Fruit of the Loom, the US clothing manufacturer which employs 1,000 in Donegal and Derry, is dangerously close to bankruptcy as debts of $1.3 billion (€1.3 billion) fall due at the end of January. Fruit of the Loom's assets are worth just $289 million, leaving it vulernable to a bankruptcy filing by one of its creditors unless it can secure new finance.
The troubled company reported third quarter losses of $166.4 million. This year it has announced thousands of job losses worldwide, including up to 1,000 of its Irish workforce, in a bid to restore it to profitability. The uncertainty about whether it can put any future finance in place before the January 31st deadline has prompted analysts to downgrade the company and heightens concern for its workforce.
The company is understood to be trying to set up a $600 million loan to fend off a bankruptcy suit. Operational problems, which started in late 1998, cut profitability and set the company's cash flow plummeting.
Concern about its future is mounting as order fulfilment problems look likely and suppliers have started to stop shipment of its clothing for fear of not getting paid before bankruptcy proceedings start.
