Catalyst Cuts Additional Staff

Vancouver, British Columbia, Canada, 27 August 2007 – Catalyst Paper continued the year-long focus on improving its competitive position with the announcement of further staffing reductions. This downsizing of 85 employees, accomplished largely through early retirement, is expected to deliver annualized savings of CAD 13 million on one-time severance costs of CAD 16 million. Most of the reductions will take place at the Crofton and Elk Falls mills.

“Competitive indicators for staffing levels in the industry show this restructuring step will bring us within reach of best quartile benchmarks,” said Richard Garneau, president and chief executive officer. “Market pressures are not easing up and it is essential that we continue to take prudent and timely steps to restore profitability while strengthening our position in key product segments.”

Implementation of the total corporate overhaul program, including downsizing of 565 positions, centralization of functions, and the relocation of the Vancouver office to Richmond, is on track to be completed by year-end with expected savings of CAD 58 to CAD 63 million annually on one-time costs of CAD 61 million.

Catalyst is a leading producer of mechanical printing papers in North America. The company also produces market kraft pulp and owns western Canada’s largest paper recycling facility. With five mills located within a 160-kilometer radius on the south coast of British Columbia, Catalyst has a combined annual capacity of 2.4 million metric tons of product. Catalyst Paper Corporation common shares trade on the Toronto Stock Exchange under the symbol CTL. The company is headquartered in Vancouver.