Paper Industry January 2006 News

Jan. 2, 2006 - Groveton Paperboard on Friday (Dec. 30) informed its 108 workers that they are being laid off and the Groveton, New Hampshire plant closed. The plant produces corrugating medium.

According to a news report in The Caledonian-Record, management told employees that the plant would stop production at 7 a.m. Sunday.

"A lot of us were expecting this, now we can go on with life," Peter Morey told The Caledonian-Record. Morey, 57, has worked at the plant for 37 years.

In a written statement, plant manager Thomas Pitts said, "the decision to cease production is because of high energy and freight costs and the mill's limited operations capability."

The Groveton mill is jointly owned by International Paper and Smurfit-Stone Container. In July, IP announced that it would try to divest its interest in the mill.

In addition, The Caledonian-Record reported that the Groveton site is also home to Wausau Paper's fine paper operations, which will remain in operation.

David Atkinson, vice president of operations of the Wausau mill, said the two mills are in the same plant and share some of the same buildings, but are completely separate since the late 1960s.

FiberMark Completes its Financial Reorganization, Emerges from Chapter 11 as a Private Company

BRATTLEBORO, VERMONT, January 3, 2006—FiberMark, Inc., today announced that it has completed its financial reorganization and emerged from chapter 11 as a private company. Effective today, having completed all conditions for emergence, the company implemented its Plan of Reorganization, which had been approved by the U.S. Bankruptcy Court, District of Vermont, by order entered on December 5, 2005.

In conjunction with its emergence from chapter 11, the company also closed on its exit financing facilities. The package includes $80 million in revolving credit facilities for working capital and general corporate purposes underwritten by GE Commercial Finance for its German and North American operations, none of which was drawn at closing. The company also has approximately $18 million in cash.

Consistent with the Court-approved Plan, FiberMark's previously outstanding common stock will cease trading and has been cancelled. New common stock has been created under the Plan for issuance to certain unsecured creditors, including a small number of former bondholders, among them the company's new majority owner, investment firm Silver Point Capital, as well as a small number of trade creditors. As a now-private company, FiberMark is no longer required to file its financial statements with the Securities and Exchange Commission. Also effective today, FiberMark installed its new Board of Directors, as detailed in its Plan.

Also effective today, the Board of Directors announced that Alex Kwader has retired from his positions as the company's Chairman of the Board of Directors and Chief Executive Officer and will leave the company. The Board expressed its appreciation to Alex for his many years of service and his efforts in successfully guiding the company through the difficult bankruptcy process. The Board also announced that Thomas Weld will serve as Chairman of the Board of Directors, effective immediately. Dr. Walter Haegler will continue as Senior Vice President and Managing Director of FiberMark's German Operations and will report directly to Mr. Weld as Chairman of the Board of Directors. The Board is also pleased to announce that Brian Esher will serve as Chief Executive Officer of the company's North American and UK operations. Mr. Esher brings a wealth of related industry experience to this position having been a successful CEO in many other companies. Mr. Esher will be responsible for all aspects of the company's North American and U.K. operations and report to Mr. Weld as Chairman of the Board of Directors.

“This is a long-awaited and welcome day for the company, marking completion of our financial restructuring and our emergence from chapter 11,” said John Hanley, Chief Financial Officer. “We have met our objective of emerging as a stronger company strategically, operationally and financially, with a debt load appropriate for our business. I credit this achievement to the confidence and support of our creditors and vendors, the loyalty and support of our customers, and the professionalism and dedication of our employees, all of which were evident throughout this process. We look forward to delivering the results that underlay this confidence in FiberMark as we implement our fresh start balance sheet, operate on a more streamlined basis and continue to build our product lines and brands in support of our core markets: office products, technical specialties, publishing and packaging.”

FiberMark, headquartered in Brattleboro, Vt., is a leading producer of specialty fiber-based materials meeting industrial and consumer needs worldwide, operating 11 facilities in the eastern United States and Europe. Products include filter media for transportation and vacuum cleaner bags; base materials for specialty tapes, wallpaper, building materials, sandpaper and graphic arts applications; and cover/decorative materials for office and school supplies, publishing, printing and premium packaging.

This document contains forward-looking statements. Actual results may differ depending on the economy and other risk factors discussed in the company's Form 10-K/A as filed with the SEC on May 4, 2005, which is also accessible on the company's Web site.

After a detailed due diligence process Stora Enso has decided to withdraw from the previously announced project in consumer board production in China. A letter of intent to start a joint venture with Chinese Foshan Huaxin Packaging Co., Ltd. was signed in August 2005.

The decision to withdraw was taken after the due diligence process revealed that the project would not meet the profitability expectations set by Stora Enso because technical modification of the machine would be more challenging than initially estimated. The total cost of due diligence and withdrawal from the project is not material for Stora Enso.

The focus in China is now on developing the previously announced plantation project in Guangxi and publication paper feasibility study in Shandong. Stora Enso is exploring other possibilities of liquid packaging board production for the Chinese market.

HARTSVILLE, S.C., Jan. 6 /PRNewswire-FirstCall/ -- Sonoco (NYSE: SON), the global packaging company, today announced that it has completed the sale of its folding cartons business to Caraustar Industries, Inc. (Nasdaq: CSAR), it was announced today by Harris E. DeLoach, Jr., chairman, president and chief executive officer. The purchase price was not disclosed.

Sonoco's folding carton business produces a variety of paperboard cartons and packaging from its single manufacturing facility at 8800 South Boulevard in Charlotte, N.C. The facility has approximately 130 employees.

"Our small folding cartons business is no longer core to our growth strategy and supporting portfolio of products and services," said DeLoach. "Proceeds from the sale will be used to reduce debt." Sonoco acquired the folding carton operation as part of its acquisition of Engraph, Inc. in 1993.

Sonoco, founded in 1899, is a global manufacturer of industrial and consumer products and provider of packaging services, with more than 300 operations in 35 countries serving customers in 85 nations. Additional information about Sonoco is available at http://www.sonoco.com.

Sale of ownership stake in Nordic Paper

09 Jan. 2006, Norske Skog and M. Peterson & Søn A/S have reached an agreement for the sale of Nordic Paper, which has been owned 45 % by Norske Skog and 55 % by Peterson. The buyers consist of two people from Nordic Paper's current management team as well as external investors.
The sale will be booked in Q1 2006, and result in a small gain for Norske Skog.

Nordic Paper was established in October 2001, and is the world's largest producer of grease-proof paper grades. It has two mills in Norway, and one in Sweden. The company has 400 employees and sales in 2005 of NOK 825 million.

The financial effect will be included in Norske Skog's accounts for Q 4, 2005. The transaction is dependent upon a due diligence process and also approval from both companies' Board of directors. The transaction is expected to close by late February 2006.

Forestia is the Nordic region's leading producer of particleboard intended for the building and furniture sectors, and also produces I-beams for construction purposes. The company has 270 employees at three plants in Norway. Operating revenue is around NOK 600 million.

Byggma ASA is a public company with around 500 employees and activities within several building materials and home improvement sectors. Operating revenue after the acquisition of Forestia will be in the region of NOK 1.5 billion.

Tembec to Sell OSB Business

Montreal, Quebec, January 26, 2006 - Tembec Inc. ("Tembec" or the "Company") today announced that it has agreed to sell its oriented strandboard (OSB) business located at its facility in Saint-Georges-de-Champlain, Quebec to Jolina Capital Inc. ("Jolina") for total consideration of $98 million, $88 million of which will be payable on closing and the balance payable in the form of a $10 million interest-bearing note, repayable in equal annual installments over a five-year period. Jolina is a company controlled by Mr. Emanuele (Lino) Saputo, a significant shareholder of Tembec and a nominee for election as a Director of the Company.

The transaction is subject to customary closing conditions, including regulatory approval, and is expected to close before the end of Tembec’s current fiscal quarter ending March 25, 2006.

The transaction was reviewed by a Special Committee of the Board comprised entirely of independent directors, which recommended that the Board approve the transaction. The Board, after further review, determined that the terms of the transaction are reasonable in the circumstances and that the sale is in the best interest of shareholders.

This sale is consistent with Tembec’s earlier statements that it was pursuing several initiatives aimed at generating between $100 and $150 million in additional funds. "The Saint-Georges OSB mill has been a good facility for Tembec. However, it is also a business that for our Company is non-core," said Frank Dottori, President and CEO. "It represents a small part of both the Company’s overall sales and those of our Forest Products Group. It is a good transaction for both parties."

Incoming President and CEO James Lopez also commented positively on the transaction. "It also comes at an opportune time for Tembec. We had indicated earlier that we were reviewing our asset base and that cash generation initiatives based on non-core assets and other areas could be expected. The transaction announced today is consistent with that plan," Mr. Lopez said. "The terms of the transaction and the ability of Jolina to provide timely closing are key for Tembec. We anticipate that there will be other similarly positive initiatives as the year progresses."

The transaction constitutes a "related party transaction" under applicable securities regulatory requirements and Tembec has relied upon applicable exemptions from the valuation and minority shareholder approval requirements that the Board of Directors and the Special Committee have determined are available.

Tembec is a leading integrated forest products company, with extensive operations in North America and France. With sales of approximately $3.8 billion and some 10,000 employees, it operates 50 market pulp, paper and wood product manufacturing units, and produces silvichemicals from by-products of its pulping process and specialty chemicals. Tembec markets its products worldwide and has offices in Canada, the United States, the United Kingdom, Switzerland, China, Korea and Chile. The Company also manages 40 million acres of forest land in accordance with sustainable development principles and has committed to obtaining Forest Stewardship Council (FSC) certification for all forests under its care. Tembec’s common shares are listed on the Toronto Stock Exchange under the symbol TBC. Additional information is available at www.tembec.com

Norske Skog sells Catalyst Paper shares

30 Jan. 2006, Norske Skog has agreed to sell all its 63 million shares, corresponding to a 29.4% holding, owned by the Norwegian-based company in Canada's Catalyst Paper. Proceeds are expected to be in the region of NOK 1,080 million and yield an accounting loss of roughly NOK 730 million on the book value. A provision for the loss will be made in the accounts for the fourth quarter of 2005.

The shares will be acquired in a transaction in Canada by a syndicate headed by a subsidiary of UBS Securities Canada Inc (UBS) at the agreed price of CAD 2.98 each. Closing of this transaction is expected in mid-February.

The Catalyst shares have not been registered under the United States Securities Act of 1933 and may not be offered or sold within the United States except pursuant to an exemption from the registration requirements of that Act.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Catalyst shares in any jurisdication in which such offer, solicitation or sale would be unlawful.

Norske Skog's gearing (net interest-bearing debt divided by equity) and certain other key figures will be improved by the disposal of the Catalyst Paper shares. The accounting loss has no effect on tax cost.

"Even if this transaction causes a significant loss, it is the right thing to do for Norske Skog, says Jan Oksum, president and CEO of Norske Skog. "Through this, we will improve our possibilites to strengthen our activities in Europe, Asia, Australasia and South America."

Norske Skog originally held 50.8% of the Catalyst Paper shares, acquired through the purchase of Fletcher Challenge Paper in 2000. The company was then called Fletcher Challenge Canada.

Norske Skog has since then successively reduced its holding to 29.4%. Catalyst Paper ranks today as the third largest manufacturer of publication paper in North America, with four mills located close to each other in British Columbia.