Malden Mills approves sale of company for at least $44 million

The board of directors of Malden Mills Industries Inc. approved the sale of the company to Gordon Brothers Group of Boston, Mass., for $44 million. At the same time, and to facilitate the sale of the company's assets, Malden's lawyers filed a voluntary Chapter 11 bankruptcy petition for reorganization in the U.S. Bankruptcy Court for the District of Delaware.

The board of directors of Malden Mills Industries Inc. approved the sale of the company to Gordon Brothers Group of Boston, Mass., for $44 million. At the same time, and to facilitate the sale of the company's assets, Malden's lawyers filed a voluntary Chapter 11 bankruptcy petition for reorganization in the U.S. Bankruptcy Court for the District of Delaware.

The Chapter 11 reorganization is being conducted under 363 guidelines, which, our SNEWS® legal experts tell us, is typical when a company is trying to sell all assets, but has debts that might otherwise encumber the sale. Gordon Brothers will act as the stalking horse bidder, which, under the court guidelines for early disposition of the assets, means during the February 2007 auction, higher and better offers will be entertained by the court.

Michael Spillane, CEO of Malden Mills, told SNEWS® that Malden Mills will continue normal manufacturing operations at both its facilities in Lawrence, Mass., and Hudson, N.H., and that customers and employees of Malden will not be affected.

GE Commercial Finance will be providing a Debtor in Possession (DIP) financing facility, which ensures that the Malden will have the working capital required for a seamless transition in operations to new ownership.

"Over the past three years, we have managed to improve all facets of our business," Spillane told SNEWS®. "What this sale now means to us, and means to our customers, is that the company is transitioning into a state of permanent ownership and financial stability."

When asked what this means for him, Spillane told SNEWS®, "I am committed into seeing this through, and I want this company to be viable in the long term. I am committed to making sure we end up in the right place."

SNEWS® View: Naturally, with the hearings regarding the Chapter 11 proceedings and all the legal paperwork flying around, few are talking on the record about anything that is not readily found already in public and court documentation. Fortunately, SNEWS® has been keeping notes and records of conversations, interviews and court documents dating back since before the 1995 fire that triggered all this state of prolonged uncertainty, so we feel comfortable with a bit of speculation in the following paragraphs.

In reviewing the court documents filed with the court at 6:32 a.m. on Jan. 10, 2007, it is not hard to see what Malden needs to do and why the company filed for reorganization. The top two unsecured creditors are Rechtsanwalt Harald Bubhardt of Gorlitz, Germany ($5,562,000), and Aaron Feuerstein, former owner of Malden ($1,560,516). There are others too, such as Outside Magazine for $168,588 and Rodale for $67,914 and Unify for $304,254. But it is clear to us that with the reorg and sale of assets, Malden is wiping old and hanging debts to Bubhardt (click here to read our 2004 story on the closing of that factory) and Feuerstein.

We also would doubt that Malden will leave relationships such as the company enjoys with Outside, Rodale, Unify, etc., to be tarnished by a "we know we owed you money, but we don't anymore thank you" kiss-off via Chapter 11. While there are legal rules and regulations that must be adhered to, it is not Malden's nor Spillane's style to jeopardize relationships…especially when so much is at stake. Though you will likely never read about it, we would expect those that need to be paid will find make-goods in one manner or another over the next year.

For those wondering if this sale was a chance meeting, or if Malden was the instigator, think again. In reviewing the players, we stumbled across the name of one Robert Himmel, who joined Gordon Brothers as a senior vice president in 2002. Himmel worked for Malden prior to that, as director of sales and marketing for Polartec. It is not hard to put two and two together to see it's likely Gordon Brothers had an inside view of Malden, and its worth, and as a result, most likely approached Malden. And, no doubt, having Himmel on the team made Gordon Brothers a bit more attractive to Malden as well.

As long as we are speculating, indulge us a bit more. Gordon Brothers is by no means new to the game of asset acquisition, nor is it new to dealing with textile companies. It also has a history of entering into strategic partnerships to complete deals. It would not surprise SNEWS® one bit if W.L. Gore emerged as the strategic partner of choice. As long as Malden was operated as a separate brand, such a combination and potential for collaboration and mingling of talents on the fabrics and technology side of the fence would likely make many in the military, and certainly quite a few in the manufacturing community, smile broadly -- not everyone we grant you, but likely the majority.

Now our nod to Spillane. We've sat down with many CEOs in our time, over beer, coffee, tea and the like. Few have impressed our entire team as has Spillane -- accessible, open, honest and direct. We do not believe it would be too bold of a statement to make when we say that without Spillane and the management team he has assembled, we doubt very sincerely if Malden would be in the position of strength it now finds itself. We would imagine that Gordon Brothers, or whatever company or strategic entity ends up with ownership of Malden, would do well to keep Spillane on well into the future.


Malden Mills Files For Voluntary Ch. 11 Reorganization

Malden Mills filed yesterday for voluntary Chapter 11 reorganization in a Worcester, Mass. U.S. bankruptcy court. "I have to do it. I am going to do it," said company president and CEO Aaron Feuerstein to ABC cameras shortly after the filing. "I have to keep my eyes on the more

Did you hear?... Polartec LLC completes acquisition of Malden Mills

Polartec LLC completed the acquisition of Malden Mills Industries' assets on Mar. 14, effectively ending a financially challenged saga that began in 2003 when an exit from Chapter 11 ended three generations of Feuerstein-family control and put the company in the hands of a more

Malden Mills reaches accord with Unite Here

Despite trade publication reports earlier in the week that implied Malden Mills was on the verge of a crippling strike, Malden reached accord with Unite Here on Thursday, with an overwhelming vote by the 700-employee union members in favor of a new three-year contract. That vote more

Malden Mills Files Reorganization Plan With Courts

Malden Mills made the first significant step to emerge from Ch. 11 protection by filing Aug. 19 a Disclosure Statement for the Joint Plan of Reorganization with the U.S. Bankruptcy Court for the District of Massachusetts. A hearing to consider the relief sought in the more

Malden Mills Reorganizing For Growth and Future Innovation

In the last several weeks, the clamor surrounding Malden Mills and questions surrounding the company's future -- or rumored lack of future -- has reached into the SNEWS® offices from around the globe. As of Monday afternoon, Nov. 19, Malden Mills and its network of banks and more

Malden Ch. 11 emergence date postponed

Malden Mills' emergence from Chapter 11 bankruptcy has been postponed until Sept. 10, slowed down by paperwork. A Malden spokesman has confirmed to SNEWS that chief creditor General Electric Co. is extending Aaron Feuerstein's deadline for an additional 30 days to raise the more

Malden's German subsidiary files for insolvency

Goerlitz Fleece GmbH, a wholly-owned subsidiary of Malden Mills Industries, based in Goerlitz, Germany, has filed for voluntary insolvency under German law -- similar to bankruptcy protection in the United States. In a statement issued by Malden on Oct. 7, Malden Mills more

Did you hear?... U.S. Bankruptcy Court calls a creditors meeting for Jan. 22 in the case of Malden Mills' Chapter 11 filing

The U.S. Bankruptcy Court, District of Massachusetts, has called a creditors meeting for Jan. 22 in the case of Malden Mills' Chapter 11 filing. The location is the Worcester U.S. Trustee Office, Office of the U.S. Trustee, Franklin Square Tower, 600 Main Street, Suite 202, more

Feuerstein has option to retain control of Malden

Under a reorganization plan Malden Mills filed with the courts, Aaron Feuerstein may have to step down as the company's chief executive officer and relinquish control to a group of creditors led by the finance arm of General Electric Co. According to court documents, Feuerstein more