Salt Life parent's troubles could lead to 224 N.C. job losses - Business North Carolina (2024)

A Georgia company known for its beachwear brand Salt Life and activewear label Soffe could permanently close four North Carolina operations in three counties after filing bankruptcy, resulting in the loss of 224 jobs, according to paperwork filed with the state.

Delta Apparel, based in Duluth, Georgia, filed for Chapter 11 bankruptcy protection in Delaware on June 30. It is seeking a new owner.

“If the company is unable to conclude a suitable transaction, the planned closing will be
permanent,” according to a notice filed with the Department of Commerce.

“We’re still hopeful the layoff doesn’t have to happen,” says a company spokesperson who requested their name not be used. The company will know more within 30 to 60 days, the spokesperson added.

“The Company was not able to provide earlier notice as it was actively seeking a transaction to enable the continuation of operations, and believed in good faith that the potential for business disruption accompanying notice would have impaired its ability to obtain such a transaction,” the notice stated.

The company filed paperwork with North Carolina that same day announcing it could permanently close operations in Cabarrus, Cumberland and Robeson counties. Job losses total 22 (administrative jobs) in Cabarrus County, a manufacturing and distribution site in Cumberland County totaling 156 jobs and 46 jobs in Robeson County at a manufacturing site in Rowland.

The effective date for layoffs at all four sites is Aug. 29, according to paperwork filed with the N.C. Department of Commerce. All employees were notified they may no longer have jobs after Aug. 29.

Delta Apparel listed roughly $337.8 million in assets and $244.5 million in total debt, according to the company’s bankruptcy petition, as reported by Bloomberg. An increase in cotton prices and other raw materials as well as diminished demand for its products contributed to its financial troubles, according to court papers.

Shares closed at 20 cents, down 55%. Delta Apparel has traded between 2 cents and 45 cents in the past year. It traded for more than $30 in 2021. The company reported $415.3 million in sales last year, compared with $484.9 million the year before.

Similar notices were filed in the states of South Carolina, Florida, Texas, Arizona and Georgia. The company has about 600 employees in the U.S., with several thousand more working in Mexico and Honduras.

Four Florida surfing buddies launched the Salt Life line of beachy T-shirts and board shorts in 2003. The company was acquired by Delta Apparel in 2013 and for a period shared space with M.J. Soffe, a Fayetteville-grown purveyor of casual and athletic wear that Delta acquired in 2003. The N.C. company was founded in 1946 by the late M.J. Soffe, an Army vet.

Prior to its Chapter 11 filing, Delta Apparel entered into an asset purchase agreement with FCM Saltwater Holdings (Birmingham, Alabama-based Forager Capital Management) to acquire the marketing, sourcing, licensing, and selling of its Salt Life branded products for a total purchase price of approximately $28 million in cash, according to Bloomberg.

The purchase price is subject to adjustment after closing of the Salt Life transaction based on final net accounts receivable and certain inventory calculations.

Upon bankruptcy court approval FCM Saltwater Holdings is expected to be designated as the “stalking horse” bidder in connection with a sale of the Salt Life Assets under section 363 of the Bankruptcy Code, according to Bloomberg, meaning it will set the floor price for the brand.

In North Carolina, the Fayetteville plant with 55 employees is tied to Salt Life operations, with the rest affiliated with Soffe. The fate of the that plant has not been finalized even if the sale goes through.

On June 6, Elkay Partners, NY LLC backed out of a deal with Delta to buy Delta’s 35-acre campus in Fayetteville for $23.5 million and then enter into a long-term leaseback of the property to Delta, according to an SEC filing.

Since June 5, Justin Grow, the company’s chief administration officer, and Matthew Miller, president of its Delta Group, have announced resignations that have taken effect. Nancy Brubanich, its chief accounting officer, will leave the company on July 26, according to an SEC filing.

An earlier version of this story had an incorrect number of Delta job losses due to incorrect information on the Commerce Department website.

Salt Life parent's troubles could lead to 224 N.C. job losses - Business North Carolina (2024)


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