WestPoint Stevens' creditors are said to be vying for control over the restructuring of the company as the bank debt continues to trade. "Behind the scenes there is wrangling between the bond holders and second-lien holders," said a source following the situation. But constituents in the debt are set to be disappointed after the company announced weak May monthly figures as LMW went to press. According to the filing, WestPoint lost over $11 million in May.
The first lien revolver was trading in the 93-94 context last week and the more illiquid second-lien paper was quoted at 73 before the monthly numbers came out. The unsecured bonds were being quoted at cents on the dollar. One banker said the first-lien paper was likely to fall in value.
The first-lien bank debt has about $440 million outstanding and these lenders want to be refinanced out, said one source following the situation. Holders of the $165 million second-lien paper, however, want equity in the reorganized company. The second-lien piece was done as a rescue financing in 2001 and was led by Deutsche Bank. The company, which makes sheets and pillow cases, filed for bankruptcy last year. The second-lien lenders are hoping WestPoint's cash-flow improves and can get back to the old levels.
Lorraine Miller, senior v.p. of investor relations, said WestPoint initially filed an agreement with the bondholders in 2003, but subsequently moved away from this and is now working on a consensual plan. The company's debtor-in-possession facility is good through September and could go to June 2005, she added. She declined comment on the trading activity.