The Cone Heads.

• Author: Hopper, Kathryn
• Position: Cone Mills Corp. and the people who run it - Company profile

It"s not a matter of who owns but what runs the state's second-largest private company. Does debt?

Not too long ago, you knew from the name who owned Cone Mills. Now it's not so simple to determine who controls the 100-year-old company, which ranks second on Arthur Andersen & Co.'s list of the state's largest private companies.

Chairman Dewey Trogdon owns 10 percent of the common stock, but he claims he might as well be holding rubles. There's no public market for his shares. Besides, loan covenants prevent him from selling them anyway.

Each hourly employee owns stock - a twist that must have old-time mill lords twirling in their graves. But some workers are bitter because their shares act more like bonds: The price stays the same no matter how the company does. The stock's designation - junior preferred" - says it all.

In the final analysis, it's not so much a matter of who owns but what runs Cone Mills. And since 1984, when the company borrowed $465 million to parry a hostile takeover, doing what's necessary to service the long-term debt to a large degree has decided its direction.

Once ruled by patriarchs who practiced a brand of welfare capitalism, it is now run by penny pinchers who have closed plants, slashed the work force, trimmed research and development and nixed new projects. Observers say Cone is doing about as well as can be expected under the circumstances, but recent tough times have stalled efforts by the company to dig itself out from under a $201 million mountain of debt.

And all the while, management has been waiting and hoping for a rebound that will enable it to go public again. No matter what happens, the one-time family business has become about as private as Madonna.

"I don't regret doing it," Trogdon says of the buyout. "I regret the business culture that developed in the 80s. I think that made it tougher to run [an LBO company]. My concern as not to emotionally get into some heroic save-the-company situation because that was dangerous.

"I felt you could do it without putting it on the backs of the employees and the customers. That's what kept me involved. But I just wished we hadn't been faced with that."

It was Halloween 1983 when Trogdon heard the ghastly news that Ceasar Cone II, the only surviving son of founder Ceasar Cone, had agreed to sell his 10.9 percent stake for $50 a share - $30 million - to Western Pacific Industries, a New York-based screw manufacturer with a reputation for hostile takeovers. Six months and several lawsuits later, management won the war and took Cone private in a $70-a-share, $465 million leveraged buyout.

For much of its history, Cone Mills had operated as a paternalistic employer that provided housing, health care and recreation facilities and programs for its workers. It was also a father figure for the surrounding community. All over Greensboro can be found the Cone name. Cone money helped build hospitals, schools and airports. The City Council traditionally had a "Cone seat." A Cone once served as mayor. For decades, Cone accounted for at least 10 percent of the city's United Way contributions.

But in the '50s, brothers Herman and Ceasar Cone II instituted an anti-nepotism policy that made it nearly impossible for family members to assume...