Katahdin Paper to Idle SC Paper Machine in Maine

May 30, 2008 - Katahdin Paper Company LLC yesterday said that it will indefinitely shutdown a 180,000 ton per year supercalendered paper machine at its mill in Millinocket, Maine.

The closure is expected to take effect July 28, 2008 and is for an indefinite period. About 208 workers will be impacted by the shutdown.

Katahdin's directory papers business (including two directory paper machines and related pulp and energy operations located in East Millinocket, Maine) is unaffected by this announcement.

"Despite continued operational improvement at the mill since its re-start in 2004, sharply rising input costs have prevented us from creating a sustainable business at Millinocket," said Peter Gordon, president and CEO of Fraser Papers Inc., manager of the Katahdin paper operations.

"The root cause for today's announcement is record high oil prices which have doubled our fuel costs over the last twelve months. In 2007, the Millinocket mill consumed over 400,000 barrels of oil to generate heat and steam for the paper-making process. As with many other paper mills which are dependent on fossil fuels, a secure and more economic energy source, combined with significant conservation, is required for this operation to be viable in today's business environment," Gordon said.

The facilities will be maintained in a manner in which operations can re-start on an expedited basis should business conditions improve, Katahdin noted.

Katahdin added that it will be working with the Office of the Governor to explore all options that could further resolve the challenges being faced by the mill.

SOURCE: Katahdin Paper Company LLC

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