Once the largest textile company, Burlington Industries will leave bankruptcy court a smaller company.
CHARLOTTE, N.C. (AP) -- Berkshire Hathaway Inc., the company headed by billionaire Warren Buffett, has agreed to buy bankrupt textile company Burlington Industries Inc. for $579 million.
After leaving bankruptcy, Greensboro, N.C.-based Burlington Industries will operate as a fully owned subsidiary of Berkshire Hathaway and will carry no debt, under the deal announced Tuesday.
In a statement, Burlington executives said they were not completely ruling out other buyout offers, including a stock and cash offer from WL Ross & amp; Co. LLC, a New York-based buyout firm that bought LTV's steel plants.
In a joint news release, the companies did not provide details about the Ross offer other than to say the proposal was contingent on obtaining new debt and would pay only secured claims in cash and offer the unsecured creditors new common stock.
A Burlington spokeswoman said Tuesday the company had no comment beyond its release.
Burlington, which makes denim, carpet and other textiles, was once the world's biggest textile company. At its height in the early 1980s, Burlington Industries employed more than 80,000 people in 149 plants, and its stock traded at more than $80 a share.
The company filed for Chapter 11 in November 2001, with $1.1 billion in debt. Since then, the company has laid off thousands of workers, closed plants and sold unprofitable businesses as it worked under a restructuring program to emerge from bankruptcy.
Under the proposed sale to Berkshire Hathaway, which is based in Omaha, Neb., Burlington's secured creditors would be paid in full and its pre-petition unsecured creditors would receive cash and certain other assets estimated to be about 35 percent of their claims.
All shares of Burlington's common stock would be canceled without payment, the companies said.
"This is a very positive outcome for the company, our employees and our creditors," said George W. Henderson III, chairman and chief executive of Burlington Industries. "In several recent cases, other companies have emerged from bankruptcy with excessive debt only to be faced with renewed problems.