BANKS EXTEND CREDIT LINE FOR JPS TEXTILE TO MAY 1
NEW YORK — JPS Textile Group Inc., the highly leveraged fabric manufacturer, said its bankers have extended its revolving credit facility to May 1 from March 1.
The bank agreement includes a provision that if JPS Textile files a Chapter 11 petition, the credit facility expires on Nov. 1, or the effective date of a reorganization, whichever is earlier.
JPS said the extension will allow the firm’s operating subsidiaries — JPS Converter & Industrial and JPS Elastomerics — to continue business as usual while JPS Textile works to revise its capital structure.
In its fiscal year ended Nov. 2, JPS Textile reported that its losses widened to $71.9 million from $34.7 million a year earlier, according to its recently released 10K.
Sales fell 5 percent to $448.8 million from $472.6 million.
The loss included $30 million in charges related to the closing of the plant in Greenville, S.C., the sale of its elastic apparel business and the writedown on the asset value of its plant in Kingsport, Tenn.
Interest costs were $40.5 million.
The apparel fabric business had an operating loss of $22.4 million after charges of $14.2 million for the Greenville plant closing and a $6.2 million loss on the sale of its elastic apparel business.
In 1995, the apparel fabrics group notched an operating profit of $16.7 million.
Sales of apparel fabrics slumped 10.5 percent to $221.8 million from $247.8 million, reflecting reduced unit volume, combined with lower average selling prices.
JPS’s 10K noted that its apparel fabrics business has been hurt by falling margins in women’s apparel, generally relaxed consumer attitudes regarding fashion, price pressures from a troubled retail industry and increased imports, particularly in commodity-knit fabrics.
To turn around its losses, the company said it has taken steps to broaden its sales distribution to include export sales to Mexico, Europe and other continents.
The company also expects to increase capital spending on the apparel fabrics segment to lower costs and improve productivity.
JPS’s apparel fabrics business includes gray goods, finished fabrics and yarns for end products such as blouses, dresses, sportswear and underwear.
JPS’s industrial fabrics business, which serves the building industry, had operating earnings of $5.9 million on sales of $193 million in 1996 while its home fashion textiles business generated an operating profit of $647,000 on sales of $34 million.
Under the terms of its new bank agreement, credit facility funds are to be used only by the operating subsidiaries and not to cover interest payments on JPS’s bonds.
The company defaulted on its notes in November of last year.
JPS said in its 10K it is involved in active discussions with its bondholders to modify its capital structure and is “optimistic a plan will be agreed upon in the near future.”
The company last year retained Blackstone Group Inc. and Houlihan, Lokey, Howard & Zukin Inc. to assist with a financial restructuring.