Company Tries To Appease Creditors
January 17, 2000
Fruit of the Loom Inc.'s tenure under bankruptcy protection will hardly be brief, despite cost-cutting measures initiated in 1995 to keep the long-troubled apparel maker afloat.
Analysts and investors have issued a number of warnings over the last several quarters regarding Fruit of the Loom's troubled health. And in a meeting last Monday with creditors, as the company's lead bankruptcy attorney disclosed the details of its debtor-in-possession refinancing plans, all the nay-sayers proved themselves right.
The company and its 33 affiliates filed for Chapter 11 protection late last month.
Attorney Mark Thomas said the company's pre-bankruptcy debt of $1.6 billion includes a guaranty to repay a $65 million secured personal bank loan made in March to Chairman William Farley. The debt also includes: a $660 million bank revolver to Bank America; $425 million in publicly-issued bonds; $400 million in unsecured debt; and an additional $250 million in 8.875%senior notes due 2005.
While company officials would not comment on the procedure, the company made a series of announcements last week to assuage creditors. It announced that it would sell-off non-core assets and replaced Farley with Sir Brian Wolfson as chairman of the board.