Paragon Files Plan of Reorganization

NORCROSS, Ga., (PROTEXT) - Paragon Trade Brands, Inc. (OTCBulletin Board: PGNFQ) announced that yesterday it filed a standalone plan of reorganization (the "Plan") with the United StatesBankruptcy Court for the Northern District of Georgia. The Planis supported by the Official Committee of Unsecured Creditors(the "Creditors' Committee") of Paragon. The Plan provides analternative to the proposal by Wellspring Capital Management LLC("Wellspring"), a private investment company, to acquire Paragonas part of a plan of reorganization (the "Wellspring Proposal").The Wellspring Proposal contemplated that Paragon couldsimultaneously prepare and file a stand alone plan ofreorganization. The Plan provides that Paragon's unsecured creditors willreceive a pro rata distribution of notes and new common stock tobe issued by reorganized Paragon and that current equity will becanceled. If current shareholders approve the Plan, they willreceive a combination of warrants and a portion of the proceeds,if any, of claims assigned to a litigation trust. The Plancontains provisions typical of a chapter 11 plan of this natureand provides for new bank financing for working capital forreorganized Paragon. Paragon also announced that it is revising its business planto reflect second quarter 1999 results and lowered volume growthexpectations for the future. As a result of Paragon'sreforecasting of its business plan, the Plan, as filed, does notyet specify the amount of value to be distributed. On August 19, 1999, Wellspring delivered a commitment toproceed with the Wellspring Proposal, but Paragon informedWellspring that the commitment was not acceptable. The partiesare continuing their negotiations with respect to this matter.Paragon stated that it remains committed to pursuing atransaction with Wellspring while continuing to welcome otherbids in accordance with the Bankruptcy Court-approved procedures. Commenting on the filing of the Plan, Chief Executive Officer,Bobby Abraham, said "The filing of our stand alone plan is animportant step in the process of exiting from chapter 11. We willcontinue to pursue the auction process approved by the BankruptcyCourt while simultaneously moving forward with our Plan. Ourfiling of the Plan provides us flexibility to emerge from chapter11 whether we do so independently, with Wellspring or withanother entity. The stand alone plan furthers our objective toexpeditiously emerge from chapter 11 while maintaining theability to maximize the value of Paragon's estate." Paragon also reported that the Bankruptcy Court last weekgranted a limited stay through August 25, 1999 of Paragon'srecently approved settlement agreement with Kimberly-ClarkCorporation ("K-C") pending a ruling by the District Court on anemergency motion by the Equity Committee which seeks an 80-daystay of the K-C settlement pending an appeal. The parties agreedyesterday to the District Court's direction that a limited stayremain in place until September 3, 1999, to allow the DistrictCourt to more fully consider the Equity Committee's motion.Paragon believes that the granting of the limited stay by theDistrict Court is a procedural step in the appeal process thatdoes not alter the substance of the Bankruptcy Court's August 6,1999 approval of the K-C settlement. The Equity Committee hasalso filed a notice of appeal of the Bankruptcy Court's August 6,1999 approval of the Company's settlement with The Procter &Gamble Company ("P&G"). Paragon believes that both the K-C andthe P&G settlements will be upheld on appeal. Paragon Trade Brands is the leading manufacturer of storebrand infant disposable diapers in the United States and, throughits wholly owned subsidiary, Paragon Trade Brands (Canada) Inc.,is the leading marketer of store brand infant disposable diapersin Canada. Paragon manufactures a line of premium and economydiapers, training pants, feminine care and adult incontinenceproducts, which are distributed throughout the United States andCanada, primarily through grocery and food stores, massmerchandisers, warehouse clubs, toy stores and drug stores thatmarket the products under their own store brand names. Paragonhas also established international joint ventures in Mexico,Argentina, Brazil and China for the sale of infant disposablediapers and other absorbent personal care products. Statements made in this press release, other than thoseconcerning historical information, should be considered forward-looking statements. Such statements are subject to certain risksand uncertainties that could cause actual results to differmaterially from those expressed in the Company's forward-lookingstatements. Factors which could affect the Company's financialresults, including, but not limited to: the Company's Chapter 11filing; increased raw material prices and product costs; newproduct and packaging introductions by competitors; increasedprice and promotion pressure from competitors; new competitors inthe market; Year 2000 compliance issues; and patent litigation,are described in the Company's Annual Report on Form 10-K filedwith the Securities and Exchange Commission. Readers arecautioned not to place undue reliance on the forward-lookingstatements contained herein, which speak only as of the datehereof, and which are made by management pursuant to the "safeharbor" provisions of the Private Securities Litigation ReformAct of 1995. ots Original Text Service: Paragon Trade Brands,Inc. Internet: http://www.newsaktuell.de Contact: Alan J. Cyron,Executive Vice President and Chief Financial Officer of ParagonTrade Brands, Inc., 678-969-5200, or Kurt P. Ross, or Guy B.Lawrence of K.P. Ross, Inc., 212-308-3333, or kpross1@msn.com ,for Paragon Trade Brands, Inc.

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