-- Patriarch Partners Makes $188 Million Offer to Acquire Company; Reiterates Commitment to Working With Management to Execute Long-Term Strategic Vision
-- Company Secures Financing From GE Capital, Enabling Normal Business Operations to Continue Without Interruption
Seeking to move forward with its efforts to be acquired, Galey & Lord, a leading global supplier of denim, khaki and corduroy fabrics for the fashion apparel and uniform markets, today filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the Northern District of Georgia. The company announced that it has entered into a definitive asset purchase agreement with Patriarch Partners, LLC, whose funds have $4 billion under management, to acquire the company pursuant to section 363 of the U.S. Bankruptcy Code. The agreement amends the proposal Patriarch made last month, the terms of which were not disclosed.
Galey & Lord also announced it has secured an $80 million post-petition financing agreement with GE Capital, which will enable the company to continue normal business operations, including providing wages and benefits to employees, maintaining bank accounts and cash management systems, and meeting new obligations to customers, suppliers and others. The company is seeking expedited Bankruptcy Court approval of the financing agreement.
Under the terms of the Patriarch agreement, which is subject to Bankruptcy Court approval and other acquisition offers, if any, Patriarch would pay $45 million for the company's term debt and pay off, replace or assume up to $85 million in other secured debt plus the outstanding letters of credit. Patriarch also would assume up to $58 million in trade, utility, tax, and employee pay and benefit obligations. The agreement excludes certain legacy liabilities such as those obligations insured by the federal Pension Benefit Guarantee Corporation. The transaction is expected to close by early November 2004.
In July, Galey & Lord's board agreed to an out-of-court acquisition offer by Patriarch. The proposal did not win the unanimous approval of the term lenders required for the acquisition to go forward.
"Our board of directors and many of our lenders have concluded that an acquisition by Patriarch presents the greatest opportunity to secure a bright future for Galey & Lord and is in the best interests of our customers, employees, vendors, suppliers and stakeholders," said John J. Heldrich, president & CEO of Galey & Lord. "While we are disappointed that our lenders were unable to reach unanimous agreement to proceed with the original plan, we are confident that this course will allow us to continue on a positive track and give us the means of achieving our long-term goals.
"As this process unfolds, we will continue to work to preserve jobs, protect value and provide the highest level of service to our customers," he added. "We expect business to continue as usual, with little, if any, impact on our employees, partners or business operations. Patriarch believes in these same responsible business practices.
"In modifying its proposal for bankruptcy court consideration, Patriarch has reiterated its commitment to working with management to help this company achieve stability and provide the resources necessary for us to achieve long-term success," he continued. "Patriarch is a highly-regarded investor with a long track record of working with companies in our industry. We are grateful for its staunch support and are committed to an open, fair and expedited sale process that benefits all of our stakeholders."
The company has retained Dechert LLP and Alston & Bird as bankruptcy counsel and Houlihan Lokey Howard & Zukin as investment banking advisors.
Galey & Lord, Inc., which is privately held following its emergence from bankruptcy protection in March of 2004, operates domestically and in Canada under two divisions, Swift Denim and Galey & Lord Apparel, and internationally through joint ventures in Europe, North Africa, Asia and Mexico. Its customers include: VF, Gap, Old Navy, Banana Republic, Polo Ralph Lauren, Abercrombie & Fitch, Levi's, Tommy Hilfiger, L.L. Bean, Nautica, Eddie Bauer, Liz Claiborne, Haggar, Land's End, and Tropical Sportswear / Savane, among others.
Galey & Lord Apparel is a leading producer of innovative woven sportswear fabrics as a result of its expertise in sophisticated fabric finishing and close design partnerships with its customers. Swift Denim is a leading producer of differentiated and value-added denim products supplying top designers and retailers around the world. Galey & Lord and its joint venture interests operate in the U.S., Canada, Mexico, Asia, Europe and North Africa.