Fraser Papers Inc.
TSX : FPS

Fraser Papers Inc.

May 01, 2009 10:30 ET

Fraser Papers Announces Temporary Shutdown of Paper Machine

TORONTO, ONTARIO--(Marketwire - May 1, 2009) - Fraser Papers Inc. ("Fraser Papers" or the "Company") (TSX:FPS) announced today it plans to curtail production of commodity groundwood paper grades on paper machine #6 at its paper mill in Madawaska, Maine for an indefinite period starting the week of May 4, 2009. Fraser Papers will continue operating the remaining five paper machines in Madawaska. In 2008, paper machine #6 produced 69,000 tons of groundwood papers.

"The impact of a weak economy and a drop in advertising has led to falling demand for publishing papers and today this market segment is significantly oversupplied," said Jeff Dutton, President and COO of Fraser Papers. "In addition, we strongly believe that these poor market conditions are partly due to Alternative Fuel Tax Credits which are providing an enormous incentive to certain of our competitors to produce at full capacity when they may not otherwise do so. We are calling on the U.S. Government to close this outrageous tax loophole that unfairly benefits a select group of paper companies in the country," noted Dutton.

The Company will continue to service all of its customers in the specialty printing and packaging segments as well as all customers of high-bright groundwood papers. The Company will work with its commodity groundwood paper customers as they transition to other producers.

As a result of the production curtailments, 100 affected employees at the Madawaska operations will be laid off indefinitely. The Company has given employees notice under the Workers Adjustment and Retraining Notice ("WARN") Act.

Fraser Papers is an integrated specialty paper company that produces a broad range of specialty packaging and printing papers. The Company has operations in New Brunswick, Maine, New Hampshire and Quebec. Fraser Papers is listed on the Toronto Stock Exchange under the symbol: FPS. For more information, visit the Fraser Papers web site at www.fraserpapers.com.

Note: This press release contains forward-looking information and forward-looking statements within the meaning of Canadian provincial securities laws. These forward-looking statements include, among others, statements with respect to production curtailments, continuing operation of paper machines, commitments to customers and employee lay-offs. The words "plan", "expect", "will", "continue", variations of those words, similar words and other expressions which may be predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those set forth in the forward-looking statements include general economic conditions, pulp and paper pricing, changes to government policy, unforeseen production issues, demand for the Company's products, staffing requirements at the Company's operations and other risks detailed from time to time in the documents filed by the Company with the securities regulators in Canada. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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