Omaha, Neb.—Warren Buffet’s thirst for acquiring companies under the Berkshire Hathaway umbrella is not slowing down. Having completed five acquisitions in 2002 including Fruit of the Loom, the company is kicking off 2003 by purchasing Burlington Industries, parent of Lees commercial carpets. Burlington has been in Chapter 11 reorganization proceedings for the past 15 months ( FCNews Nov. 30/Dec. 3, 2001). The definitive agreement signed by Berkshire and Burlington is estimated to be $579 million, subject to adjustments. This would be paid to the creditors of Burlington.

Under the proposed plan, Burlington’s secured creditors would be paid in full and its prepetition unsecured creditors would receive cash and certain other assets estimated to be 34% to 35% of their claims. Additionally, all shares of Burlington’s common stock would be canceled with no payment. When done, Burlington would emerge with no debt, other than ordinary course liabilities and certain pre-petition obligations, because it would have repaid the majority of the $1.1 billion of liabilities it had prior to its bankruptcy filing, and eliminated the balance through the bankruptcy process. Burlington would then operate as a wholly-owned subsidiary of Berkshire.

 “Only the very strong will survive in the textile industry—strong in management, strong in worker skills and strong in financial strength,” Buffett said. Burlington brings the first two resources to a successful reorganization; Berkshire brings the latter. “Burlington will be able to go forth as a company with no debt, talented and dedicated management and a workforce second to none,” he added. “It will be a company designed for success.” George Henderson, III, Burlington’s chairman and CEO, called the transaction “a very positive outcome for the company, our employees and our creditors. The opportunity to be totally debt free and having made considerable progress in our globalization efforts puts us in a unique position to take full advantage of our capabilities and compete successfully in a rapidly changing textile industry.

 “Berkshire is a company of great integrity and long-term focus,” he continued, “and we believe its solid foundation provides us the right environment in which to operate and grow as we implement a new and challenging business model.” The deal is expected to close by the end of June. Until then, Burlington will seek court approval of procedures whereby higher and better offers to purchase it may be considered and authorizing the payment to Berkshire of a termination fee in certain circumstances. The textile mill noted the Berkshire offer is for cash and is not dependent on obtaining outside financing.