Dan River to liquidate, GHCL shuts unit after two years
Home Textiles Today Staff -- Kids Today, 4/17/2008 2:31:00 PM
Dan River is in the process of winding down its operation and will liquidate after nearly 126 years in business.
The company let go the majority of staff associated with its U.S. home fashions business earlier this week and is operating with a skeleton crew. The U.S. hospitality businesses owned by parent company GHCL – Best Manufacturing and HW Baker – are reportedly still in operation.
Just weeks ago, Indian industrial conglomerate GHCL announced it would spin off the home textiles sourcing and manufacturing division to a 100%-owned subsidiary, and also shift India and U.K.-based retail operations to a 100% retail subsidiary. The home textiles company was to include three U.S.-based businesses: Dan River, HW Baker, and Best Textiles. The retail business includes the 300-store Rosebys home furnishings specialty chain in the U.K.
Under the plan, the legacy GHCL business, comprising soda ash mining and manufacture, would continue to be listed on the Indian stock exchanges.
GHCL acquired Dan River in January 2006 in a deal worth $93 million: $17 million in cash plus the assumption of $76 million in short- and long-term debt.
In a filing with the Bombay stock exchange at the time, the equity cost was to be funded through Foreign Currency Convertible Bond (FCCB) issue proceeds while the existing debt was to be refinanced. GHCL accomplished the buyout by paying several secured creditors’ groups that held equity in Dan River a “heavily negotiated, arms-length price of $0.085 per share,” according to bankruptcy court documents.
Dan River filed for bankruptcy protection in March 2004, worn down by competition from lower-cost imports as well as the impact of Kmart Corp.’s 2002 bankruptcy and subsequent store closings.
Dan River exited bankruptcy in early 2005 having whittled down its debt to approximately $90 million from some $270 million at the time of its filing for Chapter 11. A new common stock was issued to some of the company’s post-emergence lenders and to its unsecured pre-petition creditors. The total exit financing was $140 million, including $110 million from a revolving credit facility by Ableco Finance LLC.; a $10 million loan from Ableco; and an additional $20 million from a group of bondholders.
Dan River was No.10 in the Home Textiles Today Top 15 Supplier Giants as recently as 2005, when it posted revenues of some $259 million.
A Dan River executive told HTT that the company would be releasing no information to the press at this time.
Information obtained by HTT for this report came from interviews of executives in home textiles retailing and manufacturing who were informed by Dan River directly about the situation.
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