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Contacts:
William S. Shropshire, Jr.                                 Joel Weiden
Chief Financial Officer                                    Gavin Anderson & Co.
Tel: 704-341-4860                                          Tel: 212-515-1970



          DYERSBURG CORP. ANNOUNCES NEW FINANCING, CREDITOR AGREEMENTS
                             AND RESTRUCTURING PLAN

                        TRADE CREDITORS TO BE UNIMPAIRED


CHARLOTTE, NC, August 31, 2000 - Dyersburg Corporation (OTCBB: DBGC) announced
today that it has reached an agreement on a restructuring of the Company with an
informal committee of bondholders holding approximately 50 percent of the
Company's Senior Subordinated Notes due on September 1, 2007 and lenders under
the Company's revolving credit facility.

The parties have agreed to implement the restructuring through a pre-negotiated
Chapter 11. To ensure that the Company has adequate working capital to operate
its business normally during the restructuring proceedings, the Company's
current bank lenders have agreed to extend the existing $74 million revolving
credit facility as well as roll over a term loan of $23 million. Additionally,
the bank lenders have agreed to decrease the reserve against borrowing
availability under the revolving line of credit from $7 million to $2.5 million,
thereby increasing the Company's borrowing availability by $4.5 million. Under
the restructuring plan, general unsecured creditors, including all trade
creditors, will be unimpaired.

Under the agreement, holders of Dyersburg's 9.75 percent Senior Subordinated
Notes due September 1, 2007 will receive new common stock representing 100
percent of all shares issued and outstanding at the conclusion of the
restructuring process and a $15 million Senior Subordinated Payment-in-Kind Note
with a term of 7 years. Additionally, all existing common stock in Dyersburg
Corporation will be cancelled and the holders of existing common stock will
receive two series of warrants to acquire up to 15 percent of the new common
stock. By implementing this financial restructuring, Dyersburg expects to reduce
its total borrowings on a pro forma basis as of July 1, 2000 from $201 million
to $91 million. Additionally, the Company said that the restructuring would
reduce cash payments for interest on such debt by $12.1 million per year.


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T. Eugene McBride, chairman and chief executive officer of Dyersburg Corp. said,
"The strong support of our bondholders for our restructuring plan is a vote of
confidence in Dyersburg's future and reinforces that our operations have great
potential. Dyersburg has been a competitive business with some significant
financial challenges. This restructuring plan is a major step towards resolving
our issues by bringing our debt load to manageable levels and offering us the
flexibility we need to invest in our future. And because we have already
negotiated the major elements of our restructuring plan with our bondholders and
creditors, we expect to be able to emerge expeditiously from Chapter 11."




Dyersburg is one of the largest domestic marketers of circular knit fleece,
jersey and stretch knit fabrics. The Company produces fabrics that are used
principally for activewear, bodywear, outerwear and various branded sportswear.
Dyersburg also operates a garment packaging business in the Dominican Republic.
For more information, please visit the Company's web site at www.Dyersburg.com.

This press release contains certain forward-looking statements within the
meaning of the federal securities laws, all of which are intended to be covered
by the safe harbors created thereby. These statements include all statements
regarding the Company's intent, belief and expectations (such as statements
concerning the Company's liquidity and future operating and financial strategies
and results) and any other statements with respect to matters other than
historical fact. Investors are cautioned that all forward-looking statements
involve known and unknown risks and uncertainties (some of which are beyond the
control of the Company) including, without limitation, the ability of the
Company to restructure its long-term indebtedness, the ability of the Company to
operate successfully under Chapter 11, the ability of the Company to continue to
access availability under the Credit Agreement, risks associated with the
Company's use of substantial financial leverage, access to trade credit and
terms from suppliers, the ability of the Company to improve its operating
performance, restrictions imposed by the terms of the Company's credit facility,
the Company's ability and success in achieving cost savings, the Company's
ability to compete with other suppliers and to maintain acceptable gross
margins, potential adverse developments with respect to the cost and
availability of raw materials and labor, risks associated with governmental
regulation and trade policies, and potential adverse developments regarding
product demand or mix. Moreover, although the Company believes that any
assumptions underlying the forward-looking statements contained herein are
reasonable, any of the assumptions could prove to be inaccurate. Therefore, in
light of these known and unknown risks and uncertainties, there can be no
assurances that the forward-looking statements included in this press release
will prove to be accurate and the inclusion of such information should not be
regarded as a representation by the Company or any other person that the
forward-looking statements included in this report will prove to be accurate.
The Company undertakes no obligation to update any forward-looking statements
contained in this press release.

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