, Inc. (NYSE:BUR) on Nov. 15 filed for Chapter 11 bankruptcy protection as it struggles with heavy debt, competition from cheaper imported textiles and a drop in consumer spending.
Company chairman and CEO George W. Henderson, III, said the textile manufacturing giant will reorganize to concentrate on its Lees Carpets business, expand global business through a Hong Kong subsidiary and accelerate manufacturing improvements in its North American operations.
The filing included 24 Burlington subsidiaries. It was made in U.S. Bankruptcy Court in Wilmington, Del., a day after Greensboro-based apparel maker VF Corp. announced it would slash 13,000 jobs.
Burlington said the filing would accelerate its move to modify its business model, so filed under Chapter 11 of the U.S. Bankruptcy Code.
"This decision was not made lightly and we believe it is in the best interest of the long-term viability of the company," said Henderson. "We recognize the need for aggressive and comprehensive change in our business model and we can no longer afford the time needed to incrementally transition the company. By utilizing the Chapter 11 process, we can control and guide our reorganization activities under the protection of the court to expedite the debt and operational restructuring that we have been pursuing and at the same time ensure that our daily operations continue uninterrupted."
Burlington Industries also announced it has received a commitment for a facility of up to $190 million in debtor-in-possession (DIP) financing underwritten by J.P. Morgan Chase & Co. Still subject to court approval, Henderson said DIP financing would augment the company's liquidity to provide adequate funding for operations during the reorganization period.
The company said it expects to generate positive cash flow during fiscal 2002, and anticipates no disruption in daily operations at the company's headquarters or manufacturing plants, or in the delivery of customer orders.
Burlington also reported a net loss of $76.7 million for its fourth quarter, compared to a net loss of $523.7 million for the same period last year. Net sales slid to $327 million in the quarter from $427 million a year ago. About $57 million of the sales reduction relates to businesses sold or closed during the fiscal year, the company said.
For the year, Burlington reported a net loss of $91.1 million, compared with a net loss of $527 million in 2000. Sales fell to $1.4 billion from $1.6 billion.
It has been in a restructuring program the past 21/2 years that resulted in plant closings and layoffs, but the changes weren't enough, Henderson said.
Burlington Industries (www.burlington.com) is one of the world's largest manufacturers of textiles used for apparel and interior furnishings. It has plants in the United States, Mexico and India.