Fortress Begins Dissolving Pulp Production at Thurso

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Chad Wasilenkoff, chairman and CEO of Fortress Paper, noted that "this is a momentous day in the history of Fortress Paper and a culmination of our work at the Fortress Specialty Cellulose Mill since acquiring the mill in April 2010. We are very proud to join the limited group of dissolving pulp producers in the world and look forward to completing our first shipments. We would like to thank all those involved in helping bring this project on line."

In other announcements, the company said that upgrades to improve speed and capacity at its Dresden, Germany, mill have been successfully implemented. During the past few months, Fortress, in its normal course, has been reviewing each of its business divisions and assessing all options as part of its strategy to enhance shareholder value. As part of this ongoing evaluation, management identified a potential divestiture opportunity relating to its non-woven wallpaper base division.

Given the financial uncertainties and lack of financial confidence in the Euro zone, Fortress management said that it decided not to pursue any divestiture option for the Dresden Mill. With the support of its management team in Germany, the company intends to continue to grow this business division organically and potentially through strategic acquisitions.

The Fortress Landqart Mill in Switzerland "has continued to experience challenges throughout the fourth quarter as a result of a strong Swiss franc, high raw material costs, and less than optimal production efficiency on its paper machines," the company noted, adding that it expects that these issues will continue to materially impact results of operations in the fourth quarter. The company anticipates that it will overcome many of these challenges with the new banknote paper orders that have recently been placed at the mill and which represent a significant portion of the mill's 2012 banknote capacity.