Polyair Inter Pack Inc.

Polyair Inter Pack Inc.

October 17, 2006 15:21 ET

Polyair Inter Pack Inc. Announces Financing for its Packaging Business

Canadian pool subsidiary obtains CCAA protection

TORONTO, ONTARIO--(CCNMatthews - Oct. 17, 2006) - Polyair Inter Pack Inc. ("PPK" or the "Company") (TSX:PPK)(AMEX:PPK) announced today two significant developments toward meeting its previously announced objective to focus on its core packaging business.

PPK has entered into an agreement with Power Capital (Americas) Ltd. whereby one of its affiliates will lend US$5,000,000 to certain packaging subsidiaries of PPK (each a "Borrower"). The debentures will mature in 36 months and will be pre-payable at any time without penalty. The debentures will be secured by the assets of the Borrowers ranking junior only to PPK's existing working capital facility and term debt. The debentures will carry the right to acquire up to 20% in total of the equity of the Borrowers for nominal consideration. The agreement requires completion of the transaction by November 15, 2006 and is subject to the execution of definitive documentation and other customary conditions.

The Company also announced that its wholly owned Canadian subsidiary, Cantar Pool Products Limited ("Cantar") has obtained an Order under the Companies' Creditors Arrangement Act ("CCAA") from the Ontario Superior Court of Justice today. The Order grants an initial 30-day stay of proceedings to Cantar to provide it with an opportunity to propose a Plan of Arrangement to its creditors.

A. Farber & Partners Inc. has been appointed Monitor under the Order. The Court also made Orders allowing Cantar to complete the previously announced sale of its pool equipment business and to allow the sale of remaining equipment associated with the above-ground pools business. The CCAA documents may be accessed at the Monitor's website at www.afarber.com.

The Order does not affect Polyair's packaging business which operates as a stand-alone business through separate subsidiaries and it will continue to operate in the normal course.

Mr. Victor D'Souza, interim Chief Executive Officer of the Company, stated that "This financing will assist in the restoration of the liquidity of the Company's packaging subsidiaries and will enable the Company to focus on this core business."

Polyair Inter Pack Inc. (www.Polyair.com) in its Polyair Packaging division manufactures and distributes a wide range of protective packaging products. These products are sold to distributors and retailers across North America. The Company operates nine manufacturing facilities, seven of which are in the US where it generates the majority of its sales.

Certain information included in this release contains statements that are forward looking. Such forward-looking information involves risks and uncertainties that could significantly affect anticipated results in the future. We caution that forward-looking statements should not be regarded as a representation by the Company that the future plans, estimates, or expectations contemplated by us will in fact be achieved. Please refer to the Company's reports filed on SEDAR (www.sedar.com) and EDGAR (www.sec.gov/edgar.shtml) for a description of the business environment in which it operates and important factors that may materially affect its results. Polyair Inter Pack Inc. is not under any obligation, and expressly disclaims any such obligation, to update or alter its forward-looking statements.

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