Icahn wins court approval to buy WestPoint Stevens

Thursday, June 30, 2005 | 9:06 a.m.

Billionaire investor Carl Icahn won court approval to buy WestPoint Stevens Inc., the bankrupt maker of Martha Stewart sheets and towels, for $703 million.

U.S. Bankruptcy Judge Robert Drain in New York on Wednesday approved the sale, six days after WestPoint selected Icahn's offer over a $697 million bid from financier Wilbur Ross.

The purchase by Icahn's American Real Estate Holding Ltd. ends a five-month battle for the assets. Ross and a group of creditors had challenged the decision, claiming WestPoint used an unfair method to value the bids and their offer was better than Icahn's.

"We are very happy with the judge's decision," Icahn said in an interview. "We believe we are going to be able to resuscitate WestPoint Stevens back to its former self."

WestPoint will use most of the proceeds to repay creditors owed more than $2 billion. The West Point, Ga.-based company will liquidate its remaining assets and cease to exist once all of the assets are sold.

"It does appear to me that the final bid was the highest and best bid," Drain said at a hearing. "I also believe that the value placed on that bid by WestPoint is a reasonable value."

Sidney Levinson, a lawyer representing Ross and the creditor group, declined to comment. Ross can appeal Drain's decision. The sale is expected to be completed by the end of the year.

"The business is starting to deteriorate," said WestPoint lawyer Michael Walsh. "There's no way to fund a business plan without a sale."