Catalyst reduces salaried staffing level due to weak economy

    RICHMOND, BC, May 26 /CNW/ - Catalyst Paper (TSX:CTL) today announced
further staffing reductions in light of the global economic recession and
deteriorating market conditions that have forced production curtailments at
the company's Elk Falls and Crofton pulp mills.
    Approximately 100 staff positions will be affected. Permanent reductions
will occur mainly at the Richmond and Nanaimo offices while the indefinite
layoff of 55 salaried staff will take place at the Elk Falls mill and Crofton
pulp mill. Both mills were curtailed indefinitely at the end of February as
nearly 40 per cent of the company's production capacity is currently idled.
    The severance of 42 employees will be completed over the next few months
as the business continues to streamline its corporate structure and support
functions. Staff layoffs will take effect June 8, 2009.
    The unprecedented layoffs within the salaried workforce reflect the
severity of recent demand declines and the likelihood that curtailed
production will not restart in the short term.
    Expected savings from the layoffs are in the range of $350,000 per month
with a further $4 million in annualized savings from the permanent staffing
reductions. One-time severance costs associated with this program are expected
to not exceed $5 million.
    "This is an exceptionally difficult time in the industry and current
market conditions cannot support the current staffing level," said Richard
Garneau, president and chief executive officer. "The steps we are taking today
will continue to bring costs down as we strive to put in place the lean
manufacturing structure necessary for what could be a smaller paper market
going forward."

    Certain matters described in this release are forward-looking, including
statements with respect to the length and volume of production curtailments,
anticipated savings and severance costs. These forward-looking statements are
not guarantees of future performance and are subject to risks and
uncertainties that may cause actual results to differ materially from those
contained in these statements.

For further information:

For further information: Lyn Brown, Vice-President, Corporate Relations,
(604) 247-4713

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Catalyst Paper Corporation

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