Berkshire-Hathaway to acquire Burlington Industries

Berkshire–Hathaway has agreed to buy Burlington Inds. for approximately $579 million. This will bring Burlington out of Chapter 11 debt free as a wholly owned subsidiary of the Omaha–based company. Under the proposed sale, expected to close in the third quarter, Burlington’s secured creditors will be paid in full and its unsecured creditors will receive cash and certain other assets estimated to be 34% to 35% of their claims. All shares of Burlington’s common stock will be canceled, with no payment to shareholders. The Greensboro, N.C.–based company will emerge from bankruptcy with no debt, other than ordinary course liabilities and certain pre–petition obligations. The majority of its $1.1 billion in pre–bankruptcy liabilities will have been repaid and the balance eliminated through the bankruptcy process.

“This is a very positive outcome for the company, our employees and our creditors,” said George Henderson, chairman and CEO. “Over the last year, our efforts have increased the value of our company and allowed us to achieve a significant level of return for our creditors, despite extraordinarily challenging conditions in our industry and the capital markets.

“In several recent cases, other companies have emerged from bankruptcy with excessive debt only to be faced with renewed problems. The opportunity to be totally debt free and having made considerable progress in our globalization efforts puts us in a unique position to take full advantage of our capabilities and compete successfully in a rapidly changing textile business.”

Berkshire Hathaway’s chairman, Wall Street wizard Warren Buffet, said, “Only the very strong will survive in the textile industry – strong in management, strong in worker skills and strong in financial strength. Burlington brings the first two resources to a successful reorganization; Berkshire brings the latter. Burlington will go forth as a company with no debt, talented and dedicated management, and a workforce second to none. It will be a company designed for success.” The proposed acquisition is subject to federal bankruptcy court approval.

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