Burlington Industries is hoping to raise over $1 billion next year from a combination of new bank loans and a planned public sale of stock, banking sources said.

They cautioned, though, that the plans are still very preliminary.

Debt-ladened Burlington would use the new funds mainly to retire high-cost junk bonds. The bonds stem from the 1987 leveraged buyout of the Greensboro, N.C., textile concern for $2.2 billion by an investor group led by Morgan Stanley & Co.

$1.9 Billion in Debt

As of June 30, the company had about $1.9 billion of long-term debt outstanding. Part of that debt consists of bank loans.

While the company has not yet filed a stock offering, it has been viewed as a possible candidate to undergo a reverse LBO.

In an effort to improve its balance sheet and cut interest costs, the company this year has repurchased some $240 million face amount of subordinated debt.

In other moves, the company this year also sold its. C.H. Masland & Sons business, and exchanged a series of junior subordinated discount debentures for a new issue bearing a lower interest rate.

Stock Aspect

The actions have been seen by analysts as a possible precursor to an initial public offering of stock. "They've been trying to position themselves for an IPO," said Don Wong, an analyst at Standard & Poor's Corp.

A Burlington spokesman declined to comment.

It's unclear exactly how much new bank financing Burlington wants to raise.

Potential lead banks include the bank units of Chemical Banking Corp. and Bankers Trust New York Corp., which led the bank financing for the original buyout.

Bankers Trust also was one of the original investors in the buyout and still retains an equity interest, along with Morgan Stanley and Equitable Life Assurance Society.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.