Carolina Mills Exits Finishing, Weaving

Carolina Mills Inc. reports it will
now focus on its yarn manufacturing and sales business domestically and internationally as well as
opportunities outside of the textile sector, leading to the closure of the Maiden, N.C.-based
textile manufacturer’s Finishing Division and Weaving Division. The company expects to lay off
about 223 employees as a result.

Valdese, N.C.-based Plant No. 9 — a dyeing and finishing facility for industrial, apparel
and upholstery fabrics — will close by April 30, 2006. Likewise, Newton, N.C.-based Carolina
Specialty Fabrics, Plant No. 3, which manufactures woven fabrics for apparel, commercial and
industrial products, is set to close by May 31, 2006.

“It is clear that the continuing flood of low-priced imported products and skyrocketing fuel
costs have irreparably damaged the domestic customer base for our woven fabrics and fabric dyeing
and finishing services,” said Steve Dobbins, president and CEO. “Therefore, we have no choice but
to exit these market segments.”

March 14, 2007