Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, June 7, 1994 TAG: 9406080021
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: By MAG POFF STAFF WRITER
DATELINE: LENGTH: Medium
United Elastic will continue operating under Chapter 11 of the bankruptcy code, according to A. Carter Magee Jr. of Magee, Foster, Goldstein & Sayers in Roanoke, the company's attorney.
"United Elastic is a growing company, and we anticipate that the company will emerge from bankruptcy as a stronger organization," Magee said.
United Elastic employs more than 800 in plants at its headquarters at Stuart and in Chesterfield, S.C., and Rolling Fork, Miss.
With about 600 workers in Stuart, United Elastic is the largest employer in Patrick County. The county's total population is estimated at 17,400.
"Management is well-respected in the industry. The problems arise totally from United Elastic's excessive debt," Magee said.
The company was formed from a highly leverage buyout of the elastic division of J.P. Stevens Co. in 1986 and now is a wholly owned subsidiary of U.E. Holdings Inc., a Delaware corporation.
Sales remain strong, Magee said, last year totaling $47 million. The company's gross margins were the best in recent years during February and March, he said.
"The balance sheet is lopsided - simply too much debt in an industry where the profit margin is very competitive," Magee said.
Magee denied reports that there will be layoffs. "It is not our intent to lay off or terminate anyone in the foreseeable future," he said.
The plan, he said, is "to reorganize with new capital or sell to a strategic buyer." He defined such a buyer as someone in the same or a similar industry who would buy the company to enhance it and make it grow. It would not be a competitor who would shut down the company, Magee said.
He said one of those alternatives should happen within three to four months.
The company's assets range from $15 million to $25 million, Magee said. He estimated liabilities at $25 million to $30 million.
The papers filed with the bankruptcy court listed 523 creditors, but Magee said supplemental names will be added in the next few weeks.
The 20 major unsecured creditors were owed $2.45 million, according to the court papers. The top two on the list were BancBoston Financial Co. of New York, $668,921, and Unifi Inc.-First Factors of Charlotte, N.C., $180,274.
United is one of the largest makers of narrow woven elastic, supplying elastic products to a broad range of companies and the government. About half its sales are in intimate apparel.
Chief Executive Officer Charles Tracy said United had contacted its major customers. "They understand our situation," he said. "By all accounts, we will maintain our customer base.
"Suppliers also have been contacted and generally expressed confidence in our ability to return to normal operation soon," Tracy added. "Now it's business as usual as we implement our turnaround plan. We have the support of our major lender."
Employees were informed Monday of the filing in a series of meetings in all three plants.
Tracy said he is confident the employees will help the company come out of bankruptcy as a stronger organization.
by CNB