Calcot suit targets Fruit of the Loom

By CHIP POWER
Californian staff writer

Financially strapped Fruit of the Loom's money woes have reached Kern County, where the underwear maker is entangled in a contract dispute with some of its suppliers — cotton growers.

Bakersfield-based Calcot Ltd., a nonprofit growers cooperative, alleges that Fruit of the Loom and another concern, Union Underwear Co., have fallen into arrears on their payments.

The cotton growers contend in a civil suit filed in Kern County Superior Court that the companies owe them $4.3 million. One of the issues cited was a shipment of 37,080 bales of cotton. Calcot says it wasn't paid for 13,163 bales of the fiber.

Manufacturers can make 2,104 pairs of boxer shorts, or 1,217 T-shirts, from a bale of cotton.

The apparel company's stock is trading near a 52-week low amid worries about the company's financial status. On Friday, the company named a former executive to lead its operations.

The company said that John Holland, who had been president and chief operating officer from the mid-1970s through the early 1990s, has been named executive vice president.

Fruit of the Loom shares were down 3Ú16 at 15Ú16 Friday, lingering just above a 52-week low and well below the 52-week high of 19.

A company spokesman said Friday he could not comment on the cotton growers' allegations because he was unaware of the lawsuit, which was filed Dec. 10.

Mark Bagby, a spokesman for the cotton cooperative, said the group doesn't comment on pending legal matters.

Wednesday, Egan-Jones Ratings Co. downgraded Fruit of the Loom's ability to repay debts, with the ratings agency's managing director saying the apparel maker is running out of options.

Analysts say Fruit of the Loom has been beset by production and customer service problems. It posted a third-quarter net loss of $166.4 million, or $2.49 a share, compared to a profit of $50.4 million, or 70 cents a share a year ago.