Dow Jones News Retrieval
A union representing more than 1,700 workers employed by bankrupt clothing manufacturer Bidermann Industries is preparing a bid to acquire the company's Arrow shirt manufacturing business, competing with a reorganization plan that could bring huge profits to Merrill Lynch and several other banks. The Atlanta-based Union of Needle Trades, Industrial and Textile Employees is working with Bethesda, Md.-based investment form American Capital Strategies to acquire the division in an employee stock ownership plan (ESOP), says Harris Raynor assistant regional manager for the union. A hearing on the case is scheduled for Nov. 25.
A reorganization plan submitted in September by Tim Coleman, a managing director at Blackstone Group who's the bankruptcy court's financial adviser, offers the union an equity stake in the reorganized company but leaves control in the hands of Merrill an the other senior creditor --distressed trading firm Angelo Gordon & Co., iNG Barings and Donaldson, Lufkin & Jenrette. If approved, the deal would mean a jackpot for the senior creditors, which bought $123 million face value in secured debt for about $10 million in December 1995, and other unsecured debt at between 80 and 90 cents on the dollar, bankers and lawyers involved in the deal say. Some of the securities have traded hands since then, they add, making it difficult to tell exactly how much each firm will make. At the time before the purchases, the company's prospects seemed bleak. But Bidermann has since turned around, and by giving the creditors control Coleman's plan allows them to be repaid at par or higher, the bankers and lawyers say. A Merrill spokeswoman referred questions to Coleman, who declined comment.
The business the union hopes to buy represents roughly one-third of Bidermann Industries, which manufactures clothes in plants in the U.S. and Canada and is valued at $280 million in Coleman's reorganization plan. Raynor said Coleman's plan leaves the company's workers vulnerable if the creditors sell to company. "Merrill's already making a fortune with this deal" even without control of the Arrow division, Raynor said. "Our fear is that they break up the company and sell to someone who will shut down the plants. "Officials who support the creditors say Merrill and the other banks have a rightful claim to the company and should be able to get market value for its assets.
The dispute is the latest in a long saga that started when French businessman Maurice Bidermann bought the company in 1990 for $420 million. Bryan Marsal, a principal with turnaround consultants Alvafez & Marsal, was brought losses -- and increase the value company's securities. But a buyout plan Marsal put together with investment firm Vestar Equity Partners was halted by bankruptcy judge Tina Brozman earlier this year because she said the fees and incentives offered to Marsal and Maurice Bidermann were too high (CFW, 3/24). In response, Brozman hired Coleman to act in lieu of an independent board of directors.
Meanwhile, Maurice Bidermann who still owns about two-thirds of the company's stock -- told CFW he also objects to Coleman's plan and is seeking financing for his own proposal, the details of which he declined to reveal. Like the union, Maruice Bidermann says Coleman's plan is too favorable to the bank-debt holders. "Coleman has bent over backwards to cater to the will of the financial giants," said Leon Wagner, a lawyer with Phillips, Lytle, Hitchcock, Blaine & Huber in New York representing Maurice Bidermann.
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