Paragon to File Motion Regarding Proposed $100 Million

Investment From Wellspring Norcross, Ga. (PROTEXT) - Paragon Trade Brands, Inc. (NYSE:PTB) announced that it will file today a motion with the UnitedStates Bankruptcy Court for the Northern District of Georgia,seeking approval of bidding procedures, an expense reimbursementand a termination fee relating to a proposed investment byWellspring Capital Management LLC, to acquire Paragon as part ofa plan of reorganization (the "Wellspring Proposal"). The biddingprocedures provide for the consideration of competing investmentproposals from other interested parties. The Wellspring Proposal provides for a $100 million equityinvestment in Paragon by Wellspring in return for 84.1% of thenew common stock of Paragon to be issued pursuant to a plan ofreorganization, subject to dilution and diminution as a result ofa rights offering for up to 24.1% of new common stock. TheWellspring Proposal also provides for reorganized Paragon'sissuance of approximately $200 million in senior subordinatednotes and Wellspring obtaining new third-party working capitalfinancing for reorganized Paragon in the amount of at least $50million. Under the Wellspring Proposal, it is estimated thatthere will be approximately $325 million in distributable valuein the form of cash, notes and 15.9% of new common stock inParagon as reorganized. As of March 28, 1999, liabilities subjectto compromise totaled an estimated $407 million. The Wellspring Proposal contemplates that substantially all ofParagon's current senior management will continue with thecompany, and is subject to the completion of satisfactory duediligence, procurement of the working capital financingcommitment, definitive documentation, Bankruptcy Court approvalof the motion and the plan of reorganization and other conditionsprecedent standard in a transaction of this nature. The motion notes that the Wellspring Proposal is at this timea suggested format for a chapter11 plan of reorganization thatwould incorporate the Wellspring investment but that thedistribution provisions of such a plan remain subject tonegotiation. The Wellspring Proposal provides that Paragon maysimultaneously prepare and file a stand-alone plan ofreorganization so that the plan process and Paragon's emergencefrom chapter 11 are not delayed in the event that the WellspringProposal is not consummated, or a higher or otherwise betteralternative transaction is not approved or accepted. Paragon andWellspring hope and expect that the bid procedures, combined withactive efforts to obtain higher and better third-party offers,will lead to prompt negotiations among parties in interest andthe confirmation of a plan supported by most or all of suchparties. Paragon's Creditors' Committee has indicated that itsupports the Bid Procedures but has not yet indicated its supportof the Wellspring Proposal. Paragon intends to discuss theWellspring Proposal and the Bid Procedures with Paragon's EquityCommittee, The Procter & Gamble Company and Kimberly-ClarkCorporation over the next few weeks. Commenting on the Wellspring Proposal, Bobby Abraham, ChiefExecutive Officer of Paragon, stated, "Paragon has been workingdiligently to develop a stand-alone plan. Nevertheless, webelieve the infusion of new capital through the Wellspringtransaction constitutes a viable and prudent alternative to astand-alone plan and the bidding procedures for which we areseeking approval have been designed to maximize recoveries onbehalf of Paragon's stakeholders. Paragon has the ability topursue an alternative transaction should it determine that suchan alternative expedites its emergence from chapter 11 ormaximizes its distributable value in its chapter 11 case. If itdecides to pursue an alternative, Paragon's only obligation toWellspring, should the Wellspring proposal become firm andunconditional, is the payment of reasonable expenses and atermination fee of $2 million." Wellspring Capital Management LLC manages a private investmentpartnership focused on investing in companies where it can createsubstantial value by contributing management expertise,innovative operating and financial strategies and capital. Thepartnership's capital is provided by investors who are among thelargest and most respected public and private pension funds,corporations and financial institutions in the U.S. and Canada,as well as from the principals of Wellspring. Paragon Trade Brands is the leading manufacturer of storebrand infant disposable diapers in the United States and Canada.Paragon manufactures a line of premium and economy diapers,training pants, feminine care and adult incontinence products,which are distributed throughout the United States and Canada,primarily through grocery and food stores, mass merchandisers,warehouse clubs, toy stores and drug stores that market theproducts under their own store brand names. Paragon has alsoestablished international joint ventures in Mexico, Argentina,Brazil and China for the sale of infant disposable diapers andother 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. CyronExecutive Vice President and Chief Financial Officer of ParagonTrade Brands Inc. (USA) 678-969-5200, or Kurt P. Ross or Guy B.Lawrence (USA) 212-308-3333, or kpross1@msn.com, both of K.P.Ross, Inc. for Paragon Trade Brands, Inc.

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