WestPoint Stevens receives waiver on credit facility as negotiations with lenders continue

By Carlise Newman

Chicago, April 16 - WestPoint Stevens Inc. obtained a waiver from lenders under its senior credit and second-lien facilities as negotiations on amending covenants continue.

The company said that if the negotiations are not successful, its auditor would issue a going concern qualification in its audit report.

"This waiver was needed to allow us adequate time to work out issues relating to resetting certain financial covenant requirements to reflect the current challenging retail environment," said Holcombe T. Green, Jr., chairman and chief executive officer of WestPoint Stevens, in a news release.

"However, we recently concluded an excellent Spring Home Fashions Market Week with significant new business coming from our targeted key retail accounts all of which should contribute to a stronger second half of 2003," Green added.

WestPoint said that its business in the first quarter was harmed by the war in Iraq and weather conditions, which caused "a sharp decline" in retail demand.

As a result it expects to report a 13% decline in sales and EBITDA of $31 million.

The waiver is required because the outcome of the negotiations is material to the 10-K annual report for the year to Dec. 31, 2002 which it must file with the Securities and Exchange Commission. WestPoint is delaying filing the 10-K until the negotiations are complete.

WestPoint said in a release that the interim waiver will extend to June 10, and will protect the company, under its senior credit and second-lien facilities, from any default that might result from its failure to make a timely filing of its annual report.

The WestPoint, Ga.-based home fashions marketer said it is hopeful that its continuing negotiations will result in a longer-term resolution. The company said its results of operations for 2002, announced on Feb. 11, would not be affected by the negotiations or their results.

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