Fruit Of The Loom Hits Bottom

Fruit of the Loom Ltd., the financially troubled underwear and apparel maker, asked for protection from its creditors Wednesday under Chapter 11 of the U.S. bankruptcy code.

Trading in shares of the Chicago-based company had been halted earlier in the day pending announcement of the petition filed in U.S. Bankruptcy Court in Wilmington, Del.

Acting CEO Dennis S. Bookshester said the filing represented "the first step in our effort to address the challenges facing the company and protect the brand."

"We are confident that restructuring our operations and capital structure will enable Fruit of the Loom to emerge as a stronger company in the competitive basic apparel industry and continue our reputation for producing quality apparel," he added.

The company announced that Bank of America had agreed to provide a new $625 million secured debtor-in-possession credit facility.

Fruit of the Loom said in a statement issued through the company's Chicago offices that credit would ensure that the company "has the short-term capital necessary to continue normal, day-to-day operations, such as the purchase of materials and inventory and the payment of suppliers and employees."

The company has 40,000 at 60 locations worldwide.

The company's brand names include Fruit of the Loom, BVD, Gitano, Best and Screen Stars. Licensed brands include Munsingwear and Wilson.

The company's financial problems were underscored by a steep, third-quarter loss of $166.4 million compared to net earnings of $50.4 million a year earlier. The company predicted at the time that its troubles would continue into the third quarter.

Fruit of the Loom in July reported a second-quarter $2.3 million loss as sales dropped 12 percent from a year earlier. Moody's Investors Service had earlier downgraded the company's debt ratings, pointing to declining sales and earnings performance, a weak balance sheet and production and distribution woes.

The company has closed many of its U.S. textile operations this year, shifting them and thousands of jobs to cheaper overseas plants in Mexico, Central America and the Caribbean to save money.

In addition, it has transferred its financial base from Chicago to the Cayman Islands.

©1999 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed