JPS IN DEFAULT
NEW YORK — JPS Textile Group Inc. has defaulted on an interest payment for its 7 percent subordinated notes due in 2000.
JPS had said it did not expect to make the $1.9 million payment because of restrictions included in an amendment to its revolving credit agreement in September. The restrictions prevent additional borrowings by operating subsidiaries to cover interest payments to noteholders.
The amendment extended the expiration date on the facility to March 1997 from Nov. 1, assuming JPS does not file a Chapter 11 petition.
A JPS spokeswoman said the company is in active negotiations with its creditors and bondholders. Blackstone Group Inc. and Houlihan, Lokey, Howard & Zukin Inc. have been retained to assist with a financial restructuring.
As a result of the default, Standard & Poor’s Corp. said this week it cut its ratings on JPS Textile Group’s 7 percent notes to D from single-C. S&P also said JPS’s single-C rating on its 10.85 percent senior subordinated discount notes and 10.25 percent senior subordinated notes, both due in 1999, remain under review for possible downgrades.
S&P noted that the next interest payment on the 10.85 percent and 10.25 percent notes is due Dec. 2.
In the nine months ended July 27, JPS lost $62.3 million. The loss included a $30.1 million pretax charge for the closing of a spun apparel fabric plant in Greenville, S.C., the loss on the sale of another apparel manufacturing fabric division and the write-down of its knit plant in Kingsport, Tenn., to fair value.
Overall sales of the textile company slid 4.6 percent to $333.4 million from $349.5 million, with apparel fabric sales down 8.6 percent to $167.2 million.
JPS is not a publicly owned company but files financial information with the Securities and Exchange Commission because of publicly held debt.