Approximately $30 million of Burlington Industries' debt traded last week in the high 60s, up slightly from quoted levels two weeks ago in the 65 range. Dealers were quoting the bank debt at 67-69 by the end of the week. Some predict levels will bottom out in mid-50s because of the struggling textile industry. A dealer explained that market players who aren't in the paper want to see levels drop further to get into the name in hopes that there will be a return. "They're trying to push it down, [thinking] that eventually it will trade back up," he said. He added that the outlook on the textile industry remains grim. "Stay away," he said with a laugh. Burlington, based in Greensboro, N.C., makes fabrics for both the apparel and home-furnishing sectors. Calls to Charles Peters, cfo, were referred to spokeswoman Delores Sides, who did not return them by press time.
On Nov. 15, the company filed for Chapter 11, pushing quotes down to 65 from the low 70s. Standard & Poor's downgraded the debt to D from CCC following the bankruptcy filing. Burlington has cited excessive debt and a highly competitive and difficult operating environment, exacerbated by the continued influx of foreign imports and the slowing economy as the main reason behind the filing. Burlington anticipates, however, that it will be cash-flow positive by fiscal 2002. Among its strategies, the company has announced that it will modify its business model so there is global reach to Burlington's products and services. Burlington has $60 million cash on hand and has received a commitment for as much as $190 million in debtor-in-possession financing from J.P. Morgan.