Galey & Lord reorganization plan gets confirmed

By Jeff Pines

Washington, Feb. 10 - Galey & Lord, Inc. said its plan of reorganization was confirmed and that it expects to emerge from Chapter 11 within the next 10 days.

Under the plan, holders of Galey & Lord's $4.5 million of economic development bonds and $500,000 of leases will see their claims reinstated unimpaired.

Holders of claims under the senior credit facility will share $35 million in cash, the company's $130 million of new term notes and all the common stock of the reorganized company. The new term notes will mature in 5.5 years and pay interest at 10%. The company estimates outstanding claims in this group total $298 million.

General unsecured creditors with claims totaling $15 million will share $500,000 in cash.

Holders of Galey & Lord's $300 million of 9 1/8% senior subordinated notes due 2008 will receive warrants to purchase 3% of the company's common stock. This distribution will only be made if the class votes to accept the plan. The warrants will run for three years and will have an exercise price that reflects a 100% recovery to senior lenders.

Holders of common and preferred stock will receive nothing.

Galey & Lord will obtain an exit financing credit facility of up to $70 million. The disclosure statement said the company has received several proposals from lenders.

Galey & Lord is a Greensboro, N.C. textile manufacturer.

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