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Catalyst Paper Clarifies Media Reports on Nature of Recapitalization Process

January 18, 2012
RICHMOND, BC—Jan. 18, 2012—Catalyst Paper announced it has applied for and received an initial court order under the Canada Business Corporations Act (CBCA) to commence the consensual restructuring process with its noteholders announced on Jan. 14, 2012. Contrary to certain media reports, this is not a bankruptcy proceeding. The company is also seeking recognition of these proceedings with the U.S. Court in order for the Canadian order under the CBCA to be recognized in the United States.

The company will continue to operate and satisfy its obligations to trade creditors, customers, employees and retirees in the ordinary course of business during this restructuring process.

Further information concerning the recapitalization is contained in the Agreement, a copy of which is available on SEDAR (www.sedar.com), EDGAR (www.sec.gov) and the company’s web page (www.catalystpaper.com). Investors who have questions about the recapitalization may contact Nancy Turner of Perella Weinberg Partners, the financial advisor for Catalyst Paper, at 415-671-4550.

The following is the Catalyst’s original recapitalization announcement:

Jan. 14, 2012—Catalyst Paper announced today that the company has entered into an agreement (the Agreement) for a recapitalization transaction that will result in a significantly reduced debt burden.

Catalyst Paper’s management team and Board of Directors believe that the proposed recapitalization offers substantial benefits to Catalyst Paper, including:
  • enhanced flexibility to respond to the downturn in the market for paper, newsprint and pulp;
  • improved capital structure: $315.4 million reduction in debt; and
  • reduced cash interest expense: up to $25.5 million reduction in annual cash interest expense ($37.0 million if paid in kind to the maximum extent possible).

Catalyst Paper’s management team and board of directors believe that, in view of the challenges and risks to the company’s ongoing viability created by the current paper, newsprint and pulp markets and the company’s existing capital structure, the recapitalization is the best alternative available to the company and its noteholders, shareholders and other stakeholders. The new capital structure will provide a stronger financial base for the execution of the company’s operating strategy and enhance the long-term value of the company.

“This transaction addresses the company’s capital structure and interest payment obligations, extending its operating horizon,” said Dallas Ross, director and chair of the Board’s independent committee overseeing the noteholder negotiation. “Based on extensive management analysis and independent review of options related to preservation of enterprise value, the Board of Directors is unanimous in its recommendation that all shareholders and noteholders support this transaction.”
 

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