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Wellstone Mills

The second-largest producer of combed and carded ring-spun cotton yarn in the United States, primarily serving the knit, woven and military apparel sectors. The Company has over 40 years of experience in the U.S. yarn-spinning industry and is recognized for its innovation and specialty product development capabilities.

Engagement Goals

Brookwood advised Wellstone on a transaction involving its four yarn-spinning facilities with Parkdale Mills, the largest manufacturer of spun yarn in the world. This transaction represents the 11th advisory assignment Brookwood professionals have led in the yarn-spinning sector.

Engagement Process and Outcomes

Challenging Situation – Brookwood was initially engaged by the Company’s shareholders to pursue a range of recapitalization and liquidity options for the Company. However, in late-2009 and early-2010 as the global economy continued to face challenges and the Company’s financial performance deteriorated, the Company decided to pursue a sale of Wellstone’s operations to address near-term debt reduction requirements.

Rapid Marketing Process – Brookwood leveraged its substantial yarn-spinning experience and industry-wide relationships to run a comprehensive – yet rapid – marketing process. Brookwood crafted compelling marketing materials which highlighted the significant facility-level opportunity for a strategic acquiror, as well as the potentially negative impact that Wellstone’s closure would have on both suppliers and customers. Brookwood contacted a broad set of buyer combinations, utilizing its industry knowledge to generate a creative set of alternatives.

Timely Outcome – Brookwood’s effective marketing process generated a variety of transaction alternatives for the incumbent lender to consider within the timeframe allowed. Ultimately, Wellstone consummated a transaction with Parkdale Mills which offered: (i) an attractive economic package to address the Company’s lender requirements; (ii) a timely alternative with an efficient path to closing; and (iii) the ability to save approximately 450 jobs across the Company’s four operating facilities.

Press Release Excerpt

We are pleased to announce that Brookwood Associates advised Wellstone Mills, LLC in a transaction with Parkdale Mills, Inc. The transaction illustrates Brookwood’s expertise with companies facing critical debt service complications. We worked effectively under tight time constraints and challenging business conditions to consummate a solution acceptable to Wellstone and to its lender.

In the Wellstone assignment, Brookwood crafted comprehensive marketing materials highlighting Wellstone’s technical capabilities and its importance to its end-markets. We designed a focused marketing process which identified a range of creative transaction alternatives. Wellstone consummated a transaction with Parkdale that addressed the Company’s debt service requirements and saved approximately 450 jobs in the Company’s four yarn-spinning facilities.

Assisting companies facing excessive leverage or bankruptcy with financing or sale transactions remains a core business for Brookwood. While many of our recent distressed assignments have involved the restaurant, chemical and textile industries, we have broad experience involving situations in a wide range of industries.