Delta Mills extends tenders for 9 5/8% notes, receives offer from possible buyer, may file Chapter 11

New York, May 25 - Delta Woodside Industries, Inc. said its Delta Mills, Inc. subsidiary extended its tender offer and consent solicitation for its 9 5/8% senior notes due 2007 after receiving an offer from a potential acquirer to buy the company via a Chapter 11 filing.

The consent deadline is now 4:59 p.m. ET on May 30 and the tender offer ends at 5 p.m. ET on May 30, extended from 4:59 p.m. ET and 5 p.m. ET on May 26.

Delta Mills said it extended the offer in order to give noteholders more time to consider the bid to buy the company.

The company said that it received an offer Thursday morning from a potential acquirer that is preparing an offer to buy most of Delta Mills' assets. The transaction would be carried out under section 363 of the Bankruptcy Code.

Excluded would be at least some of Delta Mills' real estate.

The price has not yet been determined but the buyer "would assume" that the acquisition price plus the liquidation of surplus assets will yield more than $300 per $1,000 principal amount for the noteholders as well as "pay all protected claims of the trade creditors and most employee claims" and pay bankruptcy costs.

No formal offer has so far been received and Delta Mills also warned about the time a Chapter 11 case would take.

In the tender offer, begun on April 17, Delta Mills is offering $260 per $1,000 principal amount of its notes plus a $10 per $1,000 consent payment.

The consent solicitation is to delete or modify covenants in the note indenture relating to liens, asset sales and permitted indebtedness so that Delta Mills can obtain a term loan with a first-priority security interest.

The tender is subject to the receipt of consents from holders of at least $15.471 million of the $30.941 million notes outstanding.

At the time it announced the offer, Delta Mills warned that its proposed new credit facility would use virtually all its current borrowing capacity and will provide the funds for the tender offer and working capital.

The company said the tender price is the highest amount of cash it can envision being able to pay "in the foreseeable future."

If the tender is not successful, Delta said it will consider alternatives for dealing with the Sept. 1, 2007 maturity of the notes including amending the note terms, offering an exchange of notes for cash, other debt and equity, a refinancing or restructuring, selling or otherwise disposing of assets or filing for bankruptcy.

Delta Woodside is headquartered in Greenville, S.C. Its wholly owned subsidiary Delta Mills manufactures textile products.

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