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<SEC-DOCUMENT>0001104659-05-043361.txt : 20060905
<SEC-HEADER>0001104659-05-043361.hdr.sgml : 20060904
<ACCEPTANCE-DATETIME>20050908162311
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001104659-05-043361
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20050908

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			POLYMER GROUP INC
		CENTRAL INDEX KEY:			0000927417
		STANDARD INDUSTRIAL CLASSIFICATION:	BROADWOVEN FABRIC MILS, MAN MADE FIBER & SILK [2221]
		IRS NUMBER:				571003983
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0103

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		4055 FABER PLACE DR., SUITE 201
		CITY:			NORTH CHARLESTON
		STATE:			SC
		ZIP:			29405
		BUSINESS PHONE:		843-329-5151

	MAIL ADDRESS:	
		STREET 1:		4055 FABER PLACE DR., SUITE 201
		CITY:			NORTH CHARLESTON
		STATE:			SC
		ZIP:			29405
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<html>

<head>






</head>

<body lang="EN-US">

<div>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">September 8, 2005</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Securities and Exchange
Commission</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Division of Corporation Finance</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">450 Fifth Street, N.W.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Washington, DC 20549</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Attention: Andrew Blume</font></p>

<p style="line-height:normal;margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="80%" style="border-collapse:collapse;margin-left:.25in;width:80.0%;">
 <tr>
  <td width="72" valign="top" style="padding:0in 0in 0in 0in;width:.75in;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Re:</font></p>
  </td>
  <td width="511" valign="top" style="padding:0in 0in 0in 0in;width:383.4pt;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Polymer
  Group, Inc.</font></p>
  </td>
 </tr>
 <tr>
  <td width="72" valign="top" style="padding:0in 0in 0in 0in;width:.75in;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="511" valign="top" style="padding:0in 0in 0in 0in;width:383.4pt;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Form 10-K
  for the fiscal year ended January 1, 2005</font></p>
  </td>
 </tr>
 <tr>
  <td width="72" valign="top" style="padding:0in 0in 0in 0in;width:.75in;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="511" valign="top" style="padding:0in 0in 0in 0in;width:383.4pt;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Form 10-Q
  for the quarterly period ended April 2, 2005</font></p>
  </td>
 </tr>
 <tr>
  <td width="72" valign="top" style="padding:0in 0in 0in 0in;width:.75in;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="511" valign="top" style="padding:0in 0in 0in 0in;width:383.4pt;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Filed March
  29, 2005 and May 16, 2005</font></p>
  </td>
 </tr>
 <tr>
  <td width="72" valign="top" style="padding:0in 0in 0in 0in;width:.75in;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="511" valign="top" style="padding:0in 0in 0in 0in;width:383.4pt;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">File No.
  1-14330</font></p>
  </td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Ladies and Gentlemen:</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Polymer Group, Inc. (&#147;PGI&#148;) hereby submits
this response to comments received from the Staff of the Securities and
Exchange Commission (the &#147;Commission&#148; or &#147;Staff&#148;) with regard to PGI&#146;s Annual
Report on Form 10-K for the fiscal year ended January 1, 2005 and filed with
the Commission on March 29, 2005 (the &#147;Form 10-K&#148;).&#160;&#160; The Staff delivered its original comments by
letter dated May 18, 2005 from George F. Ohsiek, Jr., Branch Chief, to James L.
Schaeffer, Chief Executive Officer of PGI, to which PGI responded by letter
dated June 10, 2005 from R. Douglas Harmon of Parker Poe Adams &amp; Bernstein
L.L.P., counsel to PGI (the &#147;Original Response Letter&#148;). &#160;The Staff provided additional comments by
letter dated June 23, 2005 addressed to Mr. Schaeffer and signed by Mr. Ohsiek (the
&#147;Second Comment Letter&#148;), to which PGI responded by letter dated July 18, 2005
from Mr. Harmon (the &#147;Second Response Letter&#148;).&#160;
On August 1, 2005, Andrew Blume and Robyn Manuel of the Division of
Corporation Finance, representatives of Ernst &amp; Young LLP and the
undersigned participated in a telephone conference call discussion of the Staff&#146;s
comments and PGI&#146;s prior responses (the &#147;Conference Call&#148;), to which PGI
responded by letter dated August 9, 2005 from Willis C. Moore, III, the Chief
Financial Officer of PGI (the &#147;Third Response Letter&#148;).&#160; Additionally, on August 31, 2005, Andrew
Blume, Robyn Manuel and Stephanie Hunsaker of the Division of Corporation
Finance, representatives of Ernst &amp; Young, LLC, and the undersigned,
participated in a telephone conference call discussion of the Staff&#146;s comments
and PGI&#146;s prior responses (the &#147;Second Conference Call&#148;).&#160; This letter supplements our Original Response
Letter, Second Response Letter, and Third Response Letter and responds to and
clarifies certain accounting topics discussed with the Staff in the Second Conference
Call.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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<div style="font-family:Times New Roman;">

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The numbered paragraphs below correspond to
the numbered paragraphs of the Second Comment Letter and the page numbers
referenced below refer to the page numbers of the Form 10-K.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:0in;"><b><u><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Form 10-K
for the Fiscal Year Ended January 1, 2005</font></u></b></p>

<p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Note 11.</font>&#160;&#160; Debt, page 61</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><b><i><u><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Explain the effects of
subordination related to the exchange of the Junior Notes and the PIK Preferred
Shares.</font></u></i></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Junior Notes ranked pari
passu with all debt except for debt under the then-existing bank credit
agreement, which bank debt ranked ahead of the Junior Notes; whereas the PIK
Preferred Shares ranked behind all debt but prior to common stock and
participated in any distribution with respect to the common stock on an
as-converted basis. &#160;At the dates of
exchange, with the reduced priority of the PIK Preferred Shares relative to the
Junior Notes, only certain foreign debt in an estimated amount of $8.0 million became
more senior in the capital structure. More importantly, by agreeing to the
conversion of the Junior Notes to the PIK Preferred Shares, the subordination
provisions of the PIK Preferred Shares made it possible that, subsequent to the
dates of exchange, the Company could borrow additional funds, which additional
debt would also rank ahead of the PIK Preferred Shares.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Additionally,
it is important to note that the holders of the Junior Notes, upon converting
to PIK Preferred Shares, immediately put themselves in the position where the
Company could elect to optionally redeem the PIK Preferred Shares for Class A
Common Stock, a right that was not available to the Company under the terms of
the Junior Notes</font></u>. &#160;Accordingly, upon the optional redemption by
the Company of the PIK Preferred Shares for Class A
Common Stock, the PIK Preferred Shares would at that point rank behind all debt
and equal to the common stock.</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company&#146;s Board of Directors,
on July 28, 2005, authorized the redemption of all the Company&#146;s PIK Preferred
Shares on or before September 30, 2005. &#160;The
date for redemption has subsequently been set for September 15, 2005, which
redemption price will be paid through the issuance of the Company&#146;s Class A Common Stock.&#160;
However, due to the relative values of the redemption price and the
conversion rate, we expect that all PIK Preferred shareholders will convert
their PIK Preferred Shares into Class A Common Stock
prior to the redemption date.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><b><i><u><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Explain the related party
nature of the parties to the exchange of Junior Notes to PIK Preferred Shares.</font></u></i></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Under the terms of the Joint
Amended Modified Plan of Reorganization, through which PGI exited the Chapter
11 process on March 5, 2003, each holder of a Class 4 Claim in bankruptcy who
elected to receive Class A Common Stock of the Company was given the
opportunity to take part in the new investment in the $50.0 million of Junior
Notes, the proceeds of which were to be used for the retirement of a portion of
the then-outstanding Senior Bank Debt. &#160;The
raising of the additional capital for the retirement of the Senior Bank Debt
was necessary for the Company&#146;s successful emergence from the Chapter 11
process and was led by MatlinPatterson</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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<div>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Global Opportunity Partners (&#147;MatlinPatterson&#148;)
(the Company&#146;s majority shareholder) working closely with the other significant
Class 4 Claimants. &#160;MatlinPatterson, who
owned approximately 70% of PGI on an if-converted basis at the date of
emergence, purchased approximately $38.1 million or 76% of the Junior &#160;Notes and the
remaining holders of Class 4 Claims purchased approximately $11.9 million or
24% of the Junior Notes.&#160; MatlinPatterson
had also agreed in advance that they would fund the entire $50.0 million should
others elect not to participate.&#160; The
holders of Class 4 Claims, who converted their claims to Class A Common Stock, upon emergence owned approximately 94% of
the Company based on common shares outstanding and approximately 97%, on an
if-converted basis assuming the Junior Notes were converted to Class A Common
Stock.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">MatlinPatterson and other
significant common shareholders have worked together for the better good of the
Company and all common shareholders during the bankruptcy process, the raising
of the new investment in the $50.0 million of Junior Notes and at the dates of
the exchanges of the Junior Notes for PIK Preferred Shares. &#160;The references in the Company&#146;s previous
Response Letters that referred to related parties, who owned on a combined
basis 76% of the Company&#146;s common stock, on an if-converted basis, and 93% of
the aggregate principal amount of the Junior Notes, at the dates of exchange,
only refers to MatlinPatterson and one other shareholder, James D. Bennett and
affiliated entities, whose holdings were identifiable by the Company only
through filings with the SEC. Although the remaining holders of Junior Notes at
the dates of exchange were not specifically identifiable by the Company, as
their holdings are in street name, the Company expects that a substantial
portion of those other Junior Note holders were also substantial holders of
Class A Common Stock at the dates of exchange.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Additionally, the membership on
the Company&#146;s Board of Directors is reflective of the influence exerted by the
aforementioned related entities. &#160;For
example, of the four independent directors of the Company, MatlinPatterson
appointed two directors, William B. Hewitt and Pedro A. Arias, and the members
of the unsecured creditors committee (excluding MatlinPatterson), which was
chaired by Bennett Management Corporation, appointed two directors: Eugene Linden,
who subsequently has been named Vice President and Chief Investment Strategist
for Bennett Management Corporation, and James A. Ovenden. &#160;These independent directors have been active and
influential members of the Company&#146;s Board of Directors and the various
committees of the Board on which they serve.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The exchange of the Junior
Notes for PIK Preferred Shares was unanimously approved by the Company&#146;s Board
of Directors and was led by MatlinPatterson with the intent of satisfying the
requirements of the Company&#146;s new lending group and the rating agencies, as
well as to provide an instrument with an equitable and balanced set of terms
acceptable for such an exchange. &#160;All
common shareholders significantly benefited from the restructuring and
recapitalization of the Company, which resulted in the Company refinancing its
then-existing $425.0 million bank debt from a fixed interest rate of 12.0% to a
variable rate, which at the date of refinancing had a</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">blended</font>
rate of approximately 5.5%. &#160;The benefits
to all common shareholders are clearly evidenced by the fact that annual cash
interest expense under the restructured Bank Facility was reduced in excess of
50.0%, or approximately $28.0 million per year, while also providing the
Company with more flexible bank terms, conditions and covenant requirements, as
well as allowing the management of the Company the financial freedom to focus
on managing and growing the business.</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Statement of Financial
Accounting Standards No. 57 &#147;Related Party Disclosures&#148; (&#147;SFAS No. 57&#148;),
generally includes within the definition of related parties, owners or others
who possess, either directly or indirectly, the&#160;
power to direct or cause the direction of the management and policies of
an enterprise through ownership, by contract or otherwise. &#160;Based on the controlling voting interests and
significant representation on the Company&#146;s Board of Directors maintained by
MatlinPatterson, and the combination of voting interests held by and the
ability to impact management and policies of the Company through Board of
Directors representation influenced by James D. Bennett, the Company believes
both of these to be related parties.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Additionally, the guidance
included in the footnote reference to Paragraph 20 of Accounting Principles
Board Opinion No. 26, states:&#160; &#147;Moreover,
extinguishment transactions between <u>related</u>  <u>entities</u> may be in
essence capital transactions.&#148;&#160; It is
worth noting that the term &#147;related entity&#148; is not the same as &#147;related party&#148;
referred to in SFAS No. 57 and such &#147;related entity&#148; term was not specifically
amended by the provisions of SFAS No. 57.&#160;
The Company believes that in the context of the exchange of the Junior
Notes for PIK Preferred Shares, in which all shareholders benefited, that the
transaction should be looked at in its totality and that recording the entire exchange
as a capital transaction is appropriate and reflects the essence of the
exchange.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accordingly, a) as MatlinPatterson
and James D. Bennett, as noted in previous Comment Letters, represented
approximately 76% of the Company&#146;s common stock on an if-converted basis, and
approximately 93% of the aggregate principal amount of the Junior Notes and
should be considered related parties; and b) the Company expects that a
substantial portion of those other Junior Note holders were also substantial
holders of Class A Common Stock at the dates of exchange; and c) there were no
securities or assets given up in the exchange in excess of those that the
Company was previously obligated to issue or pay (conversion price of $7.29 per
share was identical in both instruments); and d) significant economic benefits
were realized by the Company and all common shareholders; and e) as the restructuring
and recapitalization was led by the majority shareholder and Junior Note holder
and negotiated on behalf of all the remaining Junior Note holders and executed
for the benefit of the Company and all common shareholders, the Company
believes that the exchange of Junior Notes for PIK Preferred Shares was, in
substance, a related party transaction resulting in the recapitalization of the
Company and no part of the exchange should be treated as an
extinguishment.&#160; The Company, therefore,
reaffirms its belief that the exchange should be accounted for as entirely
among related entities and should be looked at in totality and not be bifurcated
or allocated in any manner.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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<div>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><i><u><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Describe the accounting for dividends on the PIK Preferred Shares
giving appropriate consideration to the provisions of the Bank Facility, with
respect to the limitation on cash dividends.</font></u></i></b><b><i><u><font style="font-style:italic;font-weight:bold;"> </font></u></i></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The dividends on the PIK
Preferred Shares accrue at an annual rate of 16% and, once declared, are
payable by the Company semiannually in arrears on each July 1<sup>st</sup> and
January 1<sup>st</sup> and are payable at the option of the Company; (i) through
the issuance of additional PIK Preferred Shares; (ii) in cash; or (iii) in a
combination thereof. &#160;Dividends are
cumulative and accrue from the date of the most recent dividend payment.&#160; The Company&#146;s Board of Directors is not
obligated by the terms of the PIK Preferred Shares to declare or pay dividends
on the PIK Preferred Shares in any of the aforementioned options, except at the
dates of maturity, optional redemption, or prior to payment of any dividends on
parity or common stock.&#160; Also, interest
does not accrue on any unpaid dividends.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Additionally, it should be
noted that if a holder converts the PIK Preferred Shares to Class A Common Stock prior to maturity, the holder of the PIK
Preferred Share is not entitled to accrued dividends from the date of last
payment; dividends are in effect forfeited.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company&#146;s Bank Facility
limited restricted payments, which includes cash dividends on all securities,
to $5.0 million in the aggregate, since the effective date of the Bank
Facility. &#160;Accordingly, absent an
amendment to the Bank Facility, at January 14, 2005, the date of the initial
dividend declaration by the Company&#146;s Board of Directors in the amount of
approximately $5.6 million, covering the accrued dividends through January 1,
2005, &#160;the Company&#146;s Board of Directors
would have been limited to the options of (i) payment of dividends in cash and
in-kind in the amounts of $5.0 million and&#160;
$0.6 million, respectively; (ii) payment of dividends in-kind in the
amount of $5.6 million; (iii) and the payment of dividends in cash in any
amounts less the $5.0 million with the difference paid in-kind.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company believes that it
could have obtained an amendment to its Bank Facility that would increase the
$5.0 million restricted payment limit and allow it to pay the entire amount of
the dividend declared on January 14, 2005 in cash had its Board of Directors
chosen that option. &#160;This belief can be
supported by the amendments to the Bank Facility negotiated in March 2005, at
no cost to the Company, increasing the combined 2005 and 2006 capital expenditure
limit by $50.0 million and increasing the cash available to optionally redeem
the PIK Preferred Shares by $15.0 million.&#160;
Accordingly, it is reasonable to assume that the Company could have
obtained an additional $0.6 million for the payment of cash dividends in
January 2005.&#160; At the extreme, the
Company could have elected to pay the dividend entirely in cash and address any
violation of its Bank Facility agreement with the bank, which was neither a
holder of the PIK Preferred Shares nor a party to the negotiations for the
exchange of the Junior Notes for the PIK Preferred Shares.&#160; That is, while the Company acknowledges the
impact of the Bank Facility on cash flow planning, there was no specific
contractual linkage between PIK Preferred Shares and the Bank Facility.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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<div>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Additionally, it should be
noted that the Bank Facility matures before the PIK Preferred Shares.
Accordingly, the Company theoretically could avoid the declaration of dividends
on the PIK Preferred Shares until subsequent to the expiration of the Bank
Facility.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Therefore, based on the
aforementioned factors, the Company continues to believe it is appropriate to
accrue dividends on the PIK Preferred Shares at the stated rate, until such
time, if any, that dividends are actually declared by the Company&#146;s Board of
Directors, at which time dividends will be valued at the estimated fair value
of the cash or other securities distributed. &#160;Accordingly, the Company believes that no
changes to its previous financial reporting of dividends on the PIK Preferred
Shares are required or necessary.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><b><i><u><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Document the Company&#146;s
quantification of additional non-cash interest on the Junior Notes</font></u></i></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company has conservatively
concluded that the additional non-cash interest that it should have recorded in
2004, with respect to interest paid in-kind on the Junior Notes,
amounted to approximately $1.7 million.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company also reaffirms its
position that it does not believe the adjustment to be material; accordingly,
the Company believes that a prudent investor would not consider the adjustment
as important, or be influenced in their evaluation of the Company by the
inclusion or exclusion of the adjustment.&#160;
Additionally, inclusion of the proposed adjustment would not
significantly alter the total mix of information available to the investor,
given that the Company has appropriately disclosed the terms of the Junior
Notes, their conversion privileges, and their exchange for PIK Preferred
Shares, for which the Company&#146;s Board of Directors has now announced its
decision to redeem such PIK Preferred Shares effective September 15, 2005.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">PGI reaffirms
all representations and acknowledgements made in the Original Response Letter, the
Second Response Letter, and the Third Response Letter.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Please call
the undersigned if you have any questions or comments regarding the foregoing.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="48%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:48.08%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="51%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:51.92%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Sincerely yours,</font></p>
  </td>
 </tr>
 <tr>
  <td width="48%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:48.08%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="51%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:51.92%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="48%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:48.08%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="51%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:51.92%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="48%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:48.08%;">
  <p style="margin:0in 0in .0001pt;page-break-after:auto;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="21%" valign="top" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:21.68%;">
  <p style="margin:0in 0in .0001pt;page-break-after:auto;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ WILLIS C. MOORE,
  III</font></p>
  </td>
  <td width="30%" valign="top" style="padding:0in 0in 0in 0in;width:30.24%;">
  <p style="margin:0in 0in .0001pt;page-break-after:auto;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="48%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:48.08%;">
  <p style="margin:0in 0in .0001pt;page-break-after:auto;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="51%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:51.92%;">
  <p style="margin:0in 0in .0001pt;page-break-after:auto;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Willis C. Moore, III</font></p>
  </td>
 </tr>
 <tr>
  <td width="48%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:48.08%;">
  <p style="letter-spacing:-.25pt;line-height:normal;margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="51%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:51.92%;">
  <p style="letter-spacing:-.25pt;line-height:normal;margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chief
  Financial Officer</font></p>
  </td>
 </tr>
 <tr>
  <td width="48%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:48.08%;">
  <p style="letter-spacing:-.25pt;line-height:normal;margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="51%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:51.92%;">
  <p style="letter-spacing:-.25pt;line-height:normal;margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="48%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:48.08%;">
  <p style="letter-spacing:-.25pt;line-height:normal;margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="51%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:51.92%;">
  <p style="letter-spacing:-.25pt;line-height:normal;margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.34%;">
  <p style="letter-spacing:-.25pt;line-height:normal;margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">cc:</font></p>
  </td>
  <td width="95%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:95.66%;">
  <p style="letter-spacing:-.25pt;line-height:normal;margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">James
  L. Schaeffer, Chief Executive Officer</font></p>
  </td>
 </tr>
 <tr>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.34%;">
  <p style="letter-spacing:-.25pt;line-height:normal;margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="95%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:95.66%;">
  <p style="letter-spacing:-.25pt;line-height:normal;margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Daniel
  L. Rikard., Vice President and General Counsel</font></p>
  </td>
 </tr>
 <tr height="0">
  <td width="32" style="border:none;"></td>
  <td width="327" style="border:none;"></td>
  <td width="162" style="border:none;"></td>
  <td width="226" style="border:none;"></td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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