Zhejiang Fulida enters into strategic partnership with Neucel Specialty Cellulose consisting of direct investment, long term supply agreement

PORT ALICE, British Columbia , January 28, 2010 (press release) – Zhejiang Fulida Ltd. (“Fulida”) has entered into a strategic partnership with Neucel Specialty Cellulose Ltd. (“Neucel”) consisting of a direct minority investment in Neucel and a long term supply agreement to procure Neucel’s chemical cellulose product. Fulida is one of the leading producers of rayon in the world with several awards to its credit within the Chinese textile industry. Neucel plans to use the investment to accelerate its capital plan targeted mainly at capacity expansion in addition to cost and quality improvements.

“Viscose rayon fiber production capacity has increased greatly in China and competition has become intense. With the relationship with Neucel, Fulida gains a smooth and stable supply of dissolving pulp materials,” said Jainer Qi, CEO of Fulida. “The relationship provides Fulida with cost advantages and quality assurance, and it plays a positive role in extending the value chain of the business, enhancing core competence and expanding production capacity.”

“We are very excited to partner with Fulida given their leadership in the rayon market and strong growth. This partnership will enable us to gain an improved market presence in China and solidify our strong position in both the viscose and specialty markets. We remain committed to growth in both segments,” said Bob Taylor, President and CEO of Neucel.

“This announcement is great news for the North Island,” said John Duncan, Member of Parliament for Vancouver Island North. “Neucel is a major employer in our region, and this partnership will help solidify the company’s place in the world market. This will benefit local workers and businesses, and show the world that our people and products are globally competitive.”
Neucel plans to deploy the available capital immediately to keep pace with the high customer demand in the chemical cellulose market. This capital will significantly complement the funding provided by the Government of Canada’s Pulp and Paper Green Transformation Program to further reduce its energy consumption.

About Zhejiang Fulida Ltd.
Zhejiang Fulida Ltd. is the largest producer of viscose rayon fiber in China in terms of volume and is recognized as an industry leader due to its scale, equipment, technology and marketing expertise. Fulida has received numerous industry awards including “China’s Famous-Brand Product” and the “Zhejiang Best Quality Enterprise” award.

About Neucel Specialty Cellulose Ltd.
Neucel produces hemlock based high-purity chemical cellulose that is used in a wide range of manufacturing processes including rayon filament for garments, pharmaceuticals, consumer products, film, food thickeners, LCD screens and other products. Neucel is owned by a consortium of investors, lead by Wellspring Capital Management and GSC Group. For more information on Neucel, visit the company website at www.neucel.com.

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