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Port Townsend Paper Corp. Files For Chapter 11 Over Senior Notes
Port Townsend, Washington, USA, 29 January 2007 -- /PRNewswire/ -- PT Holdings Company, Inc., the parent company of Port Townsend Paper Corporation (PTPC), announced today that the company and its U.S. affiliates have filed for protection under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the Western District of Washington. The company's Canadian subsidiaries are not part of the filing.

Through the Chapter 11 cases, the company will seek to implement an agreement in principle it has reached with members of an ad hoc committee holding more than 70% in principal amount of the company's 11% Senior Secured Notes due 2011 on the terms of a consensual Chapter 11 plan of reorganization.

The agreement in principle is reflected in a term sheet filed with the Bankruptcy Court in connection with the Chapter 11 cases. The Term Sheet provides that holders of the Senior Secured Notes would receive, on a pro rata basis, in exchange for their allowed secured claims against the company (inclusive of principal and interest accrued through the petition date of the Chapter 11 cases):
(i) newly issued notes in a principal amount not to exceed $75 million and
(ii) 100% of the newly issued shares of common stock of reorganized PTPC, subject to dilution on account of the Management Equity Plan (as defined in the Term Sheet) and warrants provided to existing holders of common equity to purchase 5.25% of the new common stock with a strike price equivalent to a USD 170 million total enterprise value.

Upon emergence from Chapter 11, in accordance with the Term Sheet, the company anticipates that it will have less than USD 100 million of funded indebtedness, representing a reduction of at least USD 50 million from 2006 year end. Additional terms and conditions of the reorganization will be outlined in a disclosure statement, which will be sent to holders entitled to vote on the plan of reorganization after it is approved by the Bankruptcy Court.

John Begley, Port Townsend Paper Corporation president and chief executive officer, stated, "The balance sheet restructuring will significantly enhance our financial strength and operational flexibility, which will benefit all of our stakeholders. We expect to improve our short- and long-term liquidity, allowing us to better serve our customers, to meet our debt service and working capital requirements, and to fund capital expenditures for new programs."

Copies of court documents filed in connection with the Chapter 11 cases are available via the Bankruptcy Court's Web site at www.wawb.uscourts.gov. A PACER password is required to access the documents via the court's Web site.

The Port Townsend Paper family of companies employs approximately 800 people and annually produces more than 320,000 tons of unbleached Kraft pulp, paper, and linerboard at its mill in Port Townsend, Washington. The company also operates three Crown Packaging Plants, two BoxMaster Plants, and the Crown Creative Group, located in British Columbia and Alberta, Canada.

Source: PT Holdings Company, Inc.

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