Martin Color-Fi Signs Merger Agreement

Martin Color-Fi, Inc. announced that it has signed a merger agreement with an affiliate of Dimeling, Schreiber & Park, Pennsylvania-based investment partnership specializing in private equity investments primarily in the form of Chapter 11 reorganizations.

If the agreement (which must be approved by the Bankruptcy Court) is consummated, all of the currently outstanding shares of MCF will be canceled.

New Martin Color-Fi shares will be issued to Dimeling, which will become the sole shareholder upon effectiveness of the merger.

The agreement will be reflected in the proposed Plan of Reorganization and Disclosure Statement that Martin Color-Fi anticipates filing imminently in Bankruptcy Court in the District of South Carolina. The agreement provides that it is subject to competing overbids, Martin's obtaining debt financing acceptable to Dimeling and the confirmation of a Plan of Reorganization, among other conditions. Neither the agreement nor the proposed Plan of Reorganization will provide for any recovery for Martin's existing shareholders.

Stephen A. Zagorski, President and Chief Operating Officer of Martin Color-Fi, commented, "I am delighted with the signing of this agreement. While there can be no assurance that either this agreement will be consummated or a Plan of Reorganization will be confirmed in Bankruptcy Court, we believe that our major creditors will be supportive of this agreement and our Plan of Reorganization."

Martin Color-Fi, Inc. produces polyester fibers and pellets from recycled plastic materials such as soft drink bottles, off-class packaging resins, polyester fiber waste and film waste. The company uses these materials to produce polyester fibers for a wide range of markets, including automotive fabrics, carpet, apparel, home furnishings, industrial fabrics and construction reinforcement materials. The company also produces yarns from synthetic fibers, as well as dyes and pigments.

Edited by Anndrea Vorobej