Quaker Fabric May Liquidate

July 2, 2007  by in UnCategorized   

By Home Furnishings Business in Upholstery on July 2007 Struggling Quaker Fabric Corp., Fall River, Mass., announced Monday that it is likely the company will liquidate and sell its assets after its annual shutdown period, which began Monday and runs through July 15. The company provides yarns and fabrics to hundreds of furniture companies.

The announcement comes after company officials determined it has not met requirements for committed borrowings under its existing lending agreements, so future loans will occur at the discretion of its lenders. In February, Quaker announced annual sales of $151.7 million and a net loss of $37.6 million following a $26.3 million loss the previous year. Results in 2006 were negatively affected by restructuring efforts that included shutting domestic manufacturing factories—as domestic fabric sales dipped 29 percent during 2006. Restructuring efforts have also included shifting efforts to the outdoor and contract markets that are less vulnerable to Chinese imports.

Monday’s announcement said the company is continuing to seek debt and equity financing, but a statement expressed “significant uncertainty” about its ability to continue its operations after July 15. The statement added that a liquidation would not generate enough to make any payment to holders of its common stock. According to Hoovers.com, Quaker had 1,655 employees in 2005.

When the company reported a drop in sales and a $5.1 million net loss in its first quarter in April, President and CEO Larry Liebenow said the company was making progress in its restructuring efforts, but said, “We clearly still have a lot of work to do” in returning the company to profitability by boosting sales, lowering operating costs and striking the right balance between domestic production and global sourcing.