Berkshire Hathaway, Inc. has cancelled its $579 million cash offer to acquire Burlington Industries, Inc. out of bankruptcy court. The deal, initially announced February 11, 2003, was terminated by Warren Buffett’s BRK after a Delaware bankruptcy judge balked at $14 million breakup fee and certain other conditions that Berkshire required to proceed as a “stalking horse” in the bidding process.

The secured creditors were in support, but the Unsecured Creditors Committee opposed the fee.

Burlington filed for Chapter 11 protection in 2001.
Secured creditors were to be paid in full under the BRK deal announced over two weeks ago and the unsecured creditors were expected to see around 34% of their claims. The company would have emerged debt-free as a subsidiary of BRK.

The court said it would hear alternatives to the Buffett offer.

Wilbur Ross, chairman of New York investment company, W.L. Ross & Co., said a majority of Burlington’s unsecured creditors oppose the sale of the textile company to BRK. Ross is Burlington’s largest unsecured creditor, controlling BRLG bonds worth $81 million.

Ross competing proposal could yield as much as 60 cents on the dollar for unsecured creditors. The Ross plan would have paid Burlington’s $439 million in secured debt and $28 million in administrative claims but called for the issuance of $250 million in new debt.

Burlington Chairman and CEO Henderson issued a press release late Friday, saying, “It is unfortunate that the Berkshire Hathaway break-up fee was not accepted by the Court and the offer has been subsequently withdrawn by Berkshire. It was a firm cash offer that would have been a good outcome for the company, our employees and our creditors.

>>> Never play poker with Warren Buffett and a bird in the hand, especially Buffett’s, is usually better than two in the bush…

>>> This does not look good for 7,600 BRLG employees. But at least Ross may get a few more dollars…