Sign of the times

Fraser Papers Files For Creditor Protection
Company Developing Restructuring Plan

(All financial references are in U.S. dollars unless otherwise noted)

Toronto, ON (June 18, 2009) – Fraser Papers Inc. (“Fraser Papers” or the “Company”) (TSX:FPS) announced today that it, together with its subsidiaries, has initiated a court-supervised restructuring under the Companies’ Creditors Arrangement Act (Canada) (the “CCAA”) in the Ontario Superior Court of Justice and that they will be seeking similar relief later today pursuant to Chapter 15 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. Pursuant to CCAA Proceeding commenced today, PricewaterhouseCoopers Inc. was appointed by the Court as Monitor to assist the Company through its restructuring process. The Company remains in control of its assets and business operations.

“The filing will provide Fraser Papers with a defined process and the necessary time to restructure its affairs in order to emerge with a sustainable and profitable specialty paper business,” said Peter Gordon, the Company’s Chief Executive Officer.

Fraser Papers has been working with employees, suppliers, customers and governments over many months in an effort to reduce costs, improve fibre access, and optimize operations in a challenging environment. The Company has determined that continued operating losses, weak demand and selling prices for pulp and lumber, impending debt repayments and significant pension funding obligations require Fraser Papers to seek this protection from creditors while it continues to pursue alternatives to restructure its operations.

“Unlike many restructurings, the court filing was not the result of excessive leverage,” said Mr. Gordon. “Our paper business remains profitable, particularly the specialty packaging and printing segments where there are opportunities to grow in a number of key segments. However, weak pulp and lumber markets have drained our limited resources, more than offsetting the progress in our paper business.”

In support of this process, CIT Business Credit Canada has agreed to continue to revolve the existing working capital facility and, in addition, Brookfield Asset Management has agreed to provide debtor in possession financing. Together these two facilities will provide up to $20 million to fund operations during the restructuring process.

The Company’s operating plans are unaffected by today’s announcement. The two paper mills in Madawaska, Maine and Gorham, New Hampshire will continue to operate without disruption, manufacturing specialty paper products for existing customers. The Company will proceed with developing a framework for a restructuring plan with the goal of making Fraser Papers more competitive and profitable.

* * * * * * * *

Fraser Papers is an integrated specialty paper company that produces a broad range of specialty packaging and printing papers. The Company has operations in New Brunswick, Maine, New Hampshire and Québec. Fraser Papers is listed on the Toronto Stock Exchange under the symbol: FPS. For more information, visit the Fraser Papers web site at www.fraserpapers.com.

Comments

[Jonathan Edwards]

Fraser's announcement is more of a restructuring than an announcement of going out of business. Certainly it makes sense for a restructure while Gorham is showing a profit and prior to this winter's increased expenses running them into the ground. One thing is for sure; New Hampshire needs to go with the fastest track to getting Fraser's expenses lowered in order to keep them viable and producing 250 jobs. How can that be done?

Many people feel that the Burgess mill site is the solution because there is an existing infrastructure that can be improved upon. This couldn't be further from the truth because of the long process that needs to take place due to the size of the plant requiring a long application process laden with inevitable "walls of concern" that will come out of the woodwork if ever Laidlaw were to file. Not only is the application process long but you can bet that competitors and environmentalist concerned over cost of wood and sustainability issues will make a tangled web out of the process with their concerns. Add to that the cost to upgrade the coos loop grid in order for Laidlaw to come on line of 180 million dollars of which no one has agreed to pay and the start up date for that plant potentially leads out into infinity. At last night's forum one of the panelists stated that out of 250 biomass proposals only a handful have come to fruition while the rest talk a good game yet never come to pass. Not only has Laidlaw been at this for two years without even reaching the stage of submitting an application, they have yet to construct, operate or sell any plant under the name Laidlaw. This subject matter seems like too much of a risk to help keep Fraser alive and at the same time is stagnating growth in the middle of our city.

On the other hand, we have Clean Power, which is ahead of Laidlaw in many aspects. It also would be a plant that looks like a working farm at the foot of a mountain providing a beautiful curb appeal in comparison to our 300 foot middle finger in the middle of the city. Clean Power has already overcome almost all of its hurdles within the city planning process and is at a point where the purchase of the property can happen any day and they can begin construction. This company has an owner who has successfully constructed other north country biomass companies going back 25 years, has seen to their successful operation and has profited through the sale of power and the sale of successful facilities. Clean Power has a proposed size to its facility that likely won't create concerns among environmentalists worried about forest sustainabiity and competitors who might otherwise be concerned over rising chip prices impacting their businesses. Like any biomass company, financing and power purchase agreements is the key to moving forward. Currently this company can be on the fast track with their construction with a ruling by the PUC that PSNH is going against their own testimony in not providing Clean Power with a purchase agreement. From there, a proven track record in the business should provide Clean Power's owners with a better shot than most companies at financing and moving forward. Laidlaw on the other hand only has a PSNH power agreement in theory and possible financing only upon reaching major milestones within the application process that would prove to be a hornets nest if it ever began.

http://www.puc.state.nh.us/Regulatory/CaseFile/2009/09-067/LETTERS,%20MEMOS/09-067%202009-06-04%20Ltr%20Clean%20Powers%20respnse%20to%20PSNH%27s%20Letter%20to%20commission%20dated%20June%201,%202009.PDF

[Jonathan Edwards]

http://www.puc.state.nh.us/Regulatory/CaseFile/2009/09-067/LETTERS,%20MEMOS/09-067%202009-05-29%20Request%20to%20open%20formal%20investigation.PDF

[Jonathan Edwards]

http://www.puc.state.nh.us/Regulatory/CaseFile/2009/09-067/LETTERS,%20MEMOS/09-067%202009-06-01%20PSNH%27s%20Response%20to%20Complaint.PDF

[Jonathan Edwards]

http://www.puc.state.nh.us/Regulatory/CaseFile/2009/09-067/LETTERS,%20MEMOS/09-067%202009-03-23%20City%20of%20Berlin%20NH%20letter%20Request%20that%20PSNH%20respond%20to%20these%20questions.PDF

[Jonathan Edwards]

http://www.puc.state.nh.us/Regulatory/CaseFile/2009/09-067/INITIAL%20FILING%20-%20PETITION/09-067%202009%2004-07%20Cvr%20%20ltr%20to%20Compliant%20of%20Clean%20Power%20Development%20Against%20PSNH.PDF

[Jonathan Edwards]

IT SEEMS CLEAR TO ME THAT PSNH IS DOING ITS BEST TO MUSCLE CLEAN POWER FROM MOVING FORWARD AT THE EXPENSE OF HIGHER ENERGY COSTS, FOREST SUSTAINABILITY, AN UNNECESSARY COOS LOOP UPGRADE, THE POTENTIAL CLOSURE OF FRASER, TO EVENTUALLY OBTAIN THE BURGESS MILL SITE WHILE THE STATE OF NH HAS A LAW IN PLACE FORBIDDING PSNH TO DO SO. WHILE THIS IS GOING ON, ALL NORTH COUNTRY POLITICIANS ARE SUPPORTING THIS PRANK...WITH THIS EXCEPTION OF, THANKFULLY, MAYOR AND COUNCIL MAJORITY.

Interesting to note the people who attended last night's forum. To see representation of PSNH's Schiller station, Loggers, Business Owners and so many experts in the biomass field all convening at a Tech college that will add green energy to its curriculum was witness to the magnitude of concern and interest and hopefully responsibility the subject has brought to the north country.

[Wing Nut]

Jon,

Did anyone answer my critical questions? Namely;

1.) Is there enough Biomass grade wood in a 75 mile radius to support a 66 MW plant? What about a 100 mile radius?

2.) Can the Coos loop handle a 66MW plant? If not, what is the cost to upgrade the loop?

3.) What kind of pollution is emitted by a Biomass plant? What is the impact to the quality of life for the residents immediately adjacent to the plant?

I'd love to know if these questions were answered. Thanks........WN.

[V.]

And the Casino was shot down already!!!

[V.]

Didn't predict that that would have been a bad gamble...

[Jonathan Edwards]

Wing Nut,
#1. The only panelist willing to answer that question would probably be
considered biased as it was Bill Gabler of Clean Power. We continue to see
even the experts unwilling to specifically state that answer as they dance
around with details that leads one to think there may or may not be
sustainability issues. No panelists disputed any remarks made by Bill Gabler throughout the evening however.

#2. The Coos loop needs an investment in it's sagging lines of 2 million
for Noble to even operate which will provide about 130 MW of room on the
grid. Since Noble at peak use would use 100 MW and Clean Power would use
29, they can co-exist. The inclusion of Laidlaw on the grid would
necessitate a projected 180 million upgrade which could impact chip price,
power price, and forest sustainability issues. Again, Bill Gabler was the
only panelist providing these answers and no panelist or member of the
public in attendance argued any of his points.

3. It was stated by experts at this meeting that emmissions created by
biomass facilities are strictly regulated and that their emissions are
fairly limited especially in comparison to smaller types of biomass uses
such as outside wood furnaces used to heat a home. An example came to be
that Clean Power's emissions would be the equivalent of 6 outside wood
furnaces, but no figures were provided regarding Laidlaw emissions. It
became obvious to me that pollution occurs more from truck emissions than
the plants. That is why it becomes very important for these plants not to
drive great distances to obtain chips in order to be carbon neutral and
obtain REC credits. Panelists, at best, danced around the subject of carbon
neutrality.

[ralph]

I was there and Jon's right, they danced! Nobody has the guts to stand up to the bullies.

[pete]

A truck that hauls chips from 100 miles away (200mile round trip) carrying 30 tons of chips will use about 1% of the energy stored in the chips to move those chips.

so I guess that makes the chips only 99% carbon neutral

(I was also there and I must have missed the dancing-all the answers seemed pretty straightforward to me)

[Rocky]

Today I spoke to several people who attended last night's meeting and they all agreed that they had learned something. If most folks learned but one new fact surrounding biomass, the meeting was a success. Thank you Bill Andreas/BEDCO

[Jonathan Edwards]

Pete, Why don't you try to dance around diesel as well at 100 miles away. What impact does that have on what is trying to be accomplished?

[Jonathan Edwards]

Limits on Coos Grid Dims the Future of Laidlaw's Berlin Biomass Plant
By Phil Sletten on Thursday, June 18, 2009.

Engineers are looking closely at the power grid in northern New Hampshire to see if it can support more electricity production.

The New Hampshire Site Evaluation Committee approved the Noble wind energy park last week.

And the park’s opponents say they have little hope to stop its construction.

This development could put new limitations on other proposed renewable energy projects in the North Country.

NHPR’s Phil Sletten has more.

Berlin residents have been engaged in a vigorous debate over a proposed large biomass energy plant for more than a year.

The New York firm Laidlaw Energy Group wants to build the facility in downtown Berlin using an existing boiler from the old pulp mill.

Berlin City Planner Pam LaFlamme says a small group in Berlin is very opposed to the plant.

“Not so much because it’s biomass, but because of it’s location. It’s location, for Laidlaw, has been a controversial aspect of their project all along.”

Opponents say the smell and unsightliness of the plant are reason enough to reject it.
They also say the land in downtown Berlin could be used for alternative development.

Laidlaw is doing its best to convince the community of the plant’s benefits, including more jobs and renewable energy.

But a physical limitation may put a stop to the plant’s construction regardless of public opinion.

The Coos County Loop is the primary high-voltage power line that serves the North Country.

It was originally designed to handle only the demands of the region.

But as interest in renewable energy has grown, more groups have begun to invest in green energy projects in Coos County.

“The problem is if you put on additional generators, be they wind or biomass, at some point we are at capacity for the line.”

That’s Representative Lyle Bulis of Littleton.

He says after the Loop meets that capacity, the efficiency drops off considerably.

Public Service of New Hampshire estimates that the Coos Loop, with a modest upgrade, can support only one-hundred megawatts beyond what it carries now.

A serious improvement to the transmission line would cost about one-hundred and fifty million dollars.

And none of the involved parties are particularly interested in paying that price.

The Noble wind farm, as proposed, would produce about ninety-nine megawatts of electricity.

Representative Bulis:

“So obviously if that were to come online it would preclude other projects.”

Other projects like Laidlaw’s biomass plant.

But Noble is making about nine million dollars worth of upgrades to the Coos Loop.

And that could add an estimated sixty megawatts to the power line’s excess capacity.

Lou Bravakis is the Vice President of Planning and Development for Laidlaw Energy Group.

“Based on our analysis, we’ve concluded that there is sufficient transmission capacity for our project as well as others.”

Laidlaw’s proposed plant in Berlin would require about fifty-eight megawatts of capacity.

And with the upgrades to the wires, that would fit.

But there’s a hitch.

Independent System Operator New England, also known as ISO, operates and plans the electricity transmission system.

ISO has a waiting list for evaluating new large projects going online.

Again, Lou Bravakis of Laidlaw.

“There are a number of projects in the ISO queue, ours being third in line behind a ninety-nine megawatt wind project and a thirty megawatt biomass project”

That second project is a smaller biomass plant proposed by the Concord-based firm Clean Power Development.

“We’re building a twenty-nine megawatt biomass combined heat and power project in Berlin. Its net output onto the grid will be about, uh, could be as much as twenty-six megawatts.”

Bill Gabler is the Project Manager for Clean Power Development.

He says between the wind farm and his plant, there’s no room for anyone else.

“Our two projects will use all of the existing capacity on the improved loop.”

…leaving no room for Laidlaw, which is third in line.

Berlin City Planner LaFlamme says that the capacity estimates vary, depending on who you ask.

“I’ve heard that there’s anywhere from seventy-five to one-hundred and twenty-five, maybe even one-hundred and fifty megawatts available on the Coos transmission loop.”

[Jonathan Edwards]

It Pam Laflamme has indeed stated that there is a small group of people opposed to the Laidlaw project, where is she concluding that in relation to an election based on a population majority that ousted those in favor of the project? Writing, quite clearly on the wall at this stage, is a city planner purportedly
stating opinions in complete disregard for what mayor and council are witnessing in opposition to the plants. This city planner, if she has stated these things to NHPR, needs to be canned. She is a cancer to city hall.

[Jillian]

It's no wonder this city doesn't get anywhere, it's a house divided upon itself. The City Planner going in one direction while Mayor and Council go the other. I understand she just about sets policy for the City.

[Lea]

From what I was told this is the third time this month LaFlamme has been quoted in the media saying only a "small" number of residents are against Laidlaw.

[Lea]

The other thing is LaFlamme stated “I’ve heard that there’s anywhere from seventy-five to one-hundred and twenty-five, maybe even one-hundred and fifty megawatts available on the Coos transmission loop.” This is a complete fabrication. Why would ISO make Noble spend 2 million dollars upgrading the line to 100 mw if it didn't need to be done. If there was already a 100 mw capacity it wouldn't be required.

[Rocky]

$2 million? Try $10M to $20M for Noble to upgrade the Coos Loop.

[Jonathan Edwards]

Two million to upgrade is the figure quoted last night to tighten lines enough for Noble to use and the increase quoted by Bill Gabler last night, I believe, was 130 Megawatts but I could have heard that inaccurately. It's not Pam's fault. She is given duties significantly beyond her job profile. It is as a result of too much delegation on the part of city management to a person unqualified to really know exactly what is going on at a management level. She still needs to be canned because she won't stop.

[Lea]

At least one IHUBer seems to tell the truth once in awhile.

Posted by: CTTC Date: Friday, June 19, 2009 8:13:00 PM
In reply to: TecNasty who wrote msg# 45780 Post # of 45787

The article had errors in it. The present grid has a capacity of 60 MW and the 2 million dollar upgrade to be put in by Noble will increase the capacity to 100 MW. This information is from ISO. I think all this upgrade amounts to is adding pylons so the cable doesn't sag and contact the ground with the extra current flowing through it. The next stage is to add a new power line to the loop. This is what will cost $180 million dollars to complete.

[ralph]

Wasn't she supposed to have public meetings about the mill property? What happened there? How about that master plan thing? Is she to busy helping out Laidlaw?

[Lea]

This from the NPR article:

"Public Service of New Hampshire estimates that the Coos Loop, with a modest upgrade, can support only one-hundred megawatts beyond what it carries now.

A serious improvement to the transmission line would cost about one-hundred and fifty million dollars."

"CTTC" wasn't entirely correct either. I think the present "EXCESS" capacity of the loop is 64 mw. With the upgrade paid for by Granite Reliable Wind the line will have 100 mw of "excess" capacity not "total" capacity. This upgrade is to provide enough capacity for GRW to operate at full output in high wind conditions. Clean Power in their original presentation to the city, said their plant was specifically designed to modulate its power output to match GRW's varying output.

[Jonathan Edwards]

The NHPR article matches what Bill Gabler stated at the forum the other night. If the current "unused" capacity of the coos loop is about 60 MW and the Granite Reliable 9 million proposed upgrade provides for an additional 60 MW, the projected total Gabler stated was in a range between 120 MW and 130 MW. This provides for Granite Reliable (99MW) and Clean Power(26 MW) to coexist, but doesn't allow for other proposals to join the coos loop without the 150+million upgrade. The question is; With Canada's Hydro project in the works and forest sustainability issues locally, why upgrade the coos loop at the expense of higher electrical production cost and risk to forest sustainability?