NEW YORK, United States - American Securities LLC has bought a majority stake in Frontier Spinning Mills Holding Corp, the second-largest U.S. yarn producer, taking advantage of low energy costs and booming yarn exports to China.

New York-based American Securities bought the stake from Sun Capital Partners Inc., another private equity firm, which bought it in early 2008, the companies said on Thursday.

Terms of the deal, which marks American Securities' first foray into the U.S. textile industry, were not disclosed.

It comes amid a flurry of investment in the U.S. yarn industry as inexpensive natural gas lures companies to produce yarn that is subsequently processed in countries like Honduras that have free trade agreements with the United States.

"The essential raw materials of yarn spinning are cotton and power. Open-end yarn produced in the United States is now as low cost as anywhere else on the planet," Kevin Penn, managing director at American Securities, told Reuters.

Apparel manufacturer Gildan Activewear recently outlined expansion plans that include yarn-spinning facilities in the United States, seeking to take advantage of low energy costs.

The market for yarn has been growing as China's mills buy more of the semi-fabricated products.

Domestic cotton prices in China are higher than in the foreign market, and the import tariff on yarn is less than on raw fiber. China now holds the majority of global inventories under a government stockpiling program launched in 2001.

U.S. spinning mills, including Frontier, have been taking advantage of increased Chinese yarn demand and may have more opportunities to ship to the Chinese market, Penn said.

That could mean greater expansion for Frontier, which operates five plants in the United States.

Frontier has increased capacity by 16 to 20 percent since the company's fiscal 2009 to a current level of 10 million pounds per week, according to Frontier Chief Executive Officer John Bakane.