Propex’s Purchase of SI Positive for Chattanooga

Chattanooga, TN, January 20, 2006--Propex Fabrics Inc.'s pending purchase of Chattanooga-based SI Corp. means new jobs for the city, SI's president and CEO said. "It's a good thing, a positive thing for Chattanooga," said Joe Dana, who'll head North American operations for Propex. He said some 700 production jobs at SI's Chattanooga, Ringgold, Ga., and Gainesville, Ga., plants "will not be impacted at all." The new jobs, he said, will be at SI's Lee Highway offices, to which Propex will move its North American headquarters from Austell, Ga. "We had about 100 people running our business, but we're getting ready to triple the size of that business," Mr. Dana said. "The business could have been sold to someone else, and those 100 or so relatively high-paying jobs would have gone away," he said. According to documents filed with the U.S. Securities and Exchange Commission, Propex has agreed to pay Investcorp, SI's parent company, $235 million, minus some expenses, indebtedness and other considerations, for SI's geosynthetics, concrete systems and industrial fabrics operations. Elsewhere in the filing, Propex officials estimated that the merged company will save $18 million in the next two to three years by "taking advantage of both companies' combined manufacturing strengths and existing capacities," and eliminating administrative duplication. Mr. Dana said the sale is expected to close by the end of the month. When it does, he said, his Chattanooga office will have responsibility for six Propex plants, in addition to the three SI plants. Propex also has transportation, sales and marketing operations in Dalton, Ga. The Propex/SI deal came five months after Dalton-based Shaw Industries bought SI's Chickamauga, Ga.-based woven carpet backing operation. Earlier in 2005, Calhoun, Ga.-based Mohawk Industries bought another backing maker, Virginia-based Wayn-Tex. Frank O'Neill, publisher of Pound Ridge, N.Y.-based Floor Focus magazine, said that, prior to the Shaw deal, SI was second only to Propex among independent makers of carpet backing. Chattanoogan Don Mercer, a Propex board member and former interim CEO, said that company made the deal with an eye toward diversification. "Historically, Propex's significant business has been carpet backing," Mr. Mercer said. "Non-backing had been a fairly sizable business from Propex, but will be a very significant portion of the business now." The sale caps a turbulent year for SI. Last March, Tennessee Gov. Phil Bredesen came to Chattanooga to join community leaders and commemorate the announcement that SI would move its corporate headquarters and at least 100 jobs to downtown Chattanooga in the 401 Building. Soon after the governor's visit, however, SI said it was changing plans. Shaw announced its purchase of SI's backing operation in August. "We were totally devastated when the deal fell through because we were so excited about bringing another corporate headquarters and at least 100 more jobs downtown," said Larry Armour, one of the owners of the 401 Building. "We're still working with other prospective tenants for the building, but it's certainly hard to duplicate what SI was going to do," he said.

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