NEW YORK — Another major U.S. mill is on its way back from bankruptcy.
Malden Mills Industries Inc. said its plan of reorganization was approved by the U.S. Bankruptcy Court Judge Joel B. Rosenthal in Worcester, Mass., late Thursday. The plan gives chairman and chief executive officer Aaron Feuerstein the option to buy back the company for about $92 million — if he can show creditors the money by Aug. 26, the date scheduled for the Lawrence, Mass.-based fleece mill’s emergence from Chapter 11 proceedings.
If Feuerstein doesn’t have the money by that date, the price will go up. In addition, the mill’s new majority owners — its creditors, led by GE Capital — would name a new ceo, allowing Feuerstein to remain on as chairman and president, with a minority ownership stake.
“I am very confident that I will exercise this buyout option, as I am in the final stages of obtaining the required funds,” Feuerstein said in a statement.
Business manager David Costello said in a Friday telephone interview that Feuerstein has assembled “a substantial portion” of the money needed for the buyback deal, but declined to be more specific. He added that Feuerstein has an application before the Export-Import Bank of the U.S. to guarantee a loan for the rest.
“As a strong exporter, we at Malden Mills look forward to the Ex-Im Bank’s consideration of our request,” Feuerstein added.
Costello said about 60 percent of Malden’s $175 million in sales this year will be exports. That’s up 4.2 percent from $168 million the prior year, but well off Malden’s $400 million peak in the mid-Nineties.
Costello said the purchase price would rise more than 10 percent if Feuerstein, 77, doesn’t have the financing arranged by Aug. 26, and would rise an additional amount each year for the next three years. The plan extends Feuerstein’s option to buy back the company through Aug. 26, 2006, though he likely could buy back the company after that time if he were able to negotiate a new deal with the owners.
Costello said Malden is conducting a review of candidates for a new ceo, should it need one, but has not yet made a selection.If Feuerstein’s bid to buy back the company is unsuccessful, it will be the first time the firm has been out of family ownership and without a Feuerstein at the reins since Aaron Feuerstein’s grandfather, Henry, founded it in 1906.
Feuerstein has attracted national attention since a huge fire in December 1995 destroyed Malden’s Lawrence factory. Feuerstein rebuilt the factory where it had stood, rather than relocating to someplace where wages were lower, and kept his work force on the payroll while the work was being completed.
That act, which was widely praised in Massachusetts and elsewhere in the U.S., contributed to Malden’s amassing $140 million in debt, which in turn helped lead to its Nov. 29, 2001 bankruptcy petition.
Malden, which supplies its trademark Polartec fleece to the U.S. military, has won substantial support from some national political leaders because of Feuerstein’s actions.
The company currently has about 1,200 employees, in Lawrence and Methuen, Mass., and Hudson, N.H. The overall headcount has changed little during Chapter 11 proceedings, though the company had laid off about 300 workers in the months leading up to its petition.
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