NEW YORK — Unifi Inc. said late Friday that it had received an initial order from the arbitration panel hearing the dispute between it and DuPont over a polyester filament “manufacturing alliance.”

This story first appeared in the March 31, 2003 issue of WWD. Subscribe Today.

According to a statement from Greensboro, N.C.-based Unifi, the arbiter, law firm Helms, Mulliss of Charlotte, N.C., has found that Unifi “has not committed a ‘substantial breach’ of the alliance agreements.”

As a result of that finding, DuPont would not be able to step up the execution of the put-call agreement between the two firms, which DuPont could use to sell its polyester filament plants in Kinston and Wilmington, N.C., to Unifi.

According to the original agreement, the put-call provision — under which Unifi would be obligated to buy if DuPont chose to sell and DuPont would be obligated to sell if Unifi chose to buy — takes effect June 1, 2005 or earlier, if the agreement is broken.

DuPont in February 2002 brought the matter to an arbiter, claiming that Unifi wasn’t living up to the terms of the deal, namely that it wasn’t buying enough partially oriented yarn from DuPont. The Wilmington, Del.-based company sought $85 million in damages.

The Unifi statement said the initial order did not rule on final damages, although it said the arbiter dismissed $17.6 million of DuPont’s damage claim.

A DuPont spokesman said: “The arbitration panel has requested additional submissions that will help define the final damages compensation awarded to DuPont…DuPont is satisfied the process will result with an appropriate award.”

Sources told WWD the disagreement has been a minor hitch in DuPont’s reported negotiations with Koch Industries to sell its DuPont Textiles & Interior unit. Neither DuPont nor Koch has confirmed those negotiations.

Unifi said the arbitration is due to be completed by the end of April.

Willis C. Moore, executive vice president and chief financial officer of Unifi, said Friday the ruling means “we will continue to operate the manufacturing alliance.”

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