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Going public: Burlington Industries Inc. ready to return to Wall Street.

Burlington Industries Inc., the largest employer in Monticello, is going public again in an attempt to extinguish long-burning debt.

A reorganization plan filed with the Securities and Exchange Commission would allow Burlington to issue 57 million shares of common stock at an estimated price of $14 to $16 per share. The shares would trade on the New York Stock Exchange.

SEC approval is expected.

Burlington, one of the world's largest manufacturers of textile products, has been privately held since 1987 when a heavily leveraged buyout enabled the company to avoid a hostile takeover by New York financier Asher Edelman. The buyout was financed in large part by Morgan Stanley & Co. of New York.

Burlington, which is based in Greensboro, N.C., has spent the past five years trying to reduce the $2.9 billion in debt acquired during the buyout.

Burlington's worldwide work force has been slashed from 43,000 to 24,000 employees. The company has sold or closed more than one-third of its plants.

Although Burlington's debt has been reduced to $1.8 billion, the new public offering is clearly an attempt to avoid bankruptcy. Burlington last made a profit in 1987. The heavy debt load led to net losses of $38 million in fiscal 1989 and more than $96 million in fiscal 1990.

Arkansas Effects

Hundreds of southeast Arkansas employees could be affected by the change. Burlington draws about 1,200 employees from a 50-mile radius and operates its three Monticello plants in three shifts.

The Burlington House Area Rugs Division uses the three facilities to produce contemporary tufted area and bath rugs for home use.

The plants, which cover 1 million SF, manufacture 10 million rugs per year for clients such as Wal-Mart Stores Inc., J.C. Penney Co. and Sears Roebuck & Co.

Burlington is an integral part of the southeast Arkansas economy, supporting spin-off enterprises that have contracts with the company. Burlington came to Arkansas in 1959 when it bought a mill from the Ben Greenberg family of Chicago. Greenberg had purchased the Monticello Cotton Mill in 1945 to produce yarn and area rugs.

The Amalgamated Clothing and Textile Workers Union of America has become involved in the proposed Burlington reorganization. Union spokesman Michael Zucker says employees will be harmed by the proposal.

It has been estimated that an employee stock ownership program implemented in 1989 would see its share of the company fall from 51 percent to as little as 3 percent.

"If this is such a good deal for employees, Burlington's top executives and bankers should not be concerned about putting it to a vote," Zucker told the Greensboro News & Record.

Company officials rejected the union demand, saying employees in Monticello and elsewhere understand the importance of reducing debt. But the dispute led to an organizing campaign at the three Monticello plants.

Analyst Phelps Hoyt of Duff & Phelps/MCM Investment Research Co. of Montpelier, Vt., says employees are likely to accept the deal because "it is better to have 3 percent of something than 50 percent of nothing."

Production has held steady at Monticello in recent years, and employment has fluctuated only slightly. But without the debt reduction the public offering would allow, the company would face drastic restructuring and possibly bankruptcy.
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Title Annotation:Across Arkansas: Southeast
Author:Harper, Kim
Publication:Arkansas Business
Date:Mar 29, 1992
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