Wellman, Inc. Announces Approval of Disclosure Statement

FORT MILL, S.C.--(BUSINESS WIRE)--Wellman, Inc. ([OTC]: WMANQ.OB) announced that the Bankruptcy Court has approved its Amended Disclosure Statement and authorized the Company to begin soliciting votes on its plan of reorganization (the “Plan”).

The Plan contemplates the following:

• The debt of the first and second lien holders will be converted into equity of the reorganized company – “Reorganized Wellman”. The first lien holders will receive 70%, and the second lien holders will receive 30% of the common stock of Reorganized Wellman on the Plan’s effective date, subject to dilution by the conversion of the newly issued convertible notes.
• The Company will receive $90 million in cash in exchange for $120 million of convertible notes issued through a rights offering, which will be offered to the first and second lien holders. These notes can be converted into 60% of the common stock of Reorganized Wellman. The $90 million will be used to repay amounts borrowed under its Debtor in Possession Credit Agreement (the “DIP Facility”) and pay certain deferred financing fees, administrative expenses, priority claims, cure payments and professional fees.
• The first lien holders will receive the proceeds from the sale of the property, plant, and equipment associated with the Company’s Palmetto facility.
• The second lien holders will receive approximately 80% of the proceeds, if any, of a litigation trust and the general unsecured creditors will receive the remainder.

The Plan provides that the Company will emerge from Bankruptcy provided the following three events occur:

• The Company receives $90 million in cash proceeds from the rights offering;
• The first and second lien holder classes both vote to accept the plan of reorganization; and
• Payments required for certain administrative expenses, priority claims and cure claims do not exceed $28 million.

If any of the three events listed above does not occur, the Company will immediately begin the process of liquidating its remaining assets in cooperation with its DIP Lenders. It is likely that the operations of the Company’s Pearl River facility located in Hancock County, MS would be shut down as part of this process.

The Company has obtained an amendment of its DIP Facility, which provides that the Company must achieve the following milestones in order to remain in compliance with the DIP Facility:

• Receive an acceptable backstop commitment for the rights offering on or before November 25, 2008;
• Obtain an order confirming the Plan by December 16, 2008; and
• Emerge from bankruptcy prior to December 31, 2008.

Mark Ruday, Wellman's Chief Executive Officer, stated "We have worked very hard in extremely difficult economic times to preserve value for all of our stakeholders. Based on our current situation, we believe the Plan provides the best opportunity for our creditors to maximize their recoveries in these Chapter 11 cases. We look forward to working with our customers, vendors, employees and other stakeholders to emerge from bankruptcy as a stronger, more profitable and highly competitive company.”

Wellman, Inc. manufactures and markets high-quality PermaClear® brand PET (polyethylene terephthalate) packaging resin.

Forward-Looking Statements

Statements contained in this release that are not historical facts, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In addition, words such as "believes," "expects," "anticipates," and similar expressions are intended to identify forward-looking statements. These statements are made as of the date of this report based upon current expectations, and we undertake no obligation to update this information. These forward-looking statements involve certain risks and uncertainties, including, but not limited to: our substantial liquidity needs and liquidity pressure; our substantial indebtedness and its impact on our financial health and operations; risks associated with our indebtedness containing floating interest rate provisions and its effect on our financial health if rates rise significantly; our ability to obtain additional financing in the future; risks associated with claims not discharged in the Chapter 11 cases and their effect on our results of operations and profitability; risks associated with the transfers of our equity, or issuances of equity in connection with our reorganization and our ability to utilize our federal income tax net operating loss carry-forwards in the future; our dependence on our management and employees; the adverse effect of competition on our performance; reduced raw material margins; availability and cost of raw materials; reduced sales volumes; increase in costs; prices and volumes of PET resin imports; the financial condition of our customers; change in tax risks; environmental risks; natural disasters; regulatory changes; U.S., European, Asian and global economic conditions; work stoppages; levels of production capacity and profitable operations of assets; prices of competing products; acts of terrorism; and maintaining the operations of our existing production facility. Actual results may differ materially from those expressed herein. Results of operations in any past period should not be considered indicative of results to be expected in future periods. Fluctuations in operating results may result in fluctuations in the price of our common stock. For a more complete description of the prominent risks and uncertainties inherent in our business, see our Form 10-K for the year ended December 31, 2007.