An investigation on behalf of current investors of Polymer Group, Inc. (OTC:POLGA) over potential breaches of fiduciary duty by the Polymer Group board of directors in connection with the proposed acquisition by an affiliate of Blackstone Capital Partners V L.P. was announced.

The investigation concerns whether Charlotte based Polymer Group, Inc. and its Board breached their fiduciary duties owed to Polymer Group, Inc. (OTC:POLGA) investors in connection with the proposed takeover.

On Tuesday, October 04, 2010, Polymer Group, Inc. (OTC Bulletin Board: POLGA/POLGB) announced it has entered into an agreement to be acquired by an affiliate of Blackstone Capital Partners V L.P. As a result of the transaction, each holder of outstanding shares of Polymer Group, Inc. (OTC:POLGA) common stock will be entitled to receive up to $18.16 in cash for each share. A portion of the aggregate purchase consideration totaling $64.5 million, or approximately $2.91 per share, will be deposited in an escrow account at closing and will be available to cover potential tax liabilities, costs and expenses. As a result of the reserve of the escrow funds, each holder of outstanding shares of PGI common stock will be entitled to receive approximately $15.25 at closing, and will be entitled to receive its ratable share of any additional amounts if and when released from the escrow fund in accordance with the definitive agreement.

But the investigation by a law firm concerns whether the sale process and the offered price are unfair to the shareholders of Polymer Group, Inc. (OTC:POLGA). After media reports surfaced in August announcing that Private-equity firm Blackstone Group LP is in exclusive, early-stage talks to buy Polymer Group Inc. its shares (POLGA) closed 4% higher on Friday, August 13, 2010, or at $21.75 per share, valuing Polymer at about $467 million. POLGA continued to increase in value to as high as $23.99 per share on September 29, 2010, before losing almost 35% in response to the takeover news. Since Polymer emerged from bankruptcy in 2003 its shares (POLGA) reached over $30 per share during 2007, but lost during 2008 almost 80% of its value, and ended 2008 at roughly $6 per share. POLGA shares continued to decrease in 2009 to as low as $4.45 per share in March 2009, before seeing an overall upward trend over the past 1.5 years leading to $20 per share on April 09, 2010, and April 23, 2010 after Polymer Group announced its Board of Directors is evaluating strategic alternatives to unlock shareholder value. In addition Polymer Group, Inc. reported Total Revenue of $999.78million in 2007, $1.07327billion in 2008, and $882.65million in 2009. Polymer Group, Inc. was able to get out of a Net Loss in 2006 of $34.53million and a Net Loss in 2007 of $41.15million, to a Net Income of $5.35million in 2008 and $18.20million Net Income in 2009.
Therefore the investigation concerns whether the Polymer Group Board of Directors undertook an adequate and fair sales process to obtain fair consideration for all shareholders of Polymer Group, Inc. (OTC:POLGA) and breached their fiduciary duties to Polymer Group (POLGA) shareholder by failing to adequately shop the Company before entering into the transaction with an affiliate of Blackstone Capital Partners V L.P.