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Catalyst Paper Labor Agreement Loses to One Local

Richmond, British Columbia, Canada, 29 January 2012 – Catalyst Paper Corporation (TSX: CTL) advised today that in votes taken this weekend, one union local at the Crofton mill voted down a new labor agreement while the other union local voted to support a new labor agreement. Unanimous ratification of a new labor agreement by 31 January 2012, is a condition of the company’s recapitalization transaction announced on 14 January 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 labor agreement, joining locals 1, 76, 592, and 686, which had earlier ratified the agreement to take effect at expiry of the current agreement 30 April 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 labor 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," he said..

“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.

The company 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 31 January 2012. In addition, implementation of the plan of arrangement is subject to approval by not less than 66⅔% 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.

For further details on the recapitalization, refer to the company’s news release dated 14 January 2012, and the filings of the company available on SEDAR (www.sedar.com), EDGAR (www.sec.gov) and the company’s Web page (www.catalystpaper.com). Investors who have questions about the recapitalization may contact Nancy Turner of Perella Weinberg Partners, the financial advisor for Catalyst Paper, at 415-671-4550.

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, Canada, and Arizona, USA, Catalyst has a combined annual production capacity of 1.9 million metric tons. The company is headquartered in Richmond, British Columbia, Canada, and its common shares trade on the Toronto Stock Exchange under the symbol CTL. Catalyst is listed on the Jantzi Social Index and is ranked by Corporate Knights magazine as one of the 50 Best Corporate Citizens in Canada.


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