Byline: MICHAEL MCNAMARA
NEW YORK -- Forstmann & Co. said Monday it has signed a nonbinding letter of intent to acquire Marion Fabrics, part of Texfi Industries' gray goods division, for an estimated $14 million to $15 million.
The purchase price, subject to an adjustment for inventory at the time of closing, includes a fully equipped mill and certain inventory.
Forstmann said it expects the transaction to be completed during the current quarter. The firm intends to finance the purchase price with equity, said William B. Towne, Forstmann's executive vice president and chief financial officer.
Based at Marion, N.C., Marion Fabrics produces fancy piece-dyed and yarn-dyed fabrics for the apparel and home furnishing business using blends of linen, polyester, rayon and cotton. Marion posted net sales of about $40 million for the year ended Oct. 31, 1993. Overall, Texfi had 1993 sales of $311.2 million.
Texfi's other gray goods operations -- at High Point, N.C., and Jefferson, Ga. -- are unaffected.
"Our intention is to support and maintain Marion's current gray goods business, while using its excess mill capacity to produce textiles that'll be designed, finished and merchandised by Forstmann's apparel, contract furnishings and specialty fabrics divisions," said Christopher Schaller, Forstmann's chairman and chief executive officer.
Schaller said the move will allow Forstmann, whose sales in 1993 were $233 million, to expand its line of converted products and offer more opportunities for the company to sell fabrics on a year-round basis.
"Finishing goods manufactured by Marion in our own plants will offset, to some degree, the seasonal nature of our core woolen and worsted wool business, resulting in better capacity utilization in our existing facilities," Schaller said."
R.J. Tisdale, president of Texfi's gray goods division and head of the Marion plant, will remain president with Marion. Forstmann also said the plant's 600 or so employees will remain.
A Texfi spokesman said that until Tisdale's successor is found, Carroll A. Gibson, Texfi's executive vice president and chairman of its operations committee, will handle the day-to-day operations of Texfi's gray goods division.