Foamex Gets Commitments for Equity Investment and

Linwood, PA, October 16, 2006--Foamex International said it has received a commitment for a new equity investment and that its primary operating subsidiary, Foamex, L.P., has received a commitment for exit financing to fund the Company's emergence from chapter 11. These commitments are subject to the satisfaction of certain conditions, as described therein. Specifically, as part of the new equity investment, Foamex International has entered into an equity commitment agreement to conduct a $150 million rights offering to existing common and preferred shareholders. Subject to the terms of that agreement, five existing shareholders -- D. E. Shaw Laminar Portfolios, L.L.C., Goldman, Sachs & Co., Par IV Master Fund, Ltd., Sunrise Partners Limited Partnership, and Sigma Capital Associates, LLC -- have committed to fund any shortfall between $150 million and the actual rights offering proceeds through the purchase of new preferred or common stock in reorganized Foamex International. Separately, Foamex L.P. has received a commitment from a group of lenders led by Bank of America, N.A. and Banc of America Securities LLC for up to $790 million of exit financing, of which it expects to draw approximately $645 million upon the Company's emergence from chapter 11. If consummated, the combination of the new equity investment and the exit financing would allow the Company to satisfy all valid claims of creditors in full and allow holders of Foamex International's stock to retain their ownership interests, subject to any dilution that may occur in connection with the rights offering or otherwise. The Company filed a motion in the Bankruptcy Court seeking approval of the commitments described above, the commencement of the rights offering, and the Company's payment of certain premiums, fees and expenses in connection with the commitments. The Company has requested that a hearing to consider approval of the commitments and the payment of such amounts be scheduled for October 30, 2006. A copy of the motion and related exhibits, which include the equity commitment agreement, and the equity investment and plan term sheets, as well as the exit financing commitment and related term sheets, are available on the Company's web site at www.foamex.com/restructuring. As a part of its commitment from the Significant Equityholders, the Company and the Significant Equityholders have reached agreement on the principal terms of an amended plan of reorganization (the "Amended Plan"). The Company plans to file shortly the Amended Plan and an accompanying disclosure statement with the Bankruptcy Court. The Amended Plan and disclosure statement and the contemplated transactions thereunder are subject to Bankruptcy Court approval. The proposed rights offering will be made pursuant to a registration statement covering the additional shares of common stock being offered. In order to commence the rights offering, the Company must obtain the approval of the Bankruptcy Court and the Securities and Exchange Commission must declare the registration statement to be effective. Raymond E. Mabus, Jr., Chairman and Chief Executive Officer of Foamex International, stated, "These commitments represent a significant and very positive step toward Foamex's emergence from chapter 11, and, combined with our notable operating performance over the past several months, provide further evidence that we are gaining strong momentum. We have worked closely with our lenders and Significant Equityholders over the last few months to facilitate these commitments, which, if consummated, will enable the Company to emerge from chapter 11 as promptly as possible while also maximizing the recovery for all of the Company's stakeholders." Mabus said, "Today's announcement is the positive result of a lot of hard work - both by the people involved in the chapter 11 process and by all of our employees who have produced such impressive results so far this year."

Related Topics:Shaw Industries Group, Inc.

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