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US Bankruptcy Court approves sale of WestPoint's assets to indirect subsidiary of AREP

01 Jul '05
4 min read

Nation's premier home fashions manufacturer and marketer WestPoint Stevens Inc and American Real Estate Partners, L.P announced today that the U.S. Bankruptcy Court has approved the sale of substantially all of WestPoint's assets to an indirect subsidiary of AREP, which is controlled by Carl C. Icahn.

The AREP offer was the highest and best bid received in connection with the sale process approved by the Court in its reorganization proceedings for WestPoint.

The terms of the agreement valued at $703.5 million, include the purchase of substantially all of the assets of WestPoint, the repayment of WestPoint's outstanding debtor-in-possession loans and assumption of certain working capital liabilities, the satisfaction of other secured claims, and the payment of $3 million for wind-down costs.

The agreement also provides for the issuance on account of the first lien debt of 35.0% of the equity in WS Textile Co. Inc, a newly formed company that will own indirectly the assets of WestPoint, a $125 million rights offering for 47.5% of the equity of WS Textile Co Inc and a cash investment of $187 million by AREP for 17.5% of the equity of WS Textile Co Inc.

By virtue of its position as a holder of WestPoint debt, AREP has agreed to subscribe to its portion of the rights expected to represent equity interests of not less than 19% of WS Textile Co., Inc. and has agreed to subscribe for any unexercised rights shares.

As a result, it is expected that AREP will own in excess of 50% of the outstanding shares of WS Textile Co Inc and may own up to 79%, to the extent the subscription rights are not exercised. A closing date for the proposed sale has yet to be announced.

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