DELTA EX-EXEC STATES INTEREST IN ACQUIRING BALANCE OF STOCK
Byline: Scott Malone
NEW YORK — The tortuous restructuring path of Delta Woodside Industries Inc. took an interesting turn Tuesday, when its former number-two executive said he is “unhappy” with management’s current plan and wants to make an offer to buy the company.
In a filing with the Securities and Exchange Commission, Bettis C. Rainsford, of Edgefield, S.C., said he “is considering the possibility of making an offer to purchase those shares of the common stock of the company that [he] does not currently own…because of [his] strong disagreement with the recently announced decision by the board to spin off Delta Apparel Co. and Duck Head Apparel Co.”
In the filing, Rainsford, who holds a 13.4 percent stake in the company, said he was concerned with the tax implications of the spin-off plan.
Over the past year, Delta management has pursued a number of restructuring options, including at various times the attempt to sell the two apparel businesses or spinning off those businesses and seeking a buyer for the Delta Mills Marketing Co. cotton fabrics operation.
The current plan, as of October, is to spin off Delta Apparel and Duck Head to shareholders and arrange for Delta Mills to continue operating as a publicly traded company, using the Delta Woodside corporate structure.
The apparel operations have been losing money in recent quarters, overshadowing the profitability of the mill unit and driving the value of the stock down, observers say. In the fiscal year ended July 3, Delta Woodside reported a $32.5 million loss from continuing operations, despite $13.4 million in income from continuing operations at Delta Mills.
Rainsford, who had been with Delta Woodside and its predecessor companies since their founding in 1984, stepped down as executive vice president and chief financial officer. He remains on the board.
On Monday, Delta Woodside said it was adopting a poison-pill shareholder rights plan to prevent any interest from taking more than a 20 percent stake in the company.
In his filing, the former executive said “the company was aware of Mr. Rainsford’s strong disagreement with the recently announced spin-offs, as well as the possibility of his making an offer to purchase the company” prior to adopting the shareholder-rights plan.
Rainsford was reluctant to offer further details on his plan Tuesday, other than to confirm that he was contemplating making an offer for the company.
“We are working toward that objective because we are very unhappy with the path that the model is going down,” he told WWD. “We’re not yet really prepared to discuss any specifics at this time.”
He offered no details on whether he was working alone or with others or how he proposed to finance the potential takeover bid. At Tuesday’s closing price, the portion of the company not owned by Rainsford was worth $41.3 million.
E. Erwin Maddrey 2nd, president and chief executive officer of the Greenville, S.C.-based company, could not be reached for comment Tuesday evening.
Maddrey, who has also been with Delta Woodside since 1984, holds a significant chunk of its stock as well. According to the company’s proxy statement, dated Oct. 5, his holdings represent 13.7 percent of Delta, or 3,273,892 shares.
Rainsford said in his Tuesday filing that he holds 3,193,400 shares.
The only shareholder with a greater stake than the two men is an institutional investory, Reich & Tang, which holds 3.5 million shares, or 14.7 percent of Delta, according to the proxy.
In Tuesday’s Big Board trading, Delta Woodside shares eased 1/8, to close at 2, for a market capitalization of $47.7 million. It had a 52-week high of 7 3/8 and a low of 1 7/16.