========================================================================== PILLOWTEX BANKRUPTCY NEWS Issue Number 1 -------------------------------------------------------------------------- Copyright 2000 (ISSN XXXX-XXXX) November 17, 2000 -------------------------------------------------------------------------- Bankruptcy Creditors' Service, Inc., Phone 609-392-0900 FAX 609-392-0040 -------------------------------------------------------------------------- PILLOWTEX BANKRUPTCY NEWS is published by Bankruptcy Creditors' Service, Inc., 24 Perdicaris Place, Trenton, New Jersey 08618, on an ad hoc basis (generally every 10 to 20 days) as significant activity occurs in the Debtors' cases. Each issue is prepared by Peter A. Chapman, Editor. Subscription rate is US$45 per issue. Reproduction of PILLOWTEX BANKRUPTCY NEWS is prohibited without the permission of the publisher. ========================================================================== IN THIS ISSUE ------------- [00000] HOW TO ORDER A SUBSCRIPTION TO PILLOWTEX BANKRUPTCY NEWS [00001] BACKGROUND & DESCRIPTION OF PILLOWTEX CORPORATION [00002] COMPANY'S CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2000 [00003] COMPANY'S PRESS RELEASE CONCERNING CHAPTER 11 FILING [00004] PILLOWTEX CHAPTER 11 DATABASE [00005] CONSOLIDATED LIST OF PILLOWTEX'S 50 LARGEST UNSECURED CREDITORS [00006] MOODY'S JUNKS CREDIT RATINGS IN WAKE OF CHAPTER 11 FILING [00007] NYSE SUSPENDS TRADING AND MOVES TO DELIST SHARES [00008] DEBTORS' MOTION FOR JOINT ADMINISTRATION OF CHAPTER 11 CASES [00009] U.S. TRUSTEE TO CONVENE ORGANIZATIONAL MEETING TO FORM COMMITTEES KEY DATE CALENDAR ----------------- 11/14/00 Voluntary Petition Date 11/29/00 Deadline for filing Schedules of Assets and Liabilities 11/29/00 Deadline for filing Statement of Financial Affairs 11/29/00 Deadline for filing List of Leases and Executory Contracts 12/04/00 Deadline to provide Utility Companies with adequate assurance 01/15/01 Deadline to assume or reject leases and executory contracts 02/12/01 Deadline for removal of actions pursuant to F.R.B.P. 9027 03/14/01 Expiration of Debtors' Exclusive Period to propose a Plan 05/14/01 Expiration of Debtors' Exclusive Solicitation Period 11/14/01 Deadline for Debtors' Commencement of Avoidance Actions Organizational Meeting with UST to form Official Committees Bar Date for filing Proofs of Claim First Meeting of Creditors pursuant to 11 U.S.C. Sec. 341(a) Expiration of DIP Financing Facility -------------------------------------------------------------------------- [00000] HOW TO ORDER A SUBSCRIPTION TO PILLOWTEX BANKRUPTCY NEWS -------------------------------------------------------------------------- PILLOWTEX BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtors' cases. The subscription rate is $45 per issue. Newsletters are delivered via e-mail; invoices, transmitted with each newsletter issue, arrive by fax. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. To continue receiving PILLOWTEX BANKRUPTCY NEWS, please complete the form below and return it by fax or e-mail to: Bankruptcy Creditors' Service, Inc. 24 Perdicaris Place Trenton, NJ 08618 Telephone (609) 392-0900 Fax (609) 392-0040 E-mail: peter@bankrupt.com We have published similar newsletters tracking billion-dollar insolvency proceedings since 1990. Currently, we provide similar coverage of the chapter 11 cases involving Owens Corning, Safety-Kleen, Fruit of the Loom, The Loewen Group, Inc., Harnischfeger Industries, Inc., Vencor, Inc., Sun Healthcare Group, Inc., Mariner Post-Acute, Genesis Health Ventures, and Integrated Health Services. ========================================================================== [ ] YES! Please enter my personal subscription to PILLOWTEX BANKRUPTCY NEWS. Name: ---------------------------------------------- Firm: ---------------------------------------------- Address: ---------------------------------------------- ---------------------------------------------- Phone: ---------------------------------------------- Fax: ---------------------------------------------- E-Mail: ---------------------------------------------- -------------------------------------------------------------------------- [00001] BACKGROUND & DESCRIPTION OF PILLOWTEX CORPORATION -------------------------------------------------------------------------- Pillowtex Corporation 4111 Mint Way Dallas, Texas 75237 Telephone 214-333-3225 Fax 214-339-8565 http://www.pillowtex.com "Our dream is to help you rest easy every night," Pillowtex Corporation (NYSE:PTX) says in its promotional literature. With annual sales exceeding $1.4 billion, manufactures and markets home furnishings for the bedroom and bathroom under brand names as ROYAL VELVET, CANNON, FIELDCREST, CHARISMA, TOUCH of CLASS, ROYAL FAMILY and ROYAL VELVET BIG and SOFT. Its trademarks also include St. Mary's, Cannon Royal Family, and Beacon. It markets under customer-owned private labels, as well as certain licensed trademarks including Comforel, and Waverly. Pillowtex Corporation operates a network of manufacturing and distribution facilities in the U.S. and Canada with approximately 13,000 employees. Pillowtex sells top-of-the-bed products to virtually every major retailer in the U.S. and Canada. The Company planned continued growth through new product development, by increasing placements at current customers, by adding new licenses and extending brands to other product lines, and through the acquisition of companies complementary to its existing business. The Company offers over 10,000 variations on its basic product lines and markets its products under a variety of well-known licensed trademarks. Pillowtex and its affiliates also create and produce advertising supplements, statement stuffers, point-of-purchase signing, in- store displays, and education videos. Recent Management Changes In the past year, Pillowtex made several significant changes in its senior management. In May, 2000, Pillowtex Corporation announced that Anthony T. Williams joined the Company as Executive Vice-President and Chief Financial Officer. He is responsible for all accounting, finance, treasury and investor relations activities. Williams was previously Vice-President- Finance of the Light Vehicle Braking Systems Division of LucasVarity plc, the world's second largest independent manufacturer of braking systems to the automotive industry. In October, 2000, Pillowtex announced that Charles M. Hansen, Jr. resigned as Chairman, Chief Executive Officer and as a Director of the Company, effective immediately. The Board of Directors named Ralph La Rovere, a long-time Pillowtex Director and former JCPenney executive, to succeed Mr. Hansen as Chairman. Anthony T. Williams was named Chief Operating Officer, and also retained his CFO responsibilities. The third key member of the Pillowtex senior management team is Scott Shimizu, Executive Vice President-Sales and Marketing. A Management Committee, consisting of Messrs. La Rovere, Williams, Shimizu and two outside Directors, M. Joseph McHugh and Mark A. Petricoff, has been formed to guide the business of the Company going forward. Recent Financial History On October 27, 2000, Pillowtex announced that consolidated net sales for the third fiscal quarter ended September 30, 2000 were $357.4 million, or $58.4 million lower than the same period last year. The Company reported a consolidated net loss after preferred dividends of $18.3 million, or $1.29 per diluted share, for the third quarter, versus a consolidated net loss after preferred dividends of $20.6 million, or $1.45 per diluted share, a year ago. Sales for the first nine months of fiscal year 2000 were $1,044.5 million or $102.2 million lower than a year ago. The Company reported a net loss after preferred dividends of $38.1 million, or $2.68 per diluted share, for the first nine months of 2000 versus a net loss after preferred dividends of $9.7 million, or $0.68 per diluted share, a year ago. Anthony T. Williams, Executive Vice-President and Chief Financial Officer, stated that "Sales during the quarter reflected a sluggish retail environment for home furnishings, compounded by a rapid slowdown in orders during September. During the quarter, we also exited economically unprofitable lines of business with certain customers as part of our initiative to return the Company to profitability. In addition to the lower sales volume, our operating performance was affected by the temporary idling of certain manufacturing facilities as part of a plan to reduce inventories and improve liquidity. We will continue to take such actions as are necessary to improve the liquidity of the Company." Williams added, "Indicative of our continued focus on improving our working capital management, we reduced our inventory position by $34 million at the end of the third quarter versus the previous quarter. We expect to continue reducing inventories through the balance of the year. Also, our accounts receivable collection processes showed further improvement, which resulted in a three-day improvement in our days sales outstanding. We expect liquidity to improve during the fourth quarter as a result of our working capital initiatives and cost controls." Williams concluded, "During the quarter we began to implement initiatives that are designed to reduce debt and return the Company to profitability. We closed our Salisbury, North Carolina greige mill and consolidated parts of our Canadian operations. We are continuing to review all facets of our business in order to develop a more competitive cost structure and to enhance our manufacturing flexibility." Pre-Petition Debt Structure In December 1997, in connection with the Fieldcrest Cannon acquisition, Pillowtex entered into new senior secured revolving credit and term loan facilities with a group of financial and institutional investors for which Bank of America acts as the agent. These facilities consisted of a $350.0 million revolving credit facility and a $250.0 million term loan facility. The term loan facility consisted of a $125.0 million Tranche A Term Loan and a $125.0 million Tranche B Term Loan. Effective July 28, 1998, Pillowtex amended these facilities by increasing the Tranche B Term Loan to $225.0 million. The increase occurred in conjunction with the acquisition of The Leshner Corporation, allowing Pillowtex to fund the transaction and reduce borrowings under the revolving credit facility. Effective March 12, 1999, the revolving credit facility was amended to permit Pillowtex to use for working capital one-half of a $61.0 million portion of the facility held as contingency reserve for cash payments required upon conversion of the Fieldcrest Cannon 6% Convertible Subordinated Debentures due 2012, thereby increasing availability under that facility. Effective October 1, 1999, the revolving credit facility was further amended to permit Pillowtex to use the other half of the contingency reserve for working capital, thereby increasing availability under that facility. At the end of the third and fourth quarters of its 1999 fiscal year, Pillowtex was not in compliance with certain financial covenants under its senior debt facilities. The Company obtained a series of temporary waivers of this non-compliance. Effective as of December 7, 1999, the Company agreed to certain amendments to the senior debt facilities, principally related to cash management, adjustments to restrictive covenants, and borrowings under, and uses of proceeds from, the revolving credit facility. Effective as of March 31, 2000, the Company obtained a permanent waiver of its prior non-compliance with financial covenants, and the senior debt facilities were further amended to shorten their terms to maturity and accelerate the related amortization schedule for repayment of principal, to eliminate the contingency reserve requirement referred to above, to increase the applicable interest rate margins (subject to reduction if the Company's earnings before interest, taxes, depreciation and amortization (EBITDA) exceeded a specified level for the 2000 fiscal year), to add a covenant requiring that EBITDA must exceed specified levels for future fiscal periods and to eliminate all other financial covenants, to modify certain restrictive covenants, to limit borrowings under the revolving credit facility based on a formula tied to 45% of eligible inventory plus 80% of eligible accounts receivable, and to provide for a series of reductions in the commitment under the revolving credit facility. The revolving credit facility included $55.0 million of availability for letters of credit. At July 1, 2000, $32.8 million of letters of credit were outstanding and $18.0 million was available under the revolving credit facility. As amended, amounts outstanding under the revolving credit facility and the Tranche A Term Loan bore interest at a rate based upon the London Interbank Offered Rate plus 3.50%. The Tranche B Term Loan bears interest on a similar basis to the Tranche A Term Loan, plus an additional margin of 0.50%. The weighted average annual interest rate on outstanding borrowings under the various senior credit facilities for the second quarter of 2000 was 10.03%. The senior debt facilities expire on January 31, 2002. The senior debt facilities are guaranteed by each of the domestic subsidiaries of Pillowtex, and are secured by first priority liens on all of the capital stock of each domestic subsidiary of Pillowtex and by 65% of the capital stock of Pillowtex's foreign subsidiaries. Pillowtex also granted a first priority security interest in all of its presently unencumbered and future domestic assets and properties, and all presently unencumbered and future domestic assets and properties of each of its subsidiaries. The term loan facility is subject to mandatory prepayment from all net cash proceeds of asset sales and debt issuances of Pillowtex (except as specifically provided), 50% of the net cash proceeds of equity issuances by Pillowtex or any of its subsidiaries, and 75% of Excess Cash Flow (as defined). All mandatory prepayments are applied pro rata between the Tranche A Term Loan and the Tranche B Term Loan to reduce the remaining installments of principal. The senior debt facilities contain a number of negative covenants, which restrict, among other things, Pillowtex's ability to incur additional debt, pay dividends or make other restricted payments, sell stock of subsidiaries, grant liens, make capital expenditures, engage in transactions with affiliates, make loans, advances and investments, dispose of assets, effect mergers, consolidations and dissolutions, and make certain changes in its business. Upon the occurrence of an event of default: the senior lenders would not be obligated to make additional advances under the revolving credit facility; and would be entitled to declare all amounts outstanding under the senior debt facilities, including accrued interest or other obligations, to be immediately due and payable. The senior lenders also have the rights to block payment on substantially all of Pillowtex's other long-term debt; and are entitled to proceed against the collateral granted to them to secure the senior debt. In these circumstances, cross defaults would make substantially all of Pillowtex's other long-term debt due. If any senior debt was accelerated, the Company stated it could not be certain that its assets would be sufficient to repay in full that debt and its other debt. As a result of the covenants described above, Pillowtex's ability to respond to changing business and economic conditions and to secure additional financing, if needed, was stated to be significantly restricted. In May 1999, Pillowtex entered into a $20.0 million senior unsecured revolving credit facility (overline facility) in order to obtain additional working capital availability. On July 27, 1999, this facility was amended to increase the amount of funds available to $35.0 million. At the end of the third and fourth quarters of its 1999 fiscal year, Pillowtex was not in compliance with certain financial covenants under this facility, the covenants of which are established by reference to the senior debt facilities described above. The Company obtained a series of temporary waivers of this non-compliance and extensions of the maturity date. Effective as of December 7, 1999, the Company agreed to certain amendments to this facility, resulting in the facility being secured by the assets securing the senior debt facilities described above. Effective as of March 31, 2000, the Company obtained a permanent waiver of its prior non- compliance and the facility was amended to lengthen its term to maturity, to impose an amortization schedule for the repayment of principal, and to increase the applicable interest rate margins (subject to reduction if the Company's EBITDA exceeds a specified level for the 2000 fiscal year). This facility is guaranteed on a senior basis by Pillowtex's domestic subsidiaries. Pillowtex is currently required to pay interest on any amounts borrowed under the facility at a rate which is based upon the London Interbank Offered Rate plus 4.5% or the base rate plus 3.0%, at Pillowtex's option. This facility matures upon termination by Pillowtex at any time or otherwise at the earliest of: a) any increase in the commitment under the senior debt facilities described above, the issuance of any capital stock by Pillowtex or its domestic subsidiaries, or other specified events; or b) January 31, 2002. In connection with the Fieldcrest Cannon merger, Pillowtex issued $185.0 million of 9% Senior Subordinated Notes due December 15, 2007, with interest payable semiannually commencing June 15, 1998. Pillowtex may at its option redeem the 9% Notes, in whole or in part, on or after December 15, 2002 at a redemption price of 104.5%, which declines 1.5% annually through December 15, 2005 to 100%. The 9% Notes are general unsecured obligations of Pillowtex, and are subordinated in right of payment to all existing and future senior indebtedness, and rank pari passu to the 10% Notes described below. On November 12, 1996, Pillowtex issued the 10% Senior Subordinated Notes due November 15, 2006, with interest payable semiannually commencing May 15, 1997. Pillowtex may, at its option, redeem the 10% Notes, in whole or in part, on or after November 15, 2001 at a redemption price of 105.0%, which declines 1.667% annually through November 15, 2004 to 100%. The 10% Notes are general unsecured obligations of Pillowtex, and are subordinated in right of payment to all existing and future senior indebtedness. The 9% Notes and the 10% Notes are unconditionally guaranteed on a senior subordinated basis by each of the existing and future domestic subsidiaries of Pillowtex and each other subsidiary of Pillowtex that guarantees Pillowtex's obligations under the senior debt facilities described above. The guarantees are subordinated in right of payment to all existing and future senior indebtedness of the relevant guarantor. Upon a change in control, Pillowtex will be required to make an offer to repurchase all outstanding 9% Notes and 10% Notes at 101% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to the date of repurchase. As a result of Pillowtex's acquisition of Fieldcrest Cannon, the outstanding 6% Convertible Subordinated Debentures due 2012 of Fieldcrest Cannon are convertible, at the option of the holders, into a combination of cash and Pillowtex's Common Stock. During the fourth quarter of 1999, Pillowtex notified the holders of the 6% Debentures that it was not practicable or prudent for payments to be made in respect of the conversion of the 6% Debentures and advised holders that had given notice of conversion and surrendered their 6% Debentures that they could rescind their notice of conversion, return to Pillowtex any Pillowtex Common Stock that had been issued to them and have their 6% Debentures reinstated. Although many holders did rescind and return their stock, other holders could not rescind because they had already sold their Pillowtex stock. As of July 1, 2000, the cash component due in respect of the 6% Debentures that had been surrendered without subsequent rescission was approximately $9.1 million. In addition, as of July 1, 2000, approximately $94.2 million aggregate principal amount of the 6% Debentures remained outstanding. If all such outstanding 6% Debentures were converted at such date, including those surrendered without subsequent rescission, the resulting cash component to be paid to the holders of the 6% Debentures would have been approximately $61.0 million (classified as a current liability at July 1, 2000). Pillowtex was prohibited under the terms of its senior subordinated debt from making payments in respect of the 6% Debentures except for interest payments and payments at maturity or pursuant to sinking fund obligations. In an effort to address both (i) the unpaid cash portion of the conversion consideration owing to those holders of 6% Debentures who have surrendered their debentures for conversion but have not been paid the cash portion of the conversion consideration (Cash Claimants) and (ii) the cash payment prohibition in respect of any future conversions, Pillowtex initiated discussions with certain holders of the 6% Debentures regarding a potential restructuring of the 6% Debentures. The parties to those discussions were unable to agree upon a mutually satisfactory comprehensive restructuring proposal. Under the terms of its senior secured credit agreements and senior subordinated debt and its Series A Redeemable Convertible Preferred Stock, Pillowtex was prohibited from paying cash dividends to or making other distributions to holders of its Common Stock. Immediately before the Chapter 11 petition was filed, the Company announced its default under its senior secured credit facility, and the lending group's announced its intention to issue a payment blockage notice with respect to a scheduled November 15th interest payment on the company's 10% bonds due 2006. -------------------------------------------------------------------------- [00002] COMPANY'S CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2000 -------------------------------------------------------------------------- PILLOWTEX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET September 30, 2000 (Unaudited) ASSETS Current assets: Cash and cash equivalents................................. $3,645,000 Receivables: Trade, less allowance for doubtful accounts............. 235,468,000 Other................................................... 10,024,000 Inventories............................................... 427,999,000 Assets held for sale...................................... 1,257,000 Prepaid expenses.......................................... 11,776,000 -------------- Total current assets.............................. 690,169,000 Property, plant and equipment, less accumulated depreciation........................... 627,651,000 Intangible assets, at cost, less accumulated amortization........................... 279,652,000 Other assets............................................... 29,938,000 -------------- Total assets......................................... $1,627,410,000 ============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable.......................................... $105,487,000 Accrued expenses.......................................... 60,090,000 Deferred income taxes..................................... 37,350,000 Current portion of long-term debt......................... 87,534,000 Long-term debt currently being renegotiated............... 637,539,000 -------------- Total current liabilities.......................... 928,000,000 Long-term debt, less current portion....................... 345,877,000 Deferred income taxes...................................... 51,567,000 Noncurrent liabilities..................................... 52,720,000 -------------- Total liabilities.................................... 1,398,164,000 Series A redeemable convertible preferred stock, $0.01 par value; 79,455,000 shares issued and outstanding including accrued dividends............................. 79,875,000 Shareholders' equity: Preferred stock, $0.01 par value; authorized 20,000,000 shares; only Series A issued............................ --- Common stock, $0.01 par value; authorized 55,000,000 shares; 14,241,070 shares issued and outstanding........ 142,000,000 Additional paid-in capital................................ 160,707,000 Retained earnings......................................... 11,179,000 Currency translation adjustment........................... (2,099,000) Deferred compensation..................................... (558,000) -------------- Total shareholders' equity........................ 169,371,000 -------------- $1,627,410,000 ============== -------------------------------------------------------------------------- [00003] COMPANY'S PRESS RELEASE CONCERNING CHAPTER 11 FILING -------------------------------------------------------------------------- Dallas, Texas -- November 14, 2000 -- Pillowtex Corporation announced on November 14, 2000, that it filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. Pillowtex called the filing a necessary component of its strategy to create a sustainable capital structure, enhance its manufacturing operations, and improve its profitability. "While the decision to file a Chapter 11 petition was not an easy one, the Board of Directors determined that it was the best means of obtaining the financial flexibility needed to address our economic and competitive challenges," said Chairman Ralph La Rovere. "We are committed to using the 'breathing room' provided under Chapter 11 to implement a strategic plan designed to ensure the long term viability of our Company for the benefit of our employees, customers, vendors and the communities in which we operate," he added. Anthony T. Williams, President and Chief Operating Officer, further noted, "Pillowtex enjoys a portfolio of leading brand names, solid relationships with growing retailers, and a talented work-force. We are moving quickly to build on these assets and position the Company to be the undisputed leader in customer service." Pillowtex stated it has received a commitment for $150 million in Debtor-in-Possession (DIP) financing from a group of lenders led by Bank of America. The financing, which is subject to approval by the Court, will be used to fund ongoing business operations. The Company intends to operate in the normal course of business during the Chapter 11 case and will continue payment of employee salaries, wages and benefits, and will honor existing customer-related practices. The U.S. Bankruptcy Code allows a company that is subject to a Chapter 11 filing to continue to operate its business as usual and provides special protections for any creditors, employees and others who perform services or provide goods to that company after the filing. -------------------------------------------------------------------------- [00004] PILLOWTEX CHAPTER 11 DATABASE -------------------------------------------------------------------------- LEAD DEBTOR: Pillowtex, Inc. DEBTOR AFFILIATES FILING SEPARATE CHAPTER 11 PETITIONS: PRINCIPAL OPERATING COMPANIES: State of Incorporation ---------------------- Pillowtex Corporation Texas Beacon Manufacturing Company North Carolina Pillowtex Canada Inc. Ontario, Canada Fieldcrest Cannon, Inc. Delaware Encee, Inc. Delaware The Leshner Corporation Ohio Opelika Industries, Inc. Alabama Pillowtex Management Services Company Delaware OTHER ENTITIES: Amoskeag Management Coporation Bangor Investment Company Crestfield Cotton Company Downeast Securities Corporation FCC Canada, Inc. Fielderest Cannon Financing, Inc. Fielderest Cannon, International, Inc. Fielderest Cannon, Licensing, Inc. Fielderest Cannon SF, Inc. Fielderest Cannon Transportation, Inc. Leshner of California, Inc. Manetta Home Fashions, Inc. Moore's Falls Corporation PTEX Holding Company St. Marys, Inc. Tennessee Woolen Mills, Inc. Bankruptcy Case Nos. 00-4211 through 00-4234 Petition Date: November 14, 2000 Court: United States Bankruptcy Court District of Delaware Marine Midland Plaza Building 824 Market Street Wilmington, Delaware 19801 Judge: Not Yet Assigned Circuit: Third Debtors' Lead Counsel: David G. Heiman, Esq. Jones, Day, Reavis & Poque North Point 901 Lakeside Avenue Cleveland, Ohio 44114 (216) 586-3939 Fax (216) 579-0212 Debtors' Local Counsel: William H. Sudell, Jr., Esq. Eric D. Schwartz, Esq. Morris, Nichols, Arsht & Tunnell 1201 N. Market Street P.O. Box 1347 Wilmington, Delaware 19899-1347 (302) 658-9200 U.S. Trustee: Daniel K. Astin, Esq. Office of the United States Trustee Curtis Center, 9th Floor West 901 Walnut Street Philadelphia, PA 19106 (215) 597-4411 Financial Advisor: E&Y Capital Advisors LLC Public Relations Agent: BSMG Worldwide, Inc. 640 Fifth Avenue New York, NY 10019 (212) 445-8000 Accountants: Arthur Andersen LLP Auditors: KPMG LLP 200 Crescent Court, Suite 300 Dallas TX 75201-1885 (214) 840-2000 Reported Financial Condition as of November 14, 2000: Total Assets: $ 1,669,003,000 Total Liabilities: $ 1,403,592,000 -------------------------------------------------------------------------- [00005] CONSOLIDATED LIST OF PILLOWTEX'S 50 LARGEST UNSECURED CREDITORS -------------------------------------------------------------------------- Creditor Nature of Claim Amount -------- --------------- ------ U.S. Bank Trust, N.A. Corporate Trust Services U.S. Bank Trust Center 180 East Fifth Street, Suite 200 Indenture Trustee St. Paul, MN 55101 for 9% Senior Sub Jeffrey P. Tupper, VP Debentures Due (651) 244-0721 2007 $ 185,000,000 U.S. Bank Trust, N.A. Corporate Trust Services U.S. Bank Trust Center 180 East Fifth Street, Suite 200 Indenture Trustee St. Paul, MN 55101 for 10% Senior Sub Jeffrey P. Tupper, VP Debentures Due (651) 244-0721 2006 $ 125,000,000 State Street Bank and Trust Company Financial Markets Group Corporate Trust PO Box 778 Indenture Trustee Boston, MA 02102-0778 6% Convertible Sub Tel:(617) 622-1699 Debentures Due Fax:(617) 662-1458 2012 $ 90,435,769 Santee Print Works 58 West 50th Street, 11th Floor New York, NY 10018 Tel:(212) 997-1570 Fax:(212) 869-7230 Trade Debt $ 4,561,000 Parkdale Mills Inc. c/o Heller Financial Inc. PO Box 7247-8290 Philadelphia, PA 19170 Tel:(704) 864-8761 Fax:(704) 864-9782 Trade Debt $ 3,240,800 Credit Suisse First Boston 11 Madison Avenue New York, NY 10010 Tel:(212) 325-3399 Fax:(212) 325-8078 Trade Debt $ 2,600,000 Maintenance & Industrial Services c/o Fluour Enterprises Inc. Atlanta, GA 30384-2655 Tel:(864) 281-4000 Fax:(864) 676-7613 Trade Debt $ 2,435,800 Pac-Fung Feather Co. Ltd. Unit 6,9/F, Tower B Hoi Luen Ind. Centre 55 Hoi Yuen Road Kwun Tong Kowloon, Hong Kong China Tel:011-85223891391 Fax:011-85227978279 Trade Debt $ 2,209,500 Vulcan Performance Chemicals Div. of Vulcan Chemical PO Box 945518 Atlanta, GA 30394-5518 Tel:(800) 759-1267 Fax:(205) 298-2953 Trade Debt $ 1,964,800 E.I. Dupont Co. PO Box 905552 Charlotte, NC 28290-5552 Trade Debt $ 1,927,900 Integrated Business Sol. A Lockheed Martin Co. PO Box 93594 Chicago, IL 60673-3594 Tel:(704) 939-4314 Trade Debt $ 1,894,000 Xymid LLC PO Box 6101 Newark, DE 19714-6104 Tel:(302) 451-3230 Fax:(302) 451-0208 Trade Debt $ 1,714,000 Allenberg Cotton Co. PO Box 5000 Cordova, TN 38088-5000 Tel:(901) 383-5120 Fax:(901) 383-5146 Trade Debt $ 1,447,900 Gloria Industrial Inc. 924 E. Main Street Alhambra, CA 91801 Tel:(626) 282-9568 Fax:(626) 282-9917 Trade Debt $ 1,368,300 J&J Southeast PO Box 751819 Charlotte, NC 28275-1819 Trade Debt $ 1,356,500 CIBA Specialty Chemicals PO Box 7247-7318 Philadelphia, PA 19170-7318 Tel:(800) 431-1900 Fax:(914) 785-2142 Trade Debt $ 1,341,600 Manifattura Di Legnano cc/o Finova Capital Corp PO Box 10282 Newark, NJ 07193-0282 Tel:(212) 221-3000 Trade Debt $ 1,323,000 Sajid Textile Ind. (Pvt) Ltd. Plot 6, Sotor 12-A North Darachi, Industrial Area, Karachi, Pakistan Fax:011-92216997396 Trade Debt $ 1,259,300 Topiol Freres Et Cie 24 Rue de la Voie des Bans 95104 Argenteuil Cedex, France Tel:011 34115500 Fax:011 39827223 Trade Debt $ 1,128,600 Chem-Way Corp. 301 S. McDowell St., Suite 706 Charlotte, NC 28204 Tel:(704) 377-5512 Fax:(704) 377-4553 Trade Debt $ 1,116,100 Celanese Ltd. Dept. CH 10256 Palatine, IL 60055-0256 Tel:(800) 523-9476 Fax:(610) 706-7300 Trade Debt $ 695,500 Staplcotn Coop PO Box 30550 Nashville, TN 37241-0550 Trade Debt $ 688,200 Buhler Quality Yarns Corp. PO Box 506 Jefferson, GA 30549 Tel:(706) 367-9834 Fax:(706) 367-9837 Trade Debt $ 675,800 Polystar 7975 Marco Polo Montreal, Quebec H1E 1N8 Tel:(514) 648-8171 Fax:(514) 648-8275 Trade Debt $ 658,200 Shanghai Dragon Head Intl. The Panorama Building 10F/02, Huangpu Rd No. 53 Shanghai, China Tel: 011-862153930148 Fax: 011-862153930799 Trade Debt $ 630,200 Olin Corp.(Brass Sales) PO Box 945629 Atlanta, GA 30394-5629 Tel:(800) 299-6546 Fax:(706) 560-3274 Trade Debt $ 628,100 Soodik Printing Co. 123 N. Sangamon St Chicago, IL 60607 Tel:(312) 666-8100 Fax:(312) 666-8625 Trade Debt $ 623,800 Wellman Inc. PO Box 751316 Charlotte, NC 28275 Tel:(704) 588-3497 Fax:(704) 424-2041 Trade Debt $ 616,100 Silver Textile Factory CA 270 Shah Baig Gabol Town, Block 22, FB Area Karachi, Pakistan 75850 Tel: 011-92216980830 Fax: 011-92216982537 Trade Debt $ 604,600 XPEDX PO Box 91694 Chicago, IL 60693 Tel:(630) 628-8400 Fax:(630) 6175 Trade Debt $ 544,300 Southern Container Corp. PO Box 9049 Smithtown, NY 11787-9049 Tel:(516) 231-0400 Fax:(516) 231-0174 Trade Debt $ 530,300 Comely Int'l Trading 303 Fifth Avenue, Rm 1807 New York, NY 10016 Tel:(212) 683-1240 Fax:(212) 683-4049 Trade Debt $ 524,500 Schenker Int'l Inc. PO Box 7247-7689 Philadelphia, PA 19170-7689 Tel:(516) 377-3000 Fax:(516) 377-3074 Trade Debt $ 509,000 Dystar LP Dept AT 40075 Atlanta, GA 31192-0075 Tel:(800) 439-7827 Fax:(704) 561-3032 Trade Debt $ 433,200 PBM Graphics Inc. PO Box 13603 Research Triangle Park, NC 27709-3603 Tel:(919) 544-6222 Fax:(919) 544-0035 Trade Debt $ 432,100 Anhui Anhua Down & Feather Co. Ltd. Import and Export Bldg. 4th Flr, Rm 415 162 Jinzhai Road Hefel, Anhui 230022 China Tel:011-865513608782 Fax:011-865513644537 Trade Debt $ 423,600 Jiangxi Animal By-Products (aka Shanghai Changi Import & Export Co. Ltd.) 25 E. No. 720 Pu Don Avenue Shanghai, China Tel:011 867916246751 Fax:011 867916221419 Trade Debt $ 417,800 Green Printing Co. Inc. PO Box 727 Lexington, NC 27293 Tel:(336) 956-6000 Fax:(336) 956-2675 Trade Debt $ 417,100 Bischoff-August Intl. Inc. PO Box 40 Fairview, NJ 07022 Tel:(201) 295-3400 Fax:(201) 861-1030 Trade Debt $ 409,100 Southeastern Yarn Sales c/o Banc of America Commercial Corp. PO Box 195657 Atlanta, GA 30348-5557 Trade Debt $ 402,400 American & Efird, Inc. PO Box 60221 Charlotte, NC 28260 Tel:(800) 438-3614 Fax:(800) 842-0495 Trade Debt $ 394,800 General Fibers & Fabrics 1404 Orchard Hill Road Lagrange, GA 30240 Tel:(706) 882-8801 Fax:(706) 882-8803 Trade Debt $ 375,000 Seydel-Woolley & Co., Inc. PO Box 169 Pendergrass, GA 30567-0169 224 John B Brooks Rd. Tel:(800) 433-2821 Fax:(706) 693-2074 Trade Debt $ 368,160 Mount Vernon Mills, Inc. PO Box 101732 Atlanta, GA 30392-1732 Tel:(334) 283-6501 Fax:(334) 283-3296 Trade Debt $ 356,200 HDK Industries, Inc. 100 Industrial Park Drive Rogersville, TN 37857 Tel:(423) 272-7119 Fax:(423) 272-4532 Trade Debt $ 346,600 Bostik Inc. PO Box 73106 Chicago, IL 60673 Tel:(800) 241-7562 Fax:(706) 629-4527 Trade Debt $ 345,000 Tessitura Martinelli Ginetto, Via Agro Del Castello, 38 Casnigo, Bergamo, Italy 24020 Tel:011 39035725011 Fax:011 39035725150 Trade Debt $ 322,100 Xiaoshan Kinhong Down Products Ltd. Xixu, Chengxiang Town Xiroshan, Zhejiang, China Tel:011 862733888 Fax:011 865712677106 Trade Debt $ 312,500 United Embroidery, Inc. PO Box 520A North Bergen, NJ 07047 Tel:(201) 863-0070 Fax:(201) 863-8402 Trade Debt $ 305,100 Pittsfield Weaving Co., Inc. PO Box 8] Pittsfield, NH 03263 Tel:(603) 435-8301 Fax:(603) 435-6753 Trade Debt $ 302,100 -------------------------------------------------------------------------- [00006] MOODY'S JUNKS CREDIT RATINGS IN WAKE OF CHAPTER 11 FILING -------------------------------------------------------------------------- Moody's Investors Service downgraded the debt of Pillowtex Corporation. The affected debt includes: a) $725 million credit facility maturing 2004, from B3 to Caa2, b) $185 million issue of 9%, guaranteed senior subordinated notes due 2007, from Ca to C, c) $125 million issue of 10% guaranteed senior subordinated notes due 2006, from Ca to C, d) The Senior Implied rating was lowered from Caa1 to Ca, e) The Senior Unsecured Issuer Rating was lowered from Caa2 to Ca The rating outlook, Moody's says, is negative. The downgrade reflects the company's announcement this morning that it filed a voluntary petition for reorganization under Chapter 11 of the bankruptcy code. The ratings also reflect the company's default under its senior secured credit facility, and that lending group's announced intention to issue a payment blockage notice with respect to a scheduled November 15th interest payment on the company's 10% bonds due 2006. The ratings reflect Moody's expectation that the public debt will be restructured. The ratings also continue to reflect the company's portfolio of quality brands and licenses and the recent changes in top management. The Caa1 rating on the facility recognizes the benefits of the security package, which includes all material assets of Pillowtex and its domestic subsidiaries, including names and trademarks, as well as a pledge of 100% of the capital stock of the domestic subsidiaries and 65% of the capital stock of foreign subsidiaries. The facilities are also guaranteed by all domestic subsidiaries. While the combination of physical asset value and quality brand names should allow for a reorganization, the reorganization might result in some write down of the loan as well as the creation of a super-priority claim associated with fresh financing. The C rating on the guaranteed senior subordinated notes reflects their contractual subordination to the senior lenders. Pillowtex's $725 million credit facility consists of a six-year, $350 million revolving credit, a six-year, $125 million Senior Term A facility, and a seven-year, $250 million Senior Term B facility. The Term B facility was increased from $125 million on July 28, 1998 and the proceeds were used to acquire Leshner in July of 1998, and to reduce outstandings under the revolver. Both term loans amortize quarterly. Availability at the end of the third quarter was about $30 million. Pillowtex Corporation, based in Dallas, Texas, is a leader in the design, manufacture and distribution of home furnishing products, primarily towels, sheeting, bed pillows, blankets, mattress pads, down comforters, and other bedroom furnishings. Its trademarks include Fieldcrest, Cannon, Royal Velvet, Charisma, Touch of Class, St. Mary's, Cannon Royal Family, Royal Velvet Big & Soft and Beacon. It markets under customer-owned private labels, as well as certain licensed trademarks including Comforel, and Waverly. -------------------------------------------------------------------------- [00007] NYSE SUSPENDS TRADING AND MOVES TO DELIST SHARES -------------------------------------------------------------------------- The New York Stock Exchange announced that it determined that the common stock of Pillowtex Corporation -- ticker symbol PTX -- should be suspended immediately. The Company has a right to a review of this determination by a Committee of the Board of Directors of the Exchange. Application to the Securities and Exchange Commission to delist the issue is pending the completion of applicable procedures, including any appeal by the Company of the NYSE staff's decision. The Exchange's action is being taken in view of the fact that the Company announced today that it has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. The NYSE noted that it may, at any time, suspend a security if it believes that continued dealings in the security on the NYSE are not advisable. -------------------------------------------------------------------------- [00008] DEBTORS' MOTION FOR JOINT ADMINISTRATION OF CHAPTER 11 CASES -------------------------------------------------------------------------- Pursuant to Rule 1015(b)(4) of the Federal Rules of Bankruptcy Procedure, the Debtors asked Judge Sue L. Robinson at the First Day Hearing to order that their chapter 11 cases be jointly administered in order to reduce costs and facilitate a more efficient administrative process, unencumbered by the procedural problems otherwise attendant to the administration of multiple chapter 11 cases. Specifically, the Debtors asked that their 24 chapter 11 cases be administered jointly under Bankruptcy Case No. 00-04211 and further ordering that all pleadings and papers filed in the Debtors' chapter 11 shall be captioned: IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE - - - - - - - - - - - - - - - - -x In re: : Chapter 11 : PILLOWTEX, INC., et al., : Case No. 00-04211 (___) : Debtors. : Jointly Administered - - - - - - - - - - - - - - - - - x Judge Robinson granted the Debtors' Motion in all respects, making it clear that this request is for procedural purposes only, neither contemplating nor impairing the right of any party-in-interest to seek a substantive consolidation of the Debtors' estates. -------------------------------------------------------------------------- [00009] U.S. TRUSTEE TO CONVENE ORGANIZATIONAL MEETING TO FORM COMMITTEES -------------------------------------------------------------------------- Next week, the United States Trustee for Region III will schedule an organizational meeting for the purpose of forming one or more official committees of the Debtors' creditors. That meeting will be held in Philadelphia or Wilmington. Each of the 50 largest unsecured creditors will receive an invitation to that meeting directly from the Office of the U.S. Trustee. Ordinarily, the U.S. Trustee for Region III appoints one official committee of unsecured creditors and appoints the 7 largest debtholders willing to serve on that single committee. Daniel K. Astin, Esq., is the attorney for the U.S. Trustee in charge of Pillowtex's chapter 11 cases. Contact the Office of the U.S. Trustee at 215-597-4411 for additional details about the time, date and place for the organizational meeting. *** End of Issue No. 1 *** ------------------------------------------------------------------------- Peter A. Chapman peter@bankrupt.com http://bankrupt.com ------------------------------------------------------------------------- Recommended Reading: "Panic on Wall Street: A History of America's Financial Disasters." Order your copy of this title today at http://www.amazon.com/exec/obidos/ASIN/1893122468/internetbankrupt -------------------------------------------------------------------------