Propex Gets Approval To Borrow $20 Million

Chattanooga, TN, January 24, 2008--Propex Inc. won court approval Wednesday for part of a $60 million financing package to fund operations during the company's Chapter 11 bankruptcy case.

Judge John C. Cook of the U.S. Bankruptcy Court in Chattanooga said Propex could borrow $20 million. He will consider approving the rest of the financing in February.

Propex filed for bankruptcy protection last week after it couldn't refinance its debt. It defaulted last September. Propex said it needs bankruptcy financing so it can continue to do business with its suppliers.

A group of lenders led by bank BNP Paribas will provide the $60 million financing. BNP Paribas led a group of Propex's lenders who are owed $230 million.

Propex has been hard hit by the housing market collapse. In the first nine months of 2007, its net sales dropped over 12 percent compared with 2006.

A group of bondholders objected to the approval of the financing because they said they didn't have time to evaluate the agreement.

The bondholders said the agreement has "numerous and, in many instances, burdensome terms," including the payment of fees and expenses to Propex' pre-bankruptcy lenders.

A Feb. 13 hearing has been set to consider the rest of the financing package.