Bankers Trust and NationsBank are leading a $750 million refinancing of acquisition debt stemming from the failed 1989 buyout of West Point-Pepperell by Chicago industrialist William Farley.

The two banks jointly underwrote roughly half of the new credit. They will seek the remainder of the funds from a small group of other West Point-Pepperell relationship banks.

Those banks include Bank of New York, Bank of Nova Scotia, Chase Manhattan Bank, and Citibank.

The credit will then be syndicated in the loan market, beginning around late

October.

The existing buyout debt that will be refinanced with the new package of bank loans is held by Valley Fashions Corp., based in West Point, Ga.

Valley is the successor company to West Point Acquisiton Corp., through which Mr. Farley acquired 95% of West Point-Pepperell, the Georgia textile concern, in 1989.

Mr. Farley was never able to complete the acquisition, and West Point Acquisition defaulted on its debit in 1990.

Last September, West Point Acquisition emerged from bankruptcy proceedings, renamed Valley Fashions.

Valley still owes nearly $8000 million of buyout-related bank loans. It continues to hold 95% of the stock of West Point-Pepperell, the operating company.

West Point is the nation's biggest maker of bed sheets, and the second-biggest maker of bath towels.

Valley last week announced that it would purchase the remaining 5% of West Point stock at which point Valley and West Point would be merged into a single entity, to be called West Point Stevens.

To finance the purchase of stock, as well as to refinance some $250 million of bank debt at the West Point level, Valley also disclosed last week that it plans to offer senior unsecured and senior subordinated bonds.

Amount Not Yet Disclosed

The company has not yet filed a public registration statement, and the amount of the two bond offerings hasn't yet been disclosed.

Sources said, however, that the bond offerings would total about $600 million.

If Valley is able to raise more than that amount in the public markets, the size of the $750 million bank refinancing probably would be scaled back by a like amount, sources added.

The structure of the new bank loan package has not been completed, but it is expected to consist of a five-year term loan of $200 million, and a $200 million, five-year revolver, both priced at about 250 basis points over the London interbank offered rate.

A separate longer-dated tranche of $200 million term debt will be priced at about 300 basis points over Libor. A $150 million receivables facility will round out the loan package.

While the merged entity will be highly leveraged, it will have a more simplified structure with a conventional balance sheet.

The refinancing also will extend the maturities of the existing debt.

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