NEWS RELEASE
Cone Mills Corporation
Greensboro, NC 27415
For Immediate Release
Contact:
Gary L. Smith W. Scott Wenhold
Executive Vice President and CFO Treasurer
336.379.6220 336.379.6220
CONE MILLS ANNOUNCES FINANCING PLAN FOR MEXICAN STRATEGY
Greensboro, NC - January 17, 2003 - Cone Mills Corporation (NYSE:COE) today
announced that it has entered into a letter of intent with WLR Recovery Fund II,
L.P. ("WLR"), a fund managed by W.L. Ross and Company, to purchase up to $27.0
million of convertible notes to support a recapitalization of the Company's
balance sheet that would provide funds to allow the Company to execute its
Mexican expansion strategy. The recapitalization plan contemplated by the letter
of intent will contain the following elements:
- Existing lenders and bondholders will be asked to extend maturities
and make other modifications to their agreements;
- The Company will distribute to present holders of the Company's
common stock nontransferable rights to purchase up to $27.0 million of
convertible notes. Any notes not purchased in the offering by
stockholders will be available for purchase by directors and
employees, and any remaining notes then will be purchased by WLR; and
- The new notes will bear interest at 12% per annum and be convertible
into common stock at a $1.00 per share.
Funds managed by W.L. Ross and Company currently hold 50% of the Company's bank
debt and a portion of its bonds.
The recapitalization plan is subject to a number of contingencies and
conditions, including negotiation of a final agreement with WLR, agreement to
the proposed changes in the Company's current debt by lenders and bondholders,
approval of certain elements of the plan by the Company's common shareholders,
and the effectiveness of certain registration statements to be filed with the
Securities and Exchange Commission.
The proposed transactions may only be completed in accordance with applicable
state and federal laws including the Securities Exchange Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended. This press release
shall not constitute an offer or a solicitation to buy any securities.
Founded in 1891, Cone Mills Corporation, headquartered in Greensboro, NC, is the
world's largest producer of denim fabrics and the largest commission printer of
home furnishings fabrics in North America. Manufacturing facilities are located
in North Carolina and South Carolina, with a joint venture plant in Coahuila
Mexico.
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The matters disclosed in the foregoing release include forward-looking
statements. These statements represent Cone's current judgment on the
future and are subject to risks and uncertainties that could cause
actual results to differ materially. Such factors include, without
limitation: (i) the demand for textile products, including Cone's
products, will vary with the U.S. and world business cycles,
imbalances between consumer demand and inventories of retailers and
manufacturers and changes in fashion trends, (ii) the highly
competitive nature of the textile industry and the possible effects of
reduced import protection, free-trade initiatives and retaliatory
measures in trade disputes, (iii) the unpredictability of the cost and
availability of cotton, Cone's principal raw material and other
manufacturing costs, (iv) Cone's relationships with Levi Strauss as
its major customer including its sourcing practices, (v) Cone's
ability to attract and maintain adequate capital to fund operations
and strategic initiatives, (vi) ability to complete the transactions
contemplated by the letter of intent, (vii) increases in prevailing
interest rates, and (viii) the effect on Cone's sales and markets of
events such as the events of September 11, 2001. For a further
description of these risks, see Cone's 2001 Form 10-K, "Item 1.
Business -Competition, -Raw Materials and -Customers" and Item 7.
"Management's Discussion and Analysis of Results of Operations and
Financial Condition--Overview". Other risks and uncertainties may be
described from time to time in Cone's other reports and filings with
the Securities and Exchange Commission.
http://www.cone.com
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