Sappi Fine Paper North America to Permanently Close Muskegon Mill




    BOSTON and JOHANNESBURG, Aug. 26 /CNW/ -- Sappi Fine Paper North America
(NYSE:   SPP) today announced that it will permanently cease operations at its
coated fine paper mill in Muskegon, Michigan.  The closing will affect
approximately 190 salaried and hourly Muskegon employees, who have been on
furlough since the suspension of operations at the mill, which was announced
in March 2009. Prior to that suspension, Sappi Fine Paper North America
operated a single paper machine at the site with an annual production capacity
of 170,000 metric tons.
    

    (Logo: http://www.newscom.com/cgi-bin/prnh/20090826/NE66332LOGO )

    
    Sappi will record a charge of approximately US$30 million in the fourth
financial quarter in respect of separation and other closure costs. Of this
amount, an estimated US$10 million relates to non-cash charges. The fixed
assets are fully impaired.

    "The global economic downturn has resulted in very weak demand for coated
fine paper worldwide.  In North America, industry conditions remain very
challenging, with current year to date shipments of coated wood free paper
down 32 percent from 2007 levels and only modest recovery forecast for 2010,"
said Ralph Boettger, Chief Executive Officer of Sappi Limited, the parent of
Sappi Fine Paper North America. "The permanent closure of the Muskegon Mill,
while an extremely difficult decision to make, is necessary to ensure that we
remain competitive in today's global marketplace. This decision is in line
with our commitment to substantially improve Sappi's profitability and returns
in all our businesses."

    "We understand the hardship this decision creates for our employees at
the Muskegon Mill.  We will be providing separation benefits and job placement
services for our salaried employees and will be commencing discussions with
union representatives regarding the terms of hourly employees' separation
benefits," said Mark Gardner, President and CEO of Sappi Fine Paper North
America. "Our workforce at Muskegon was very dedicated, achieving record
productivity and safety performance in the last year of operation.
Unfortunately, the scale of the site made it difficult to successfully compete
against larger paper mills throughout the world. We will be retaining an
adviser to seek purchasers for the mill not engaged in the manufacture of
coated printing and writing paper."

    The cessation of operations at the Muskegon Mill will not affect the
product lines offered by Sappi Fine Paper North America. Since March, products
previously made at Muskegon have been and will continue to be manufactured at
the Company's other paper mills in Skowhegan, Maine and Cloquet, Minnesota,
including Opus PS, a high bulk to weight web and sheet offering with excellent
surface quality and optics.

    "We remain committed to meeting the needs of our customers for high
quality, strongly branded coated products with outstanding service from our
mills located in Maine and Minnesota, as well as Western Europe," Gardner
said. "Even with the suspension of operations at the Muskegon Mill, we have
continued to increase our market position and gain new customers in this weak
environment through new product line extensions and product improvements. With
our ongoing focus on customer service, cash generation and good cost
management, Sappi Fine Paper North America continues to demonstrate its
leadership in our market segment."
    

    About Sappi Fine Paper North America
    
    Sappi Fine Paper North America (SFPNA) is a leading North American
producer of coated fine paper used in premium magazines, catalogues, books and
high-end print advertising.  Headquartered in Boston, Massachusetts, Sappi
Fine Paper North America is known for innovation and quality. Its brand names,
including McCoy, LOE, Opus, Somerset and Flo, are some of the industry's most
widely recognized and specified. SFPNA is a division of Sappi Limited (NYSE,
JSE, LSE), a global company headquartered in Johannesburg, South Africa, with
manufacturing operations on four continents in 10 countries, sales offices in
50 countries, and customers in over 100 countries around the world. Learn more
about Sappi Fine Paper North America at: www.sappi.com/na. For the media kit
and past press releases, visit the "About Us" section of the Web site.
    

    About Sappi Limited
    
    Sappi, a global pulp and paper company headquartered in Johannesburg,
South Africa, is the world's leading producer of coated fine paper used in the
production of glossy magazines, calendars, annual reports and brochures. The
company has significant businesses in forests, pulp, coated speciality paper,
packaging grades, uncoated fine paper and newsprint in Africa. Sappi is also
the world's largest producer of chemical cellulose (dissolving pulp) used in
the manufacture of viscose staple fibre and consumer and pharmaceutical
products. With over 15,000 employees worldwide and production facilities in
nine countries on four continents, Sappi has customers in over 100 countries
and is listed on the Johannesburg Securities Exchange (SAP), the New York
Stock Exchange (SPP) and the London Stock Exchange (SAZ).
    

    ENDS

    Issued by Brunswick South Africa on behalf of Sappi Limited
    Tel + 27 11 502 7300
    Fax + 27 11 268 5747


    




For further information:

For further information: Amy Olson, Corporate Communications Manager of
Sappi Fine Paper North America, +1-617-423-5409, or Fax: +1-617-368-6580,
Amy.Olson@sappi.com; or Andre F Oberholzer, Group Head Corporate Affairs of
Sappi Limited, +27 11 407 8044, or Mobile: +27 83 235 2973,
Andre.oberholzer@sappi.com Web Site: http://www.sappi.com/na

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