Gordian Group prepared a fairness opinion in connection with a complex and contentious convertible preferred financing provided by Carl Icahn.
Client: Special Committee to the Board of Directors of WestPoint International
WestPoint Stevens was an American textile manufacturer and, like many of its domestic peers, no longer had a cost-competitive business model and was forced to seek Chapter 11 protection in 2005. Through the bankruptcy process, the Company reorganized and emerged as WestPoint International, now controlled by affiliates of Carl Icahn, who had purchased a substantial amount of the Company’s claims in bankruptcy. Concurrently, other former bondholders of the old WestPoint Stevens were suing Icahn over a rights offering that the bondholders alleged unfairly gave Icahn a majority of the reorganized equity as well as control of the Board of Directors. Meanwhile, WestPoint International was still one of the last remaining U.S. textile firms that hadn’t significantly outsourced its manufacturing and thus remained at a competitive disadvantage. The Company identified textile facilities in Bahrain and Pakistan that it believed would solve its cost structure problems and Icahn agreed to finance the purchase through a convertible preferred stock offering, whose terms were such that Icahn would continue to control the company even if it lost in litigation with the bondholders.
Gordian Group was engaged to provide a fairness opinion in connection with financing led by the Carl Icahn-controlled entity. Gordian Group performed detailed valuation and convertible preferred securities analyses in connection with rendering its opinion. We subsequently defended our views in deposition in connection with the aforementioned litigation.
The company consummated the Icahn-led financing and completed its purchases of the overseas production facilities. Gordian Group’s fairness opinion and subsequent deposition testimony was instrumental in removing legal hurdles from the financing. In addition, Gordian Group helped the Committee renegotiate the financing to secure better terms for the company in connection with our work.