U.S.

Determined To Survive

By CBSNews.com staff CBSNews.com staff

November 30, 2001 / 5:03 AM EST / CBS

The company that supplies some U.S. military personnel in Afghanistan with cold-weather clothing has filed for bankruptcy protection and borrowed $20 million to keep operating while it reorganizes.

Malden Mills Industries Inc., made famous in 1995 when president and chief executive Aaron Feuerstein kept employees on the payroll while it recovered from a devastating fire, filed Chapter 11 Thursday in Worcester.

"This reorganization allows Malden Mills to emerge from the challenges we have faced since the catastrophic fire that nearly destroyed our company in late 1995," said Feuerstein.

The company, which employs 1,200 in this economically depressed community 25 miles north of Boston, makes Polartec fleece, a synthetic fabric used to make and insulate clothing.

Bob Fossett, director of corporate security for Malden Mills, says he can't comment on whether the bankruptcy reorganization is going to mean layoffs.

"I truly do not know," said Fossett, asked about possible job cuts by WBZ Radio News Reporter Melanie Doupe. "We're all going forward, everybody's positive this is going to turn around. We've got the best product in the world, the best people in the world, and it's going to happen for us."

Fossett added that the "employees are behind the company 100 percent and we're going to continue to be the best fleece maker in the world."

The privately owned company has a $17 million contract to supply cold-weather gear to the U.S. military.

"Malden Mills is in an enviable position in the marketplace," Feuerstein said, "and with this infusion of capital, we will continue to grow the business and retain our pre-eminent status in the industry."

The company will continue to operate during its reorganization, and customers will still receive orders from the Lawrence Mill and from Gorlitz Fleece GmbH, a wholly owned subsidiary based in Gorlitz, Germany, that is unaffected by the filing.

Sen. John F. Kerry, D.-Mass., had earlier urged Jeff Immelt, chief executive of General Electric, Malden Mills' largest lender, to help the company stay out of bankruptcy.

He called the agreement between Malden Mills and lenders "great news for anybody who care about responsible corporate citizenship in America."

The announcement came a day after Moody's Investors Service downgraded Malden Mills' $125 million debt from B1 to Caa3, saying the company needed to restructure its debt and "right-size" its underused plant.

In a statement, Moody's expressed its skepticism for Malden Mills fortunes. The prestigious bond-rating firm said that "while the company's assets include the strong brand names, Polartec and Polarfleece, Moody's no longer believes that the assets will provide sufficient asset protection for the secured creditors, particularly given the weak state of the U.S. textile industry."