Kruger to merge idled sawmill in Parent, Quebec, with Industries Perron's closed finger-joint mill in Trois-Rivières; C$21M including loans to be invested in equipment upgrade, 300 jobs will be restored

PARENT, Quebec , May 13, 2011 (press release) – Investments of $21 million and recall of 300 workers

Kruger Publication Papers Inc. (KPPI) and Industries Perron today announced the formation of a partnership to create a new commercial entity that will manufacture value-added lumber products. The announcement was made in the presence of Julie Boulet, Minister of Employment and Social Solidarity and Minister Responsible for the Mauricie Region. Under the agreement, the assets of Kruger's sawmill in Parent and those of Perron's finger-joint mill in Trois-Rivières will be merged, and $21 million will be invested to upgrade equipment and start up operations at both mills, which had been closed for more than a year and a half. The investment includes a $12.75-million loan from Investissement Québec and a $5.5-million loan from the Business Development Bank of Canada. This partnership will see about 300 employees return to work: 90 at the Parent Sawmill, 40 at the Trois-Rivières mill, and some 170 loggers and forest planning employees.

"Given the challenging environment in which the Québec forest industry is operating, we are very pleased to enter into this partnership which constitutes a new business model and will optimize production at both mills. Since our operations complement each other and are spread optimally over both sites, production will resume at both lumber mills and 300 employees will be called back to work," said Daniel Archambault, Executive Vice President and Chief Operating Officer, Industrial Products Division of Kruger Inc.

In preparation for restarting the Parent sawmill at the end of July 2011 and the Trois-Rivières Mill in August 2011, logging operations will resume in June, in order to build up enough inventory to supply the production line. Both mills will then share primary and secondary processing activities up to and including finished products. The logs will be sawn and dried at the Parent Mill, after which they will be transported to the Trois-Rivières Mill to be planed and turned into lumber of varying lengths and finger-jointed lumber. The products will then be shipped to markets across North America.

The new company has also secured an asset-based loan of $8.5 million from the Royal Bank of Canada for the operating working capital.

The new commercial entity will be headed up by Claude Perron, who will act as Chairman and Chief Executive Officer, while all forest management, certification and logging activities will be coordinated by Kruger Inc.

"In short, performance of the Parent sawmill will be optimized, production will be geared to demand, fibre use will be maximized with finger-jointing, and product lines will be expanded to break into new markets in Canadaand the United States. Our unique business model capitalizes on the complementarity of our activities and targeted markets in order to protect against fluctuations in the Canadian dollar," Claude Perron concluded.


About Industries Perron

Founded in 1999, Industries Perron became a leading manufacturer of finger-jointed products and went on to produce studs for the US market. In 2003, Industries Perron was one of the top two finger-jointed stud mills inNorth America.

About Kruger

Founded in 1904, Kruger Inc. is a major producer of publication papers, tissue, lumber and other wood products, corrugated cartons from recycled fibres, green and renewable energy and wines and spirits. The Company is also a leader in paper and paperboard recycling in North America. Kruger operates facilities in Québec, Ontario, British Columbia, Newfoundland and Labrador and the United States.

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