Stephen Schwarzman is finding GoldToeMoretz the darnedest investment.
Private-equity titan Blackstone Group tried to find a buyer this year for one of the world’s largest sock companies — but couldn’t find a suitor willing to pay a high enough price to allow Blackstone to repay GoldToe’s loans and leave it with a profit, The Post has learned.
Rebuffed, Blackstone now is trying to arrange an asset-based loan for the sock maker, a source close to the situation said. The financing is imperative since the company, without the cash, may default on its debt early next year, according to Standard & Poor’s.
Schwarzman’s timing is off in trying the loan as high-yield investors are becoming wary, partly because of the European debt crisis. Earlier this year, investors had been pouring cash into high-yield funds. That would have made refinancing a lot easier.
Other heavily-indebted companies are likely watching GoldToe to gauge how they might fare as the debt market turns.
Blackstone acquired Gold Toe in late 2006, near the top of the buyout boom. It simultaneously scooped up rival Moretz. Sales of socks overall fell during the recession and GoldToeMoretz took on too much debt to finance the buyout. It has been struggling under that weight ever since.
The Newton, NC, company this summer for the first time started selling underwear in an effort to jump-start earnings.
Warren Buffett’s Berkshire Hathaway, which owns Fruit of the Loom, and Gildan, Hanesbrands and fellow PE firm Kelso, which owns Renfro, didn’t feel like paying $450 million for the low-growth business, the source said.
As often happens in many struggling private-equity owned companies, Blackstone has replaced the management team. Former GoldToe President Joe Williams, who at the time of the merger said the combined strengths of Gold Toe and Moretz were “perfect complements,” left the business in 2008.
While the going was good this year, private-equity firms succeeded in pushing out loan payments for many of the 3,000 American companies they bought from 2000 through 2007, but there is still work to do.
S&P in October reported that US companies with speculative-grade debt next year would owe $122 billion. To put that in perspective, speculative-grade businesses this year through early October raised $100 billion to refinance loans.
However, if the bond market freezes as it did in much of 2009, when 74 PE-owned companies went bankrupt, it may not be so easy to restructure deals.
Some businesses that have not yet refinanced are those with the more difficult balance sheets.
A Blackstone spokesman declined comment. jkosman@nypost.com