USA: Warren Buffett Bids $579m For Burlington Industries

By just-style.com | 12 February 2003

Troubled textile giant Burlington Industries Inc on Tuesday said it had accepted a $579 million cash offer from billionaire entrepreneur Warren Buffet's company Berkshire Hathaway.

The North Carolina-based firm said the deal, which has to be approved by a bankruptcy court, would see Burlington emerge from bankruptcy as a fully owned subsidiary of Berkshire, which also owns Fruit of the Loom Ltd.

However, Mr Buffett faces a fierce battle for the firm with rival bidder Wilbur Ross, founder of buyout firm WL Ross & Co. He has pledged to "vigorously" oppose the bid saying it undervalues the claims of its creditors.

WL Ross is the lead member of Burlington's creditor's committee and has also proposed a way to bring it out of Chapter 11 which it entered in late 2001 under $1.1 billion of debt amid a wave of cheap textile imports.

"This is a very positive outcome for the company, our employees and our creditors," said George Henderson III, chairman and CEO of Burlington. "Over the last year our efforts have increased the value of our company and allowed us to achieve a significant level of return for our creditors despite extraordinarily challenging conditions in our industry and the capital markets.

"In several recent cases, other companies have emerged from bankruptcy with excessive debt only to be faced with renewed problems.

"The opportunity to be totally debt free and having made considerable progress in our globalisation efforts puts us in a unique position to take full advantage of our capabilities and compete successfully in a rapidly changing textile business."

Mr Buffet added: "Only the very strong will survive in the textile industry - strong in management, strong in worker skills and strong in financial strength. Burlington brings the first two resources to a successful reorganisation; Berkshire brings the latter.

"Burlington will go forth as a company with no debt, talented and dedicated management, and a workforce second to none. It will be a company designed for success."

Companies: Berkshire Hathaway, Fruit of the Loom, George