Catalyst Completes Snowflake Acquisition and Related Rights Offering

On April 10, 2008, Catalyst Paper Corporation (Catalyst Paper), a leading producer of mechanical printing papers, completed a US$161 million cash acquisition of the Snowflake Arizona recycled newsprint mill and related assets from a subsidiary of Abitibi Bowater Inc.

The acquisition was funded by Catalyst Paper through a combination of debt and equity. The debt portion was funded by a draw under Catalyst Paper's existing credit facilities. The equity portion was raised through a $125 million Rights Offering to Catalyst Paper shareholders. The Rights Offering was qualified by way of a prospectus filed in each of the Provinces of Canada and a registration statement on Form F-10 filed with the US Securities Exchange Commission. Under the offering, one Right was issued for each common share. Each 1.285 Rights entitled the holder to purchase a Subscription Receipt for an exercise price of $0.75. Holders who exercised their basic subscription privileges were also entitled to subscribe for additional Subscription Receipts at the same exercise price. Each Subscription Receipt was automatically exchanged for one common share of Catalyst Paper on completion of the Snowflake Acquisition. The Rights and Subscription Receipts were listed on The Toronto Stock Exchange.

BMO Capital Markets acted as exclusive financial advisor to Catalyst Paper on the Snowflake Acquisition and BMO Nesbitt Burns Inc. and Genuity Capital Markets acted as joint Dealer Managers and Standby Purchasers for the Rights Offering. The Standby Purchasers agreed to take up any Subscription Receipts not otherwise subscribed for under the Rights Offering to a maximum of $62.5 million. Third Avenue International Value Fund (TAVIX), a significant shareholder of Catalyst, entered into an Oversubscription Agreement with Catalyst under which it agreed to exercise rights to subscribe for up to $62.5 million of Subscription Receipts not otherwise subscribed for under the Rights Offering.

The Rights Offering was oversubscribed by 27 per cent.

Valerie Seager, general counsel to Catalyst Paper, was assisted in Canada by Blake, Cassels & Graydon LLP with a team that included Peter Kalbfleisch and Trisha Robertson (securities), and Kevin Zimka (tax); and in the US by Fried, Frank, Harris, Shriver & Jacobson LLP with a team that included Jeffrey Bagner, Tristram Cleminson, Ryan Williams and Scott Wells. The Dealer Managers/Standby Purchasers were represented by Goodmans LLP with a team that included Stephen Pincus, Bill Gorman and Kirk Rauliuk. TAVIX was represented by Jim Hall and Steve Feldman of Third Avenue Management who were assisted by Torys LLP with a team that included Joris Hogan, Philip Symmonds and Adam Armstrong.


Adam S. Armstrong Kirk Rauliuk Peter C. Kalbfleisch Valerie Seager Philip D.A. Symmonds Stephen N. Pincus Trisha L. Robertson Kevin Zimka Bill Gorman


Blake, Cassels & Graydon LLP Fried, Frank, Harris, Shriver & Jacobson LLP Torys LLP