Resolute to Enter Tissue Market by 2017

US $

MONTRÉAL, June 1, 2015 /CNW Telbec/ - Resolute Forest Products Inc. (NYSE: RFP) (TSX: RFP) today announced a major decision to build a state-of-the-art facility to manufacture at-home, premium private label tissue paper, including bath and towel.

"This is an important step forward for Resolute as we execute on our growth strategy in a way that maximizes our ability to capture synergies and deliver superior value," said Richard Garneau, president and chief executive officer. "We have been studying this option to diversify into the tissue business for quite some time, and we will continue to look at opportunities to expand our presence in this growing market. Once fully operational, Resolute will produce high-quality products at one of the most competitive and efficient tissue operations. We will work to be a preferred supplier of major private label retailers by being the best at meeting their needs in customer service and the quality promise of their store brands."

Resolute's tissue paper machine and converting operations will be built at the Calhoun mill in Tennessee. This $270 million project represents the largest investment made by Resolute since 2010. At full capacity, the new tissue and converting facilities will produce approximately 60,000 metric tons per year of at-home, premium bath tissue and towel, focused on the growing private label market. With market feasibility studies, technology selection and project engineering nearly complete, construction is expected to begin shortly, with ramp-up expected to start in the first quarter of 2017. The tissue machine will use excess slush pulp over and above the additional dried market pulp capacity associated with the previously announced continuous pulp digester project.

Unlike many other paper products, tissue demand has grown steadily for the past 20 years, and it is expected to continue growing in the future. Today, the at-home segment accounts for the majority of all tissue sold in North America. Over the next ten years, most of the sector's growth is expected to be in the premium quality tier, Resolute's target market.

The decision to enter the tissue market and to build at its existing Calhoun site further capitalizes on Resolute's unique ability to capture synergies by:

  • integrating Resolute's high-quality, low-cost, excess slush pulp for 100% of the tissue machine's fiber requirement;
  • utilizing the full capacity of the tissue machine in a state-of-the-art converting operation;
  • taking advantage of capital expenditure and fixed cost efficiencies by extending existing infrastructure;
  • having access to an attractive and cost-competitive fiber basket; and
  • being ideally located to serve Eastern U.S. markets.

The Calhoun mill also benefits from a strong working relationship with local labor unions. This investment will create 105 new jobs at the mill, in addition to the 50 positions associated with the continuous pulp digester.

This investment has also received support under existing business development programs offered by the state of Tennessee, the Tennessee Valley Authority (TVA) and the mill's home community in McMinn County.

The tissue project is in line with Resolute's disciplined and financially attractive capacity-building investments in markets with future growth opportunities, such as: the 2012 acquisition of Fibrek Inc., which added 60% to the company's market pulp capacity; the Calhoun digester project, which will increase market pulp capacity by another 100,000 metric tons per year as of the end of this year; and the sawmill capacity initiatives, including the complete refurbishment of the Ignace, Ontario, sawmill and the construction of a new sawmill in Atikokan, Ontario, which together are expected to add 275 million board feet to the company's annualized lumber capacity.

"We want to thank Resolute for expanding in Tennessee and for the new jobs they're creating in Calhoun and McMinn County," said Governor Bill Haslam. "We think it says a lot when companies like Resolute, who can choose to do business anywhere in the world, continue expanding here, and today's announcement is another step toward our goal of becoming the No. 1 location in the Southeast for high quality jobs."

"Resolute and the jobs they provide make a major impact in Calhoun and McMinn County," stated Randy Boyd, Tennessee Department of Economic and Community Development Commissioner. "They've been a cornerstone of this community since 1954 and this investment is a big vote of confidence in the quality of our state's workforce. We're focused on giving Tennesseans access to quality education so companies like Resolute have a pipeline of talented workers to ensure success for decades to come."

"TVA congratulates Resolute Forest Products on its recent announcement of expansion plans involving major investment and adding more than 100 new jobs in the Calhoun community," said TVA Senior Vice President of Economic Development John Bradley. "We, along with the state of Tennessee and community economic development partners, celebrate Resolute's continuing business success and longstanding commitment to grow in the Tennessee Valley."

"We want to thank Resolute for their continued faith in the McMinn County workforce, made evident by this $270 million investment. We understand they had other options, but they chose us and for that we are humbled and truly grateful," added John Gentry, McMinn County Mayor. "Resolute continues to diversify and pivot with the changing market demands. We are indeed both fortunate and proud they will continue to call McMinn County home for many years to come."

Cautionary Statements Regarding Forward-Looking Information
Statements in this press release that are not reported financial results or other historical information of Resolute Forest Products Inc. are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. They include, for example, statements relating to: our ability to successfully penetrate the market and the expected benefits of the tissue project generally; the costs and project scheduling associated with the construction of the new tissue and converting facility; our business and operating outlook in the tissue markets, our assessment of those market conditions, and our prospects, growth strategies and the industry in general; and strategies for achieving our goals generally. Forward-looking statements may be identified by the use of forward-looking terminology such as the words "should," "would," "could," "will," "may," "expect," "believe," "anticipate," "attempt," "project" and other terms with similar meaning indicating possible future events or potential impact on our business or Resolute's shareholders.

The reader is cautioned not to place undue reliance on these forward-looking statements, which are not guarantees of future performance. These statements are based on management's current assumptions, beliefs and expectations, all of which involve a number of business risks and uncertainties that could cause actual results to differ materially. The potential risks and uncertainties that could cause Resolute's actual future financial condition, results of operations and performance to differ materially from those expressed or implied in the press release referred to above include, but are not limited to, developments in alternative media, which are expected to adversely affect the demand for some of our key products, and the effectiveness of our responses to these developments; the impact of any additional closure costs and long-lived asset impairment or accelerated depreciation charges; the impact of currency fluctuations on our competitive position, selling prices and manufacturing costs; the impact of global economic conditions; intense competition in the forest products industry and our ability to compete effectively; negative publicity, even if unjustified, which could have a negative impact on our brand and the marketability of our products; the highly cyclical nature of the forest products industry, which could impact the prices of and demand for our products which could result in small or negative profit margins, lower sales volumes and curtailment or closure of operations; the impact of contributions to our Canadian pension plans, which could be at levels significantly higher than expected; the impact of the terms of our outstanding indebtedness, which could restrict our current and future operations, particularly our ability to respond to changes and take certain actions; our ability to maintain adequate capital resources to provide for all of our capital requirements, which are substantial; any inability to successfully implement our strategies to increase our earnings power; the impact of changes in laws or regulations, including environmental regulations and liabilities and the impact of future regulation of our Canadian softwood lumber exports to the United States; any difficulties in obtaining wood fiber at favorable prices, or at all; the impact of changes in the cost of purchased energy and other raw materials, which could lead to higher manufacturing costs and reduce our margins; the impact of changes in political or economic conditions in Canada, the United States or other countries in which our products are manufactured or sold; physical and financial risks associated with climate change; the impact of any labor disputes; extreme weather conditions or natural or man-made disasters, which could disrupt our supply chain and delivery of our products; cyber security risks; the impact of acquisitions, divestitures or other strategic transactions we may pursue; and the potential risks and uncertainties set forth under Part I, Item 1A, "Risk Factors," of our annual report on Form 10-K for the year ended December 31, 2014.

About Resolute Forest Products
Resolute Forest Products is a global leader in the forest products industry with a diverse range of products, including newsprint, specialty papers, market pulp and wood products. The company owns or operates some 40 pulp and paper mills and wood products facilities in the United States, Canada and South Korea, and power generation assets in Canada. Marketing its products in close to 80 countries, Resolute has third-party certified 100% of its managed woodlands to at least one of three internationally recognized sustainable forest management standards. The shares of Resolute Forest Products trade under the stock symbol RFP on both the New York Stock Exchange and the Toronto Stock Exchange.

Resolute and other member companies of the Forest Products Association of Canada, as well as a number of environmental organizations, are partners in the Canadian Boreal Forest Agreement. The group works to identify solutions to conservation issues that meet the goal of balancing equally the three pillars of sustainability linked to human activities: environmental, social and economic.

Resolute is proud to be ranked by Corporate Knights as one of Canada's Best 50 Corporate Citizens for 2014. In addition, the company and Richard Garneau, president and chief executive officer, have been named to Canada's Clean50. And in January 2015, Resolute was awarded The New Economy magazine's global Clean Tech Award for best forestry and paper solutions.

 

SOURCE Resolute Forest Products Inc.

For further information: Investors: Rémi G. Lalonde, Vice President and Treasurer, 514 394-2345, ir@resolutefp.com; Media and Others: Seth Kursman, Vice President, Corporate Communications,Sustainability and Government Affairs, 514 394-2398, seth.kursman@resolutefp.com

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