Regional Business Reports

Greensboro
Losing Buffett's bid complicates Burlington's reorganization
One of the nation’s most famous investors withdrew his bid for Burlington Industries. Warren Buffett chose to withdraw his $579 million bid for Burlington after a judge rejected a break-up fee that would have made it difficult for other investors to acquire the company. After Buffett’s company, Berkshire Hathaway, dropped its offer, Burlington initiated a process to solicit bids for the sale of the company. The Greensboro-based textile company hopes to emerge from Chapter 11 reorganization by this summer. The court is reviewing modifications to the original procedures that would establish dates in July for submitting bids and conducting an auction for qualified bids.

“It is unfortunate that the Berkshire Hathaway break-up fee was not accepted by the court,” says Burlington chairman and CEO George Henderson. “It would have been a firm cash offer that would have been a good outcome for the company, our employers and our creditors.”

Buffett, who is known as the “Oracle of Omaha,” is considered one of the richest men in the world with an estimated fortune of $36 billion. “We’re very sorry to have to terminate our offer,” he says. “We trust and admire the Burlington team and hope the company can emerge from bankruptcy debt free. Emergence from bankruptcy under a debt-free structure will provide the best chance for the long-term survival of Burlington and allow the company to best fulfill its pension obligations to employees.”

Buffett pulled his bid a day after Randall Newsome, a U.S. bankruptcy judge, denied a $14 million fee to Berkshire Hathaway if Burlington received a higher bid. Other interested bidders, including W.L. Ross, who is known as the “Bankruptcy King,” went on record saying that that would give Buffett an advantage and stifle competition to acquire Burlington. — Jim Buice


Raleigh
Progress Energy exits the railroad business
Progress Energy is making significant strides toward getting out of the railroad business it gained as part of its Florida Progress acquisition nearly three years ago. The Raleigh-based utility has signed a letter of intent to sell about 7,000 rail cars and 48 locomotives to an Ohio investment consortium. The transaction will make it easier for Progress Energy to sell its railroad subsidiary, a unit that the company has been looking to sell as part of a strategy to shed assets unrelated to its main businesses.

The remaining subsidiary, Progress Rail Services Co., repairs rail cars and locomotives, installs tracks, and reconditions and sells rail parts to railroads across North America. Progress Energy officials and analysts think the company isn’t likely to sell the unit -- the largest rail services outfit in North America -- this year due to the slow economy.

Terms of the rail car and locomotive sale are still being finalized, but Progress Energy says it will use the returns to pay off about $67.8 million in lease obligations on the equipment.

The pending sale is to a group of investors managed by the Andersons Rail Group, based in Maumee, Ohio. The Andersons, which will also be a minority owner, is a regional grain merchandiser with businesses in agriculture, fertilizer distribution and rail car marketing.  -- Kevin Brafford


Cary
Community bank grows with its first major acquisition
Crescent State Bank is branching outside the Triangle and expects to boost its assets by 31 percent in its first major acquisition since opening for business five years ago. The Cary-based community bank, which operates four branches in Wake and Johnston counties, has announced plans to buy Centennial Bank of Southern Pines with stock or cash valued at $9.1 million. The transaction, set to close by September, will give Crescent State one branch each in Southern Pines and Pinehurst and increase the bank’s assets to $240 million.

Under the proposed transaction, shareholders of Centennial will receive cash or stock valued at $10.11 a share, a 21 percent premium to Centennial’s closing stock price on March 12, the day the deal was announced. While Centennial opened for business just three years ago, the bank already commands a 10 percent market share in Southern Pines and Pinehurst — home to one of the nation’s largest golf resorts and a growing number of wealthy retirees. Crescent State, which opened in 1998, saw its profits triple in 2002 to $1.228 million, compared with $307,000 during the previous year.

Both Crescent and Centennial zero in on small business and residential real estate loans, and both focus largely on well-heeled retail customers who seek a high level of personalized service. “We are about as similar as two banks can be,” John H. Ketner Jr., president of Centennial Bank, told the News & Observer. “It was a logical fit.”

Michael G. Carlton, Crescent’s president, says more acquisitions could be forthcoming. Last August, the bank raised $6 million by issuing 690,000 shares to the public. Even after the deal with Centennial, the bank retains enough money to pursue other targets. “We’re not done looking for deals,” Carlton says. -- Kevin Brafford


Statewide
Community College System marks its 40th anniversary
This month marks an historical moment in North Carolina’s higher education system as the state’s community college system celebrates its 40th birthday. It was May 17, 1963, when the General Assembly, urged by State Board of Education Chair Dallas Herring and others, passed legislation that merged the state’s industrial education centers and fledgling community colleges into a comprehensive system. At that time the state had 20 industrial education centers, six community colleges and five extension units. Most started following World War II, when state officials realized that education was essential for North Carolina to thrive in an industrial economy. 

Today, the N.C. Community College System enrolls 800,000 students at 58 campuses and the N.C. Center for Applied Textile Technology. “Community colleges are leading the way in North Carolina’s progress toward economic recovery, growth and change,” says Martin Lancaster, president of the system.

Community colleges are credited with opening the doors to hundreds of careers, including biotechnology, computer systems and healthcare. They prepare two-thirds of the state’s registered nurses, 95 percent of firefighters and 80 percent of law enforcement officers. They also teach basic literacy, offer adults a second chance at high school, give the unemployed new job skills and show budding entrepreneurs the nuts and bolts of running a business.

“In some cases there is a feeling that too much is made of a 40th birthday,” says Phil Kirk, president of NCCBI and chair emeritus of the State Board of Education. “This is one instance where it would be impossible to make it too big of a deal. Our community college system is unparalleled in the country.”  -- Margaret Beach


Wilmington
Georgia educator selected to succeed Leutze at UNC-W
Rosemary DePaolo, president of Georgia College & State University, has been named the next chancellor at the University of North Carolina at Wilmington. “I am well aware that you are entrusting to me a very fine institution,” she told the UNC Board of Governors in accepting her appointment. DePaolo, 55, will assume her new duties by July 15. Her annual salary will be $205,000. The Long Island, N.Y., native will replace James R. Leutze, who is retiring in June. Leutze, a military historian who has served as the school’s top administrator for the past 13 years, plans to return to the UNCW faculty following a research leave.

DePaolo served as dean of the College of Arts and Sciences at Western Carolina University in Cullowhee, one of the 16 campuses in the UNC system, before she went to Georgia College & State University in Milledgeville, Ga., in 1997.

Molly Corbett Broad, UNC system president, says DePaolo has a proven record of leadership and has demonstrated a passionate commitment to undergraduate education. “We’re delighted to bring her back to North Carolina,” says Broad.

During her tenure at Georgia College and State, a school with about 5,500 students (UNCW has 10,900), DePaolo has overseen the beginning of $100 million in construction and renovation projects. She also has been instrumental in fund-raising to support the school’s new mission as the state’s public liberal arts university.

UNCW conducted an extensive search for its new chancellor, drawing more than 100 applicants from 36 states and two foreign countries. DePaolo says she was attracted to UNCW’s high academic rank and reputation. In addition to a campus visit during her interview, she and her husband also toured the Wilmington area on their own in December. She says the beauty of the campus and the passion of the people she encountered were deciding factors. “Their commitment to and love of UNCW are unparalleled,” she says. “It’s a daunting position for (Leutze’s) successor. But my work will be done with passion. And I will give it my all.”  — Kevin Brafford


Wake Forest
Sprint continues drive toward packet switching
Sprint expects to invest some $218 million — nearly $4.2 million dollars every week — this year across North Carolina on local telephone service projects to continue providing customers with high-quality voice and data service and to meet growing demand for new communication technologies.

The company’s investments in new and expanded facilities will include the transition from circuit to packet (Internet protocol) switching in several North Carolina communities, expansion of the FastConnect DSL footprint to virtually every exchange, and enhancement of the company’s fiber capabilities.

“Every year, we invest millions of dollars to provide our North Carolina customers with the best new technology and services,” says Steve Parrott, Sprint’s state executive for the Carolinas. “Our ongoing focus on strengthening and expanding our network and facilities demonstrates our continuing commitment to customer service and satisfaction, and to the communities we serve.”

Sprint’s planned circuit-to-packet (C2P) transitions in Clinton, Jacksonville and Havelock are part of the company’s network replacement strategy that will span the next decade. Sprint will be the first provider to complete the transition to packet switching. Sprint also will continue its expansion this year of FastConnect DSL high-speed Internet access service  in dozens of communities. Sprint also will again boost its investment in fiber optics. Through year-end 2002, Sprint already had invested more than $196.2 million in fiber infrastructure in its North Carolina local-service area. Sprint serves 1.5 million local-service customers in 67 of the state’s 100 counties.


Charlotte
Strayer finds success in career education
As North Carolina’s economy focuses more on the technology and service sectors and as the state’s manufacturing jobs continue to decline, the need for adult education continues to increase. Washington, D.C.-based Strayer University took notice of this need when it decided to expand to North Carolina in 2002. Strayer University opened two campuses in Charlotte and another in the Triangle in the summer of 2002; a second Raleigh campus will open this July.

“Our challenge is to find ways of helping the state’s working adult population with the education necessary to succeed in a knowledge-based economy,” says Robert Silberman, president and CEO of Strayer Education Inc., a company specializing in adult education.

Strayer tailors its programs for working adults who are unable to attend school full time, but who need a stronger educational background in information technology, accounting or business administration to advance their careers.

“The fundamental shift in the state’s economy means we must do more to reach out to working adults and assure that they can attain the education they need,” Silberman says. “Many people who have jobs are underemployed because they don’t have the education necessary to advance their careers.”

Strayer offers associate’s, bachelor’s and master’s degrees to help students advance or change career platforms completely. “Only 25 to 27 percent of the U.S. population has a bachelor’s degree,” says Jim McCoy, North Carolina’s regional director for Strayer University. “In North Carolina, only 20 percent of people 25 and older have at least a bachelor’s degree.”

According to McCoy, 20 percent of Strayer’s North Carolina enrollment is comprised of graduate students. “Strayer expanded to North Carolina to support the growing demand for a knowledge-based workforce, and our second campus in the Raleigh area is a testament to the strong demand for post-secondary education in North Carolina,” he says.

Strayer University has 22 campuses in Washington, D.C., Virginia, Maryland, North Carolina and Tennessee. McCoy says that Strayer hires up to 10 administrators when a campus opens, with the number projected to grow to 40 or 50 administrators within four years.

Each campus is designed to support more than 1,200 students and has full-time faculty members and about 30 adjunct professors once established. — Lori Krimminger

Charlotte
Museum gains affiliation with Smithsonian
The Charlotte Museum of History has been accepted as the Queen City’s first member of the Smithsonian Affiliations program. Created in 1996, Smithsonian Affiliations is a national outreach program that enables the world’s largest and most-visited museum complex to more broadly share its artifacts, programs and expertise in association with museums of all sizes across the country.

“Smithsonian affiliation has enormous value to our museum and to this community,” says Bill Massey, the Charlotte Museum of History’s president and CEO. “The vast exhibits, collections, research and scholarship of ‘America’s Museum’ can now enhance our work.”

Through the affiliations program, the Charlotte museum will have access to the Smithsonian’s collections for use in exhibits, educational initiatives, and research programs.

The museum may also tap Smithsonian resources and staff for such outreach services as curriculum development in local schools, lectures, traveling exhibits, workshops, study tours, conservation, collections care and exhibition development.

The program currently has 130 affiliates in 37 states, the District of Columbia, Puerto Rico and Panama. The North Carolina Museum of Natural Sciences in Raleigh, the North Carolina Transportation Museum in Spencer, and the Schiele Museum of Natural History in Gastonia are the only other affiliates in the state. — Kevin Brafford


Hickory
Century brings jobs back home from China
With more and more American companies having their products produced offshore, Century Furniture Co. has taken a bold step against that tide in an effort to preserve American jobs. The manufacturer of high-end furniture has opted to produce in its Hickory plants part of a line that it has been contracting to have made in China. The Kenya Collection of Century’s Destination line was introduced at the Spring Furniture Market in High Point in April. Previously, the Destinations line was completely made in China.

“Kenya is a brand new collection in the Destinations line that we had planned to make in China,” says Robert Maricich, Century’s president. “Because of the soft economic climate here in the United States, we felt it would be judicious to manufacture it here because it will preserve jobs, and when the economy rebounds, we will still have those skills in our company.”

Although Maricich readily admits the collection cannot be produced as cheaply in the United States as in China, he says the company hopes it can produce the line more efficiently since Destinations is higher volume and lower priced than the Century line. “And we think there are consumers out there that still value American craftsmanship and products,” he says. In keeping with that premise, Century intends to make sure consumers know which of its wood products are made in the United States by placing an enamel flag inside a drawer of all its American-made pieces.

“The interesting thing about the Kenya collection is that in an age where increasingly furniture is coming from China, the group is all-American,” says Marketing Director Ed Tashjian. “American design, American hardwood alder, American craftsmanship.”

The Kenya collection features complex, compound miter joints that “require the skill and experience that Century’s American employees have,” according to Tashjian. “The collection also displays Century’s techniques for finishing and hand-patting products to a rich lustrous finish that cannot be duplicated on a (Chinese) assembly line.”  -- Charlene H. Nelson


High Point
Hospital barely pauses before expanding again
As two new hospital additions near completion, High Point Regional Health System continues to move forward with yet another project. The hospital is planning a $10-million, 68,000-square-foot office building that will house local physician practices. Construction will begin sometime in June on property already owned by the hospital.

Work nearing completion includes a Cancer Center, set to open May 15, and a Day Care Center. “Our Day Care Center and medical office building are the byproducts of continued growth of our medical community, as well as resources for attracting and retaining exceptional hospital employees and physicians,” says Darrell Deaton, vice president of planning. “When completed, we will be able to provide some of the most advanced cancer treatments available for inpatients, outpatients and physician office patients, all at a single location.”

The state-of-the-art Cancer Center, with a price tag in excess of $12 million and more than 45,000 square feet of space, includes a three-story addition to the south end of the Elm Street building. The second and third floors of that building, east of the hospital on the main campus, are being renovated. The new unit features an 18-bed inpatient cancer unit with enlarged patient rooms; a patient/family lounge and a separate family waiting room; improved technology, including a three-dimensional imaging system; a resource area/library; more offices for physicians; a meditation room and more rooms for support groups and counseling; space for the local Hospice; and a “boutique” to help patients feel better by looking better.

The $1.2 million Day Care Center for employees of the hospital will provide two more classrooms than the current location at the YMCA along with a multipurpose room, staff lounge, conference room and two different playgrounds, including one for infants and toddlers. The 7,685-square-foot building is located at the corner of Lindsay and Boulevard streets.   — Jim Buice


Sanford
Economic developers bank on attraction of new projects
In the face of a soft national economy, two major economic projects have broken ground in Lee County. Construction is under way on a new building to house the North Carolina School of Telecommunications and to expand the Lee County Industrial Park. Launching new industrial projects, particularly in a difficult business climate, should be commended, says Doug Byrd, manager of community relations for the N.C. Department of Commerce, and each is an example of the progressive thinking and planning in Lee County.

When completed, Central Carolina Community College’s $3.2 million telecommunications school will include an administrative hub and one wing of classrooms, with additional instructional wings projected for construction over a 16-year period beginning in 2004. The central portion of the 20,295-square-foot school — the section now being built — features a library, student lounge, conference room and offices. Construction should be completed in late December or early next year.

The North Carolina School of Telecommunications is the first tenant committed to the new phase of development at Lee County Industrial Park. Scheduled work on the site also includes installing a sanitary sewer system to serve new industries at the park and about 2,200 other acres around the Colon Road area.

Bob Heuts, director of economic development for Lee County, believes the new section will catch the eye of companies looking to build or relocate. “Because it provides such easy access to Apex, Cary and the Research Triangle Park, some industries looking at those areas of Wake County might travel a few miles south and discover how much better it can be doing business here.”  -- Jane Haber

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