FIGHT MAY BE BREWING OVER BID FOR DOMTEX’S SWIFT DENIM UNIT
NEW YORK — A battle might be in the offing for Dominion Textile’s Swift Denim operation.
As reported, Polymer Group, North Charleston, S.C., which primarily produces nonwoven fabrics, has made a hostile takeover bid for Domtex, a Canadian fabrics giant based in Montreal, and if successful, Polymer has agreed to sell Swift and Domtex’s uniform fabrics operations to Galey & Lord.
On Thursday, reports were circulating that Swift management may be attempting to put together a bid for Swift. Executives at Atlanta-based Swift couldn’t be reached for comment. Also on Thursday, the Domtex board urged shareholders “not to tender their shares at this time” to Polymer.
Meanwhile, Galey & Lord, which earlier this month warned that its fourth-quarter earnings would be hurt by a finishing capacity shortfall and labor problems in its Mexico operations, reported net income for the period of $2.2 million, or 18 cents a share, against $3.6 million, or 30 cents, a year ago.
The latest quarter includes a bad debt charge of 5 cents a share, so on an operating basis, the results came in ahead of Wall Street’s 19 cent estimate. Analysts had cut their estimates of 37 cents a share after G&L’s earlier announcement about production and labor problems. On the New York Stock Exchange, G&L’s stock closed Thursday at 18 1/8, up 7/16.
Sales at G&L in the three months were up 6.7 percent to $117.9 million from $110.5 million.
Although no price has been disclosed for Swift, one analyst in Montreal valued Domtex’s denim operations at $288 million ($400 million Canadian). Asked whether that’s in the ballpark, Arthur C. Wiener, G&L chairman and chief executive officer, said in a telephone interview Thursday that it was “just one analyst’s opinion.”
“This is a very complex deal, involving the assumption of debt and preferred shares,” he said. He added he was reluctant to discuss specifics “because we may not even get it, and the less that is known about our offer, the better off we are.”
As for G&L’s prospects, Wiener said that both the finishing capacity and Mexican issues have been addressed. “Our seventh continuous dye range will be in production in the March quarter. This will enable us to increase our capacity, as well as reduce our costs. In Mexico, it appears our labor problems have been resolved.”
The order backlog was up 46 percent for apparel fabrics at the end of the quarter. Home fabrics backlog was down 13 percent. Total backlog stood at $135.2 million, up 37 percent from a year ago.
For the year ended Sept. 27, G&L reported earnings up 44.3 percent to $13.7 million, or $1.14, from $9.5 million, or 80 cents. Sales rose 19.9 percent to $493.4 million.