Toronto, Ontario, Canada, 01 May 2009 -- (Marketwire) -- Fraser Papers Inc. (TSX:FPS) announced today it plans to curtail production of commodity groundwood paper grades on paper machine No. 6 at its paper mill in Madawaska, Maine, for an indefinite period starting the week of 04 May 2009. Fraser Papers will continue operating the remaining five paper machines in Madawaska. In 2008, paper machine No. 6 produced 69,000 tons of groundwood papers.

"The impact of a weak economy and a drop in advertising has led to falling demand for publishing papers and today this market segment is significantly oversupplied," said Jeff Dutton, president and COO of Fraser Papers. "In addition, we strongly believe that these poor market conditions are partly due to alternative fuel tax credits, which are providing an enormous incentive to certain of our competitors to produce at full capacity when they may not otherwise do so. We are calling on the U.S. government to close this outrageous tax loophole that unfairly benefits a select group of paper companies in the country," noted Dutton.

The company will continue to service all of its customers in the specialty printing and packaging segments and all customers of high-bright groundwood papers. The company will work with its commodity groundwood paper customers as they transition to other producers.

As a result of the production curtailments, 100 affected employees at the Madawaska operations will be laid off indefinitely. The company has given employees notice under the Workers Adjustment and Retraining Notice (WARN) Act.

Fraser Papers is an integrated specialty paper company that produces a broad range of specialty packaging and printing papers. The company has operations in New Brunswick, Maine, New Hampshire and Quebec. Fraser Papers is listed on the Toronto Stock Exchange under the symbol: FPS. For more information, visit the Fraser Papers Web site at www.fraserpapers.com.