Caraustar Ceases Production of Uncoated Recycled Boxboard at Chattanooga Mill

ATLANTA—Caraustar Industries, Inc. has permanently ceased production of uncoated recycled boxboard (URB) at its Chattanooga Paperboard mill, effective July 18, 2008. Caraustar will continue to operate the recycling center at this location.

Chattanooga Paperboard had an annual capacity of approximately 60 thousand tons. The company expects to retain its Chattanooga customers and service their needs from other Caraustar locations.

In making the announcement, Thomas C. Dawson, Jr., vice president, Mill Group, said, “The decision to cease production of URB at the Chattanooga mill reflects management’s continued focus on maximizing capacity utilization and operating efficiencies in an increasingly challenging economic environment. We are pleased to continue a vital presence in Chattanooga through the operation of our recycling center, which has been beneficial to Caraustar, local municipalities and the Chattanooga community.”

Approximately 67 salaried and hourly employees are affected by the mill closure. Caraustar will provide a comprehensive program of separation pay, benefits continuation and job assistance to these employees.

Associated with the cessation of paperboard production in Chattanooga, the company will record a pre-tax charge of approximately $7.9 million, of which approximately $5.8 million will be non-cash. This rationalization is expected to generate an estimated $9.0 million in annual pre-tax savings.