Originally created 03/02/00

Martin Color-Fi to be sold



Martin Color-Fi announced Wednesday it has agreed to be purchased by a Philadelphia-based buyout firm.

If approved, the deal would help the financially troubled Edgefield company emerge from Chapter 11 but would nullify all outstanding shares and remove Chief Executive Officer James Martin from the company he founded 22 years ago.

The potential buyer, Dimeling, Schreiber & Park, would become the polyester fiber maker's sole shareholder if the U.S. Bankruptcy Court for the District of South Carolina approves the merger.

"This is the best piece of news we've had in a long time," said Stephen Zagorski, Martin Color-Fi's chief operating officer. "What this shows is we can be successful on an ongoing basis."

Dimeling, Schreiber & Park specializes in investing in distressed companies it considers prime for a turnaround. Martin Color-Fi is the 17th Chapter 11 company the firm has become involved with.

A phone message left with the firm was not returned Wednesday.

Martin Color-Fi said the merger agreement, which includes a nonbinding letter of commitment from a lending institution, is part of a reorganization plan it intends to file with the court.

"This is kind of like a Neil Armstrong first step for us," Mr. Zagorski said.

Martin Color-Fi filed for bankruptcy protection in November 1998 after a mix of poor management decisions and foreign competition left it unable to make payments on a $60 million debt owed to Bank of America and Wachovia.

The company's stock, which once traded on the Nasdaq market at $17 a share, now trades on the OTC Bulletin Board for less than pennies a share.

Existing Martin Color-Fi shares, all 6,730,284 of them, would be canceled, and the 1,400 individual shareholders of record, in addition to institutional investors, would receive no compensation under the merger agreement.

Mr. Martin, the company's largest shareholder, owns nearly 40 percent of the stock.

The entrepreneur who helped take the company public in 1993 will step down as chief executive if the merger agreement is consummated.

He will be replaced by Mr. Zagorski, a former AlliedSignal executive recruited in 1998 to revive the struggling company.

"I do want to wish our employees, customers, senior operating management team and DS&P much success in their future together," Mr. Martin said in a statement issued Wednesday.

Mr. Zagorski said the company name and its 570 employees will remain intact under the agreement.

Martin Color-Fi, which has manufacturing facilities in Dalton, Ga., and Sumter, Trenton and Laurens, S.C., produces polyester fiber and pellets from recycled plastic materials, such as soft drink bottles. It also makes synthetic fiber yarns, dyes and pigments.

Reach

Damon Cline at (706) 823-3486.