Polartec, LLC, a wholly owned subsidiary of Chrysalis Capital Partners, has completed the acquisition of the assets of Malden Mills Industries, Inc. Polartec, LLC will now move forward as an independent company and continue all manufacturing operations at its Lawrence and Methuen, Massachusetts; Hudson, New Hampshire; and Shanghai, China plants.
Michael Spillane, who served as CEO of Malden Mills, and the management team he assembled over the past three years, will transition to their respective positions within the new company. Chrysalis Capital acquired the assets out of bankruptcy at an auction in which the firm was named the Stalking Horse bidder. No other parties made an offer. The final purchase price was $44 million.
During an exclusive interview with The BOSS Report Spillane said that the biggest change will be shifting his mindset from running a troubled company to running a healthy company. “We completed 25 loan amendments in 27 months. That really tends to keep you distracted from running an effective business,” he said. “Now, we can move ahead with a strong balance sheet and focus on building the brand, research and development, and expanding our global platform.”
Earlier this month, members of the Unite HERE! Union who manufacture Polartec products overwhelmingly voted to accept a new threeand-a-half-year contract with Polartec, LLC that ensures their continued employment at the new company (see BOSS_0710). Unite HERE! is the largest union that works with Polartec. Spillane said that this was a major component to the acquisition, and without an effective contract, the deal would have been postponed.
While many in the industry were surprised that only one company offered a bid for the assets of Malden Mills, Spillane explained that there was more involved with this deal than a simple acquisition. “The complexity of this deal really limited the number of potential bidders,” he said. “I think Chrysalis priced their bid fairly. Greg Segall, who is the managing partner of Chrysalis Capital Partners, was also the chairman of Malden Mills when I was hired. So he has a lot of history with the company. He knows the business, and more importantly, he knows the opportunity.”
Looking ahead, Polartec will be focusing on sustainable growth initiatives. Spillane sees the primary opportunity for the brand coming from international markets. “Our Asian business has been growing quite nicely, and we will continue to pursue that,” he said. “We will also look at product extensions where they make sense for the brand. However, we wont be changing channels. Polartec will continue to be on the premium end of the market and we will continue to provide technology solutions in performance fabrics for our customers.”
With a strong balance sheet, and the ability to generate stronger cash flow, Spillane said that once the transition period is complete, Polartec might be open to pursuing some strategic acquisitions. However, the top priority currently is ensuring that Polartecs customers view the transition as a “non-event.” Spillane and his team plan on moving ahead quickly and he thinks that the industry will see tangible results from the change-over by OR Summer Market.
Spillane said, “This day represents a fresh start for our Polartec products, brand, and employees. For the first time in more than a decade, we are able to completely focus on the needs of our customers, which call for developing, manufacturing and marketing technology solutions in performance fabrics. The distractions of the past are now behind us and we begin today to work on our future.”
