NEW YORK — At a time when many textile executives have been sorting through their debts and wondering how to pay them, officials at Fab Industries Inc. have been dealing with the opposite problem: figuring out the best way to pay surplus cash out to shareholders.
This story first appeared in the August 27, 2002 issue of WWD. Subscribe Today.
The company hasn’t been spared the intense pain that has afflicted most U.S. mills in recent years. Falling sales have forced it to scale back its operations considerably — the mill has cut its workforce, by more than 1,000 employees, to 676.
At the same time, the company was sitting on a $90 million war chest that chairman and chief executive Samson Bitensky had amassed so the company could make acquisitions. Bitensky concluded that all the options he looked at in recent years were “too risky.”
That prompted the decision late last year to put the company up for sale and pay out the money to shareholders. As reported, in June the company paid out a $10-a-share dividend, totalling $52.4 million, as the first installment of the cash. But Bitensky said he wants to make one thing clear: The company is on the block, but is not going out of business.
“Once we are done consolidating…a diversified business like ours will have a good opportunity to compete,” he said in a Thursday interview. “There are changes, but it’s not like I’m throwing in the towel.”
Fab’s apparel-fabric production is now mostly handled out of its Lincolnton, N.C., mill and finishing plant. The company also operates smaller mills, producing blankets and industrial fabrics, in Salisbury, Pa., and Amsterdam, N.Y.
While Fab’s sales have shrunk, it has typically remained profitable. For the first half of 2002, the company recorded $949,000 in net income on sales of $31.6 million, compared with a $5.4 million net loss on sales of $43 million a year earlier.
Bitensky said he sees some growth prospects ahead. The company’s sales into the Caribbean Basin region have risen and Fab is now beginning to warehouse some fabrics at apparel plants in the area to allow them quicker turn times.
Bitensky has attached one key requirement to the sale offer for the company.
“It will be as a going business,” he said. “For stockholders, it’s not good to liquidate a business.”
Bitensky’s 28.6 percent stake in Fab makes him the company’s largest shareholder.
Should no outside buyer materialize, Bitensky said he believes current management, which includes his son-in-law Steven Myers, president and chief operating officer, could buy the firm, which had a market capitalization slightly over $40 million on Friday.
“Probably our people would find a way to do it,” Bitensky said. “What I’d like to see is the company successfully continue.”