WestPoint Stevens says agreement is with senior noteholders, covers less than majority of unsecured debt

By Carlise Newman

Chicago, June 9 - WestPoint Stevens Inc. said its agreement in principle for a debt restructuring announced last week is with the holders of a majority of its outstanding senior notes but than the majority of its outstanding unsecured debt. The company previously announced that agreement was with holders of greater than a majority of its outstanding unsecured debt.

The agreement is on the terms of a financial restructuring which the company hopes to implement through its Chapter 11 filing last week.

As previously announced, the company also obtained commitment for a $300 million in debtor-in-possession financing. The DIP financing will be obtained from a group of banks led by Bank of America and Wachovia.

The agreement in principle is subject to certain conditions, including reaching an agreement with the company's bank lenders and submission of a Chapter 11 plan and disclosure statement, and is expected to result in an expedited reorganization process. Under the terms of the agreement in principle, the Company's current common stock will be extinguished.

The West Point, Ga.-based home furnishings company has retained Rothschild Inc. as financial advisors, and Weil, Gotshal & Manges LLP is the Company's restructuring counsel.

Under the terms of the restructuring, holders of $525 million 7 7/8% senior notes due 2005 will receive $175 million in 8% pay-in-kind unsecured subordinated notes due 2009. Holders of $475 million 7 7/8% senior notes due 2008 will receive $175 million in 8% pay-in-kind unsecured notes due 2012.

Both are contractually subordinated to the new senior credit facility and new senior secured notes.

Noteholders will also receive 30% of the new common stock of the reorganized company.

Noteholders also have a right to subscribe in cash for $166.7 million of 8% senior secured notes due 2009 secured by a second priority lien on all of the company's assets, redeemable at par by WestPoint at any time; and 70% of the new common stock of the company.

Holders who exercise their rights will be entitled to receive a payment from WestPoint equal to 1% of the amount of senior secured notes for which they subscribe.

The company's senior credit facility will be replaced by an exit facility.

Terms for unsecured creditors has not been determined yet, according to a document filed with the Securities and Exchange Commission.

Holders of old common stock will receive nothing.

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