TEMISCAMING, QC, June 1 /CNW Telbec/ - Tembec today announced that its
coated paper mill located in St. Francisville, Louisiana will be indefinitely
idled, with a target date for idling of July 31, 2007. It will affect
approximately 540 employees.
The St. Francisville mill has a capacity of 325,000 short tons of coated
and specialty papers, primarily used in catalogues, magazines and cover stock.
Tembec acquired the facility in June 2001 by way of a Chapter 11 bankruptcy
proceeding involving the mill's former owner, Crown Paper Co.
A number of factors have combined to make this decision necessary,
according to Dan Alexander, Executive Vice President and President, Paper
Group. "The effect of challenging market conditions in terms of both price and
demand, the inconsistent performance of the mill in terms of production, the
increased cost of purchased energy, and the high manufacturing costs at this
site have resulted in a situation that could not be sustained. While there has
been progress during the past year, the overall financial performance of this
site has been and continues to be unacceptable," said Mr. Alexander.
The decision to idle St. Francisville is consistent with the recovery
plan that was announced last year by Tembec President and CEO, James Lopez.
Margin improvement at all manufacturing locations is central to this plan and
the Company had indicated that, where no long-term solutions could be
identified and implemented to achieve this goal, necessary action would be
"Significant steps were taken in 2006 to lower the operating costs of
this facility and upgrade the product mix. Despite these changes, this
facility continues to be hampered by high energy costs, low machine
productivity and difficult market conditions. The Company will continue to
evaluate options to improve the profitability of this site and will take all
available steps to ensure its customers will not experience supply
interruptions," said Mr. Lopez.
Tembec indicated that it is reviewing the full range of alternatives for
this site. The Company would not speculate on the outcome of this review
"Decisions of this nature are never easy to make, and Tembec regrets the
impact of today's announcement on employees, their families and the
St. Francisville community," concluded Mr. Alexander.
Tembec is a large, diversified and integrated forest products company.
With operations principally located in North America and in France, the
Company employs approximately 9,000 people. Tembec's common shares are listed
on the Toronto Stock Exchange under the symbol TBC. Additional information on
Tembec is available on its website at www.tembec.com
This press release includes "forward-looking statements" within the
meaning of securities laws. Such statements relate to the Company's or
management's objectives, projections, estimates, expectations, or predictions
of the future and can be identified by words such as "anticipate", "estimate",
"expect" and "project" or variations of such words. These statements are based
on certain assumptions and analyses by the Company that reflect its experience
and its understanding of future developments. Such statements are subject to a
number of uncertainties, including, but not limited to, changes in foreign
exchange rates, product selling prices, raw material and operating costs, and
other factors identified in the Company's periodic filings with securities
regulatory authorities in Canada and the United States. Many of these
uncertainties are beyond the Company's control and, therefore, may cause
actual actions or results to differ from those expressed or implied herein.
The Company disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
For further information:
For further information: John Valley, Executive Vice President, Business
Development and Corporate Affairs, (416) 864-7502, Cell: (289) 259-5699