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Catalyst Paper Reaches Agreement on Financing Facilities

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Catalyst Paper, Richmond, B.C., Canada, this week entered into a commitment letter with a Canadian chartered bank for a $175 million syndicated asset based loan facility (ABL Facility) maturing on the earlier of five years from the date of closing and 90 days prior to maturity of any significant debt. The ABL Facility is a pre-condition for Catalyst to exit from creditor protection and would provide for the refinancing of existing credit facilities to fund the operations of the company on exit from creditor protection and for general corporate purposes thereafter. The collateral would primarily consist of all present and future working capital assets of the company.

The ABL borrowing base would be calculated on balances of eligible accounts receivable and inventory, less certain reserves. Customary fees are payable in connection with the ABL Facility, which is subject to the completion of a credit agreement, syndication, documentation, and certain other conditions.

Catalyst also entered into a commitment letter with respect to a secured exit notes facility of up to $80 million (Exit Facility). The Exit Facility provides Catalyst with backstop financing should additional funding be required to pay costs and expenses or manage other contingencies on exit from creditor protection.

The Exit Facility will be provided by certain holders of Catalyst's First Lien Notes and will be secured by a charge on certain assets of Catalyst and its subsidiaries ranking senior to the lien securing the $250 million of new secured notes (the Plan Notes) to be issued under the Second Amended Plan of Arrangement (the Amended Plan). Customary commitment fees for a facility of this nature are payable to the lenders in connection with the Exit Facility.

The Exit Facility of $80 million, or a lesser amount at Catalyst's option, or if Catalyst's liquidity exceeds a specified amount, is available to Catalyst upon its exit from creditor protection, has a maturity date of four years from that exit, and can be prepaid in whole or in part at any time for a premium initially of 3% and declining annually thereafter. The Exit Facility is subject to the completion of documentation and certain other conditions.

To provide sufficient time to complete documentation for the ABL Facility and Exit Facility and to satisfy the other conditions under the Amended Plan, Catalyst and certain noteholders have agreed to amend the Restructuring and Support Agreement dated March 11, 2012, as amended (the RSA) to extend the deadline for completion of the Amended Plan to September 14, 2012. The RSA and Amended Plan previously provided for completion within 45 days of the Canadian sanction order, which was obtained on June 28, 2012.

Catalyst Paper produces specialty mechanical printing papers, newsprint, and pulp. With four mills located in British Columbia in Canada and Arizona in the U.S., Catalyst has a combined annual production capacity of 1.8 million metric tons.


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