PBGC Liens Force Plymouth Rubber into Chapter 11 Reorganization

CANTON, Mass., July 6 -- Plymouth Rubber Company, Inc. today announced that it has voluntarily filed for protection under Chapter 11, due to the inability of its secured lenders and the Pension Benefit Guaranty Corporation (PBGC) to reach agreement regarding the priorities of their respective liens. "Plymouth has decided to take this step proactively to ensure that it will continue to operate without interruption and maintain full service to our thousands of customers worldwide," commented Maurice Hamilburg, Plymouth's President. "This action will protect and ensure fair treatment for the Company and all interested parties while the dispute is resolved and a satisfactory payment plan negotiated."

The Company also announced that it has arranged, subject to court approval, a cash collateral funding agreement with LaSalle Bank NA, which will immediately provide access to approximately $2 million of funds for continuing operations.

For several months, Plymouth has been negotiating the refinancing of its secured debt, based upon the expected sale of its Canton, MA, real estate, and a contract has been signed for the sale and leaseback of the property. The Company has also been in long-term discussions with the PBGC regarding the funding of its Defined Benefit Pension Plan. Although the Plan is underfunded, it has been frozen since 1996, and no new liabilities have since accrued. However, the PBGC's recent disclosure of liens previously filed by it against Plymouth's assets, and subsequent legal disagreement among the secured parties as to their priority, made resolution of this situation impossible without a court process. The Company believes that an agreement between its lenders and the PBGC can now be achieved through the court.

"We will also continue to carry out our previously announced plan to transfer manufacturing from our Canton, MA, plant to our Chinese joint venture and other sources. Plymouth intends to meet its financial obligations, including secured, trade, and pension, as fully as possible within the process of Chapter 11, and to emerge as a stronger and more profitable company," added Mr. Hamilburg.

Founded in 1896, Plymouth Rubber manufactures and distributes plastic and rubber products, including automotive tapes, insulating tapes, and other industrial tapes, mastics and films. The Company's products are used by the electrical supply industry, by electric utilities, in telecommunications, and by automotive and other original equipment manufacturers. Through its Brite- Line Technologies subsidiary, Plymouth manufactures and supplies highway marking products. In addition to its Canton plant, Plymouth operates manufacturing facilities in Denver, Colorado and Porrino, Spain. In December, 2004, in co-operation with Hebei Huaxia Group, Plymouth formed a joint venture, Plymouth Yongle Tape (Shanghai) Co., Ltd., to manufacture PVC tapes in China. Plymouth announced in March, 2005, that it planned to discontinue manufacturing operations at its Canton, MA, site, beginning in 2006, in favor of lower-cost production from the joint venture and other foreign or domestic sources. The joint venture's new plant, located near Shanghai, has been in production since April, and is expected to reach full production capacity later this year.