Propex Says It Has Sufficient Cash on Hand

Chattanooga, TN, November 1, 2007--Propex Inc. said it has failed to comply with terms of a January 31, 2006 credit agreement and has hired a financial consultant to help it negotiate with lenders and decide how to finance the company.

The company said in a public filing that it owes $230.6 million under the agreement and that it had approximately $58.4 million of cash on hand as of October 31.

Propex said the non-compliance gives lenders the right to demand payment of principal and interest.

Propex said it had hired Houlihan Lokey Howard & Zukin Capital Inc. for strategic advice, both in negotiations with lenders and for long-term financing.

In a press release, the company said, “Management believes this cash on hand provides adequate liquidity for normal operations while the Company and its advisors work with the lenders under the Credit Agreement to address the issue of non-compliance and the long-term financing needs of the Company.”