Marcal Paper Mills, Inc. Settles Claim With Environmental Protection Agency

Elmwood Park, New Jersey, USA, 26 July 2007 --/PRNewswire/-- Marcal Paper Mills, Inc., has filed a motion to approve the settlement, without admitting any wrongdoing, reached with the United States on behalf of the U.S. Environmental Protection Agency (EPA), the Department of the Interior, and the Department of Commerce on all of the elements of its claim.

"We are pleased that we could work together to quickly settle this claim for the benefit of all parties and cut short an otherwise protracted and costly legal battle with the EPA to prove the company's innocence. This settlement not only is a very positive development in Marcal Paper's emergence from Chapter 11, but also confirms Marcal Paper's outstanding reputation as an environmentally responsible company," said Nicholas Marcalus, ccompany chairman and CEO.

"This settlement recognizes that Marcal Paper, the largest recycler of paper in New Jersey, takes its responsibility to the community and the environment seriously. It also recognizes that the company is in compliance with all required state and federal permits to operate the facility in Elmwood Park. With this matter behind us, we can focus our full attention on the company's restructuring," added Marcalus.

Under the terms of the agreement, Marcal Paper has agreed to a settlement of the claim at USD 3 million. This settlement will be classified as an unsecured prepetition claim, subject to the terms of the Plan of Reorganization already developed by the company with the support of its major creditors.

The hearing on the adequacy of the company's Disclosure Statement, which explains the details of the company's proposed Plan of Reorganization, is scheduled by the Bankruptcy Court for 27 July 2007.

About Marcal Paper Mills

Marcal, founded in 1932, is a privately-held, fourth generation family business. It employs more than 900 people in its Elmwood Park, New Jersey, and Chicago, Illinois, manufacturing operations. The company produces more than 160,000 tons of finished paper products, including bath tissue, kitchen towels, napkins, and facial tissue. Its products are distributed to retail outlets for home consumption and to distributors for away-from-home use in hotels, restaurants, hospitals, offices, and factories. For more than 50 years, Marcal has been a leader in recycling recovered paper as a source of high-grade cellulose fiber for manufacturing tissue products. Each year, Marcal recycles more than 200,000 tons of recovered paper. Marcal's slogan, "Paper from Paper, Not from Trees,"(R) symbolizes the commitment of the company to sustainable manufacturing. The Natural Resources Defense Council has awarded Marcal's environmentally friendly products its highest possible ratings.

Source: Marcal Paper Mills, Inc.