Galey & Lord obtains emergency dip approval, files auction procedures

By Jeff Pines

Washington, Aug. 20 - Galey & Lord Inc. obtained an emergency order Thursday giving it interim approval for its $80 million in debtor-in-possession financing.

The interim order gives the Atlanta-based textile company access to $20 million through a loan that is scheduled to mature on Feb. 15, 2005.

In a separate Thursday filing with the U.S. Bankruptcy Court for the Northern District of Georgia, the company asked the court to approve bidding procedures for its assets.

Patriarch Partners LLC has signed an asset purchase agreement to acquire Galey & Lord for $188 million. The total includes $45 million of term debt, up to $85 million of other secured debt and up to $58 million in trade, utility, employee benefits and tax liabilities.

Galey & Lord wants to set the break-up fee at $4.2 million, or 2.5% of the purchase price, should another bidder best Patriarch.

It also wants to set initial overbids at $193 million with subsequent bidding in $250,000 increments.

If Patriarch wins the court-approved auction for the company, the transaction is expected to close by the end of November.

Galey & Lord filed for bankruptcy on Thursday after it was unable to get all of its lenders to approve an out-of-court acquisition by Patriarch. Its Chapter 11 case number is 04-43098.

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