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Kruger to Reassess its Corner Brook Operation

Corner Brook, Newfoundland, Canada, 18 May 2012 – Kruger Inc. today announced that it will reassess the viability of Corner Brook Pulp and Paper’s operations after one of four groups of pension plan members rejected the proposal to apply funding relief measures to its pension plan deficits.

Today, independent auditor Brian N. Hillier issued his final report showing the total number of objections received before the 17 May deadline from each group, as follows:

Pension Plan for Unionized Employees:
   > Active members (326): 177 objections (54.3%)
   > Retired members (617): 31 objections (5.0%)

Pension Plan for Non-Unionized Employees:
   > Active members (78): six objections (7.7%)
   > Retired members (218): seven objections (3.2%)

Under Newfoundland and Labrador legislation, in order for the relief measures to be applied, they cannot be opposed by more than one-third of members in each group (active and retirees). Consequently, with 54.3% of active unionized employees opposing the proposal, the relief measures cannot be applied to the unionized employees’ pension plan.

The relief measures were a crucial element in the mill’s strategy to improve its competitiveness and secure its future. In recent years, the Kruger Company has gone to great lengths to support its Corner Brook operation in a very challenging market afflicted by declining demand for newsprint, increasing energy costs, and the negative effects of a strong Canadian currency on exports.

In addition to these challenges, the Corner Brook mill has to contend with other Canadian paper mills that have competitive operating costs and benefit from the additional advantage of funding relief measures for their own pension plan deficits.

The company is disappointed with this outcome, especially considering efforts over the last few weeks to communicate with plan members to seek their support.

Founded in 1904, Kruger Inc. is a major producer of publication papers, tissue, lumber, and other wood products, corrugated cartons from recycled fibers, green and renewable energy, and wines and spirits. The company is also a leader in paper and paperboard recycling in North America. Kruger operates facilities in Quebec, Ontario, British Columbia, Newfoundland, and Labrador in Canada, and in the United States.


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