Fortress Paper Pulp Mill Project Affected by Union Workers Walkout

Oct. 25, 2011 - Fortress Paper Ltd. announced that an unexpected walkout by unionized employees of the contractors engaged by the Company on the dissolving pulp conversion and cogeneration projects has resulted in the temporary suspension of construction activities at its Fortress Specialty Cellulose Mill in Thurso, Quebec. Although the construction unions have not issued an official statement, Fortress Paper understands that the walkout is a result of the opposition to a bill proposed by the Quebec Government and not as a result of disputes with the Company or their employers.

The walkout is affecting construction projects across the Province of Quebec. Fortress Paper is exploring available options to resume construction work at the Fortress Specialty Cellulose Mill, and is in discussions with its contractors and government representatives with a view to resolving this situation as soon as practicable, Fortress Paper said.

Fortress management remains hopeful that the issues relating to this walkout can be resolved shortly, with the result that the re-start of the Fortress Specialty Cellulose Mill and the commencement of dissolving pulp production that was planned for early November 2011 would only experience a minor delay. However, as the duration or outcome of the walkout is out of management's control and cannot be reasonably predicted, a further delay remains a possibility.

Fortress Paper said that it will provide updated guidance in this regard following the resumption of construction work at the mill.

Fortress Paper is a leading international producer of security and other specialty papers and products. Fortress operates three mills, the Landqart Mill located in Switzerland, the Dresden Mill located in Germany and the Fortress Specialty Cellulose Mill located in Quebec, Canada. Fortress Paper's security papers include banknote, passport and visa papers and its specialty papers include non-woven wallpaper base products, and graphic and technical papers. Fortress Paper's pulp business includes specialty pulp produced at the Fortress Specialty Cellulose Mill, which is currently in the process of converting this capacity into dissolving pulp production along with the construction of a biomass based cogeneration plant.

SOURCE: Fortress Paper Ltd.