Delta Mills gets tenders for 25% of 9 5/8% notes, short of desired consents

By Jennifer Chiou

New York, May 31 - Delta Woodside Industries, Inc. said its Delta Mills, Inc. subsidiary received tenders from holders of $7.602 million or about 25% of its 9 5/8% senior notes due 2007, falling well short of the necessary consents needed to amend the note indenture.

As a result, the company said it did not accept any tenders or consents.

The consent solicitation was to delete or modify covenants in the note indenture relating to liens, asset sales and permitted indebtedness so that Delta Mills could obtain a term loan with a first-priority security interest.

The tender was subject to the receipt of consents from holders of at least $15.471 million of the $30.941 million notes outstanding.

The consent deadline was previously extended to 4:59 p.m. ET on May 30 and the tender offer to 5 p.m. ET on May 30. The deadlines were extended from 4:59 p.m. ET and 5 p.m. ET on May 26, respectively.

On May 25, Delta Mills extended the offer in order to give noteholders time to consider a bid from a potential acquirer to buy the company via a Chapter 11 filing.

The company had said that it received an offer from a potential acquirer that is preparing an offer to buy most of Delta Mills' assets. The transaction would be carried out under section 363 of the Bankruptcy Code.

Excluded would be at least some of Delta Mills' real estate.

As previously reported, the price had not yet been determined, but the buyer "would assume" that the acquisition price plus the liquidation of surplus assets will yield more than $300.00 per $1,000 principal amount for the noteholders as well as "pay all protected claims of the trade creditors and most employee claims" and pay bankruptcy costs.

No formal offer had been received and Delta Mills also had warned about the time a Chapter 11 case would take.

In the tender offer, begun on April 17, Delta Mills was offering $260.00 per $1,000 principal amount of its notes plus a $10.00 per $1,000 consent payment.

At the time it announced the offer, Delta Mills warned that its proposed new credit facility would use virtually all its current borrowing capacity and will provide the funds for the tender offer and working capital.

The company said the tender price is the highest amount of cash it can envision being able to pay "in the foreseeable future."

Delta Woodside previously reported that if the tender is not successful, it will consider alternatives for dealing with the Sept. 1, 2007 maturity of the notes including amending the note terms, offering an exchange of notes for cash, other debt and equity, a refinancing or restructuring, selling or otherwise disposing of assets or filing for bankruptcy.

Delta Woodside has headquarters in Greenville, S.C. Its wholly owned subsidiary Delta Mills manufactures textile products.

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