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Burlington Industries acquired by WL Ross through bankruptcy buyout for $615 million

November 2003

Jones Day advised Burlington Industries, Inc. in the acquisition of its assets by WL Ross & Co. LLC in a bankruptcy buyout. This deal came about following an earlier agreement with Berkshire Hathaway, Inc., which had bid $579 million for Burlington's assets. The Berkshire agreement fell apart when the Bankruptcy Court and the company's unsecured creditors refused to approve the 2.4% break-up fee and certain other conditions required by Berkshire to proceed as a "stalking horse" in the auction process.

The terms of the original Ross agreement included a cash payment of $608 million and provided for a 1% break-up fee. Simultaneously with the execution of its agreement with Burlington, Ross also signed an agreement with Mohawk Industries, Inc. whereby Ross agreed to sell Burlington's Lees Carpet division to Mohawk for $352 million if it succeeded in the auction process. At the Burlington auction, another bidder came in with a higher bid, causing Ross to raise its offer. The final agreement with Ross, approved by the judge, provided for a $614 million cash payment at closing and no break-up fee. The agreement also provided for payment of approximately 41.5% of the claims of Burlington's unsecured creditors and payment in full to the secured creditors.

For additional information about this matter, please contact: Robert A. Profusek, David G. Heiman

Client(s): Burlington Industries, Inc.