Neenah Paper to close Housatonic mill in Mass.

March 8, 2007 - Neenah Paper yesterday said that it plans to close permanently the Housatonic mill, located near Great Barrington, Massachusetts, which is one of the fine paper mills Neenah acquired in the recent purchase of Fox River Paper.

The Housatonic mill has an annual production capacity of approximately 15,000 tons per year. Neenah said it expects to shut-down manufacturing operations by the end of the second quarter.

Housatonic was the smallest of four fine paper plants Neenah acquired as part of the Fox River acquisition, the company said.

"This is a necessary part of our plan to integrate Fox River in a manner that will result in a competitive long term cost structure for our combined operations," said Sean Erwin, Chairman and CEO. "The Housatonic mill was not profitable due to its small size, cost structure and pricing of many of the grades made there."

"Selected products made at Housatonic will be produced at our other sites, where we have available capacity and the ability to make these grades at a lower cost," Erwin said. "We realize this decision will result in hardship for our employees at Housatonic and the local community and will be working to assist them through this difficult transition."

Neenah expects to incur one-time cash costs of approximately $3 million for severances and other charges related to the closure.

Ongoing annual savings of approximately $5 million are expected from the elimination of fixed costs and increased manufacturing efficiencies, although these savings would not be realized immediately due to product transition costs expected to be incurred in 2007, the company said.

SOURCE: Neenah Paper

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