PaperlinX to Exit Tasmanian Papermaking Operations

PaperlinX Ltd., Australia, announced this past week that, following a comprehensive 10-month review of opportunities for its Tasmanian paper manufacturing operations, it has decided to close the company's Wesley Vale operation and part of the operations at Burnie. However, the company is continuing to explore a sale of the remaining operations at Burnie as an alternative to its complete closure. All approvals needed for this decision have been granted. On completion of this exit, PaperlinX will be solely a merchant company, with businesses distributing paper, sign, display, and graphics materials, as well as industrial packaging to a wide range of customers in Australia, New Zealand, and Asia, Europe, and North America.

The exit will occur in two stages, with the first expected to be completed by the end of March 2010, and the second expected to be completed by the end of June 2010. In the event that both sites are ultimately closed in full, the overall net cash cost is expected to be around $10 - 20 million. The total cash closure costs before recovery of working capital and the sale of assets would be around A$120 million, including redundancies and environmental remediation costs over the full course of the exit.

Stage 1 of the exit will involve the closure of the No. 4 paper machine at Burnie (B4) and the No.11 and No. 12 machines at Wesley Vale (WV11 and WV12) by the end of March 2010. The Conversion Department of the Wesley Vale Mill will remain operational until all work in progress is converted (expected to take 4 - 6 weeks post closure of WV12). Actual closure dates will be determined following discussions with relevant stakeholders including customers.

Stage 2 will involve either the sale of the balance of the Burnie Mill, including the No. 10 paper machine (B10) and converting operations, or closure, which is expected to complete by the end of June 2010. PaperlinX continues to explore the potential for a sale with discussions ongoing.

As a result of the closures, approximately 252 Tas Paper jobs will be lost at the Wesley Vale and Burnie mills over coming months; while approximately 170 Tas Paper jobs will be maintained at Burnie pending the outcome of the sale discussions.