Textile maker Avondale Mills Inc has told employees it intends to close or sell all its plants in Alabama and two other states in a move that could lead to the loss of around 4000 jobs.

The Monroe, Ga-based business, the US' oldest surviving textile manufacturing company, says it plans to shutter its 18 plants and sales offices in Georgia, South Carolina and Alabama by 25 July.

The vertically integrated operation makes fabrics for denim, sportswear, workwear and fashion end-uses.

It blames increased foreign competition for the closures, but says a train derailment and chemical spill next to one of its plants in January 2005 caused so much damage to the plant and its equipment that it was impossible to recover. Nine people were killed in the incident, hundreds were hospitalised and thousands were evacuated from a one-mile radius around the accident site.

Avondale now says that total closure is the most likely outcome, but adds that it is exploring several options including selling, restructuring or liquidating the company.

In a cruel twist of fate, however, just one day after announcing its possible closure, Avondale Mills Inc said it has reached a US$215m settlement with its insurance company for damages caused by the Graniteville train derailment.