NEW YORK — Cone Mills Corp. is getting some help in the financing of its south-of-the-border denim efforts.

The Greensboro, N.C.-based denim producer signed a letter of intent by which a fund managed by W.L. Ross and Co. would purchase up to $27 million of the firm’s convertible notes. This, said the mill, would support a recapitalization of its balance sheet that would fund the execution of its Mexican expansion strategy.

The recapitalization plan, still subject to a number of conditions, asks existing lenders and bondholders to extend maturities and make other modifications to their agreements.

Cone would also distribute to current shareholders nontransferable rights to purchase up to $27 million of convertible notes. Notes not purchased in the offering would be made available for purchase by Cone’s directors and employees. Any remaining notes would then be purchased by WLR Recovery Fund II.

Under the plan, the new notes bear an interest of 12 percent per annum and would be convertible into common stock at $1 a share.

W.L. Ross manages funds that currently hold half of Cone’s bank debt and a portion of its bonds.

In 1999, Cone outlined plans to expand its denim manufacturing in Mexico with a facility in Altamira. An independent plant, with an initial annual capacity of 20 million yards, and expandable to 40 million yards, was to be built in an industrial park, which was the product of a 50/50 joint venture with Guilford Mills Inc.

While the infrastructure of the park was completed in 2001, the plant was never built, as Cone was busy "trying to turn around or stabilize our operations," according to Gary Smith, executive vice president and chief financial officer.

With greater financial success this year, he said, the firm was able to push ahead with plans for the new facility.

For the nine months ended Sept. 29, Cone posted net income of $8.4 million, or 20 cents per share, against a loss of $34 million, or $1.45, a year ago. Sales, though, slid 5 percent to $343.3 million from $461.3 million.

On Friday, shares of Cone slid 7 cents, or 3.8 percent, to $1.79 on the New York Stock Exchange. Over the past 52 weeks, shares of the firm have traded as low as $1.64 and as high as $4.45.

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