Once-mighty textile maker is bankrupt, blames imports

Burlington Industries claims Asian goods drove it to Chapter 11

November 16, 2001|By BLOOMBERG NEWS

WILMINGTON, Del. - Burlington Industries Inc., once the world's largest textile maker, filed yesterday for bankruptcy protection after competition from low-cost Asian imports eroded profits and left it saddled with debt.

Burlington follows rivals Thomaston Mills Inc. and Worldtex Inc., which sought bankruptcy protection from creditors this year as foreign competition and declining sales continued to claim U.S. fabric makers.

Burlington, based in Greensboro, N.C., listed $1.18 billion in assets and $1.1 billion in debts in its Chapter 11 petition filed in U.S. Bankruptcy Court in Wilmington, Del.

J.P. Morgan Chase & Co. will provide Burlington with a $190 million credit line while it reorganizes operations and cuts debt.

"I think the whole U.S. textile industry should just throw the towel in and move offshore," said Vinnie Muscolino, a money manager at David L. Babson & Co. in Boston. "From an economic standpoint, it's going to be very difficult for them to do anything else and be competitive."

Textile makers, already weakened from years of battling lower-cost imports, have been among the hardest hit by the economic slowdown, said Dennis S. Rosenberg, a textile-industry analyst at Credit Suisse First Boston.

"The entire U.S. textile industry needs to restructure to be competitive in the current environment," said Rosenberg, who doesn't own any Burlington shares and doesn't have a rating on the stock.

Named for the North Carolina city where it was founded, Burlington was started by Spencer Love before World War I. The company expanded rapidly after World War II. By 1980, it was the world's largest textile producer.

The company fended off takeover attempts in the late 1980s, leading Chairman Frank Greenberg to take Burlington private in a leveraged buyout in 1987. A string of losses that began in 1988 prompted a restructuring. The company again went public in 1992.

The company isn't affiliated with Burlington Coat Factory, a Burlington, N.J.-based retailer specializing in selling discount coats and clothing.

Burlington has shed unprofitable businesses and cut costs in an effort to compete with low-priced fabric imports from Asia.

Burlington, the third-largest U.S. textile and fabric maker, yesterday reported a loss of $76.7 million, or $1.46 a share, for the quarter that ended Sept. 30, compared with a loss of $523.7 million, or $10.05 a share, in the same quarter last year. Company sales for the quarter were $327.1 million, compared with $427.2 million last year.

Shares of Burlington, which have fallen 52 percent in the past year, rose 17 cents to 75 cents Wednesday on the New York Stock Exchange. Trading was halted yesterday.

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