Starboard Urges Wausau to Finance Tissue Expansion by Divesting Paper, Other Assets

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Starboard Value LP, New York, N.Y., USA, the largest shareholder of Wausau Paper Corp., Mosinee, Wis., with 7.5% of its outstanding common stock, this week said that it delivered a follow-up letter to the company's President and CEO Thomas J. Howatt, and the board of directors to convey its updated thoughts after having met with management and the board in late August. In the letter, Starboard stated its concern that, as currently conceived, Wausau's Tissue expansion project requires the company to take on significant additional debt, which in turn would dramatically increase the risk profile for the company's shareholders.

Starboard urged the company to finance the Tissue expansion project by divesting certain non-core assets, including the underperforming paper business, the company-owned timberlands, and its hydroelectric assets. Starboard believes this would allow Wausau to "unlock significant unrealized value for shareholders, remove the drain of the losses in the paper business, and at the same time significantly reduce risk by allowing Wausau to finance the Tissue expansion project without taking on additional debt.

Starboard also stated that it looks forward to engaging in productive and constructive dialog with the board and management of the company to change and improve the composition of the board to ensure that the best interests of all shareholders are properly represented. Finally, Starboard stated that it remains confident that Wausau is deeply undervalued and that opportunities exist to significantly improve value for shareholders based on actions within the control of management and the board.

"We recognize that the actions we are proposing are a departure from the board's current strategy and as such believe that changes to the composition of the board are required to best implement a change of strategy at Wausau for the benefit of all shareholders. In these challenging economic times, we believe the board must demonstrate the flexibility to explore alternative approaches to value creation and new, highly qualified directors are greatly needed to bring a fresh perspective into the boardroom. It is our hope and expectation to work constructively with you to change and improve the composition of the board to ensure that the best interests of all shareholders are properly represented. As such, we urge you and the board to engage with us as soon as possible regardingboard composition, director qualifications, and required skill sets so that we may propose director candidates who can be most helpful to the board in evaluating and executing on the opportunities we have proposed," the letter stated.