Five of Six Unions Vote in Favor of Catalyst Paper's New Labor Deal

Jan. 30, 2012 - Catalyst Paper said five of six unions have voted in support of a new labor agreement. However, one union, local 2 at its Crofton mill, voted down the new deal.

Unanimous ratification of a new labor agreement by January 31, 2012 is a condition of the company's recapitalization transaction announced on January 14, 2012.

Local 2 of the Pulp, Paper and Woodworkers Union of Canada (PPWC) voted down the new labor agreement at a ratification meeting on Saturday. PPWC represents approximately 380 employees at the Crofton pulp mill.

On Friday, Communications, Energy and Paperworkers Union of Canada (CEP) local 1132 voted to support the new labour agreement, joining locals 1, 76, 592 and 686 which had earlier ratified the agreement to take effect at expiry of the current agreement April 30, 2012.

The CEP locals represent 700 employees at the company's Crofton, Powell River and Port Alberni paper mills. Details of the proposed agreements are not being disclosed at this time.

"We started discussions with all parties early knowing that difficult choices lay ahead and that decisions could not be taken lightly to successfully close a very complicated but vital restructuring process," said Kevin J. Clarke, President and CEO. "With five union locals ratifying the new labour agreement — a commitment to our company that is very much appreciated — it is disappointing that we could not gain support of the sixth union local.

"Despite this setback, it's important to recognize that a majority of employees are making daily contributions that are helping our company build a bridge to the future. A goal we all share is to put our company on stronger financial footing which helps keep machines running, helps save local jobs and supports mill communities — not just for weeks or months but for years," he said.

Catalyst Paper previously announced that it has reached an agreement with certain noteholders for their support of a recapitalization through a plan of arrangement under the Canada Business Corporations Act. The agreement is subject to termination if a new labor agreement with all union locals at the company's Canadian mills has not been ratified by January 31, 2012.

In addition, implementation of the plan of arrangement is subject to approval by not less than 66% of the votes cast by holders of each of the Senior Secured Notes and the Senior Notes at meetings to be held to consider the arrangement, the approval of the Supreme Court of British Columbia and receipt of all necessary regulatory and stock exchange approvals.

Catalyst Paper manufactures diverse specialty mechanical printing papers, newsprint and pulp. Its customers include retailers, publishers and commercial printers in North America, Latin America, the Pacific Rim and Europe. With four mills, located in British Columbia and Arizona, Catalyst has a combined annual production capacity of 1.9 million tonnes. The company is headquartered in Richmond, British Columbia, Canada.

SOURCE: Catalyst Paper Corp.