Cone Mills Corporation (NYSE: COE) and Compania Industrial de Parras, S.A. de CV. (Parras) today announced an agreement to expand Parras Cone's productive capacity by 11 million yards or 40 per cent from its original capacity for a capital investment of approximately $18m.

Parras Cone de Mexico, is a joint venture between Cone and Parras located in Parras, Coahuila, Mexico. The facility produces basic denim fabrics and started commercial operations in late 1995. Parras Cone was originally constructed with the infrastructure in place to be expanded by 50 per cent, and the facility was expanded by 10 per cent in 1998. Cone Mills will continue to design, service and market the production of Parras Cone.

According to John Bakane, Cone Mills CEO: "Over the past five years, sourcing of denim jeans for US markets from Mexico has more than doubled. The Parras Cone expansion will allow us to keep up with this substantial growth in demand. In addition, since Parras Cone was originally constructed with the infrastructure in place for this expansion, this move will further improve the versatility and cost effectiveness of the plant."

Rodolfo Garcia Muriel, CEO of Parras said: "The expansion of Parras Cone is yet another sign of the growth and competitiveness of the Mexican denim industry. NAFTA combined with the recently enacted Free Trade Agreement with the European Union have solidified Mexico as a world leader in textiles and apparels."

The expansion will be financed by internal cash flow of Parras Cone and borrowings under existing facilities of Parras Cone. Since operations began five years ago, Parras Cone has paid down over $40m of debt and at the end of November 2000, the company was capitalised with a strong balance sheet consisting of approximately $72m of equity and $28m of debt. Parras Cone expects sales of approximately $75m for the year 2000 and should begin to benefit from the expansion beginning in the third quarter 2001.

About Cone Mills Corporation
Founded in 1891, Cone Mills Corporation, based 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 denim plant in Coahuila, Mexico.