St. Marys Paper lays off 300

NEWS RELEASE

ST. MARYS PAPER

************************* St. Marys Paper Corp. announces indefinite production curtailment

St. Marys Paper Corp. announced today plans to curtail production of specialty Supercalendered paper grades on paper machine #5 at its groundwood pulp and paper mill in Sault Ste. Marie, Ontario for an indefinite period starting March 12, 2010.

Combined with the December 2009 shutdown of #3 and #4 paper machines, 300 direct employees at the St. Marys Paper Corp. operations will be laid-off indefinitely.

The company will be managing the curtailment process so that paper production can continue when market and business conditions warrant.

St. Marys has fought against difficult business conditions over the last several years including historically low product prices, a high Canadian dollar vs. US currency, recent increases in the mill’s key input costs, and the indirect subsidy of U.S. competitors as a result of the “Alternative Fuel Tax Credit Program” which was in place through calendar year 2009 in the US.

The company will take this opportunity to consider the recommendations contained in an updated marketing and sales study, to determine what changes are needed to its operational plan to ensure it is cost competitive, and to recalibrate its business plan to address the realities of the paper industry.

“Our goal continues to be to transition the business from simply a paper production facility to a paper production, green energy and bio-economy business. Significant money, effort and human energy have been invested into this vision which remains the medium and long term strategy for the business,” said Gord Acton, president of St. Marys.

The company will continue to operate its sales and customer service functions to support its customers through this curtailment period.

St. Marys Paper Corp. is a privately owned groundwood pulp and Supercalendered paper mill in Sault Ste. Marie, Ontario.

The company produces quality paper grades used mainly by magazine publishers and large retailing companies for high quality advertising inserts, flyers and catalogues.

For more information, visit the St. Marys Paper website.

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