Dyersburg Corporation (OTCBB: DBGC - news) announced today that it has reached an agreement on a restructuring of the company with an informal committee of bondholders holding approximately 50 per cent 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 $74m revolving credit facility as well as roll over a term loan of $23m.

Additionally, the bank lenders have agreed to decrease the reserve against borrowing availability under the revolving line of credit from $7m to $2.5m, thereby increasing the company's borrowing availability by $4.5m. Under the restructuring plan, general unsecured creditors, including all trade creditors, will be unimpaired.

Under the agreement, holders of Dyersburg's 9.75 per cent Senior Subordinated Notes due September 1, 2007 will receive new common stock representing 100 per cent of all shares issued and outstanding at the conclusion of the restructuring process and a $15m 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 per cent 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 $201m to $91m. Additionally, the company said that the restructuring would reduce cash payments for interest on such debt by $12.1m per year.

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.'

About Dyersburg
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 website at www.Dyersburg.com.