DCR Removes WestPoint Stevens from Rating Watch-Down

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DCR Removes WestPoint Stevens from Rating Watch-Down

    CHICAGO, May 24 /PRNewswire/ -- Duff & Phelps Credit Rating Co. (DCR) has
reaffirmed its 'BB' (Double-B) rating of WestPoint Stevens' $1 billion of
senior notes and removed the notes from Rating Watch-Down, where they were
placed on November 30, 1999.  The rating action follows the company's
announcement that it has terminated its plan to recapitalize the company by
buying out its shareholders at $22 per share.  The company also declared a
special dividend of $2 per share, for a total payment of around $100 million.
The Rating Outlook is Negative.
    WestPoint cited the increase in interest rates over the past two months as
making the transaction less attractive and causing a key equity investor to
withdraw its commitment.  In addition, the company indicated that it has
ceased to explore strategic alternatives to enhance stockholder value,
including the potential sale of the company.
    WestPoint's operations remain steady, supported by a strong market
position and low cost structure.  These factors are balanced against the
company's leveraged balance sheet and the competitive nature of the home
fashions industry.
    The Negative Rating Outlook reflects the anticipated increase in
leverage this year resulting from the brisk pace of share repurchases
in first quarter together with the planned special dividend.  Beginning in
2001, lower levels of capital spending and share repurchases are expected to
free up cash flow for debt reduction.  Acquisitions, if any, are expected to
be moderate in size, and should not have a lasting impact on leverage.  DCR
will be monitoring the rate of debt reduction and the degree to which the
company can restore its credit profile.
    WestPoint's sales growth has slowed to a low single digit pace in recent
quarters.  New product roll-outs directed to a number of mass retailers are
expected to provide a boost to sales in the second half of 2000.  At the same
time, the company has renewed its commitment to take out costs and better
manage its inventories.  These initiatives will support WestPoint's
longer-term efforts to delever its balance sheet.

SOURCE Duff & Phelps Credit Rating Co.

http://www.dcrco.com
CONTACT:
Philip M. Zahn, CFA, 312-368-3154,
zahn@dcrco.com, or Thomas P. Razukas, CFA, 212-908-0223,
razukas@dcrco.com, both of DCR