Mercer International Inc. has announced it has served a Request for Arbitration on the Government of Canada for breaches by it of its obligations under the North American Free Trade Agreement ("NAFTA").

Actions by BC Hydro and the BC Government Disadvantage Mercer's Celgar Pulp Mill 

Mercer's NAFTA claim arises from the treatment of its Celgar Pulp Mill's energy generation assets and operations by the Province of British Columbia, both directly and through the actions of British Columbia Hydro and Power Authority ("BC Hydro"), a Provincially-owned and controlled enterprise, and the British Columbia Utilities Commission, a Provincial Government regulatory agency. Mercer's Claim is against Canada, rather than the Province of British Columbia as, under NAFTA, Canada is responsible for the actions of its Provinces.

Under NAFTA, Mercer's investments in Canada are required to be accorded treatment that is no less favorable than the most favorable treatment accorded to Canadian investors. The Celgar Mill, BC's largest and most modern, has been placed at a competitive disadvantage as a result of discriminatory treatment by BC Hydro and the uneven application of BC energy policy.

As a preliminary step in the NAFTA arbitration process, Mercer had previously served a Notice of Intent to Submit a Claim to Arbitration (the "Notice") on the Government of Canada on January 26, 2012.

Subsequent to the filing of the Notice, Mercer representatives met with representatives of the Government of Canada and the Province of British Columbia to attempt to settle the Claim through consultation and negotiation, as required under NAFTA Article 1118. However, no resolution was achieved. As a result, Mercer filed the Arbitration Request in order to meet the applicable filing deadline and to preserve and progress the Claim.

"We have reluctantly filed the Arbitration Request following years of attempts to resolve our issues through proceedings before the Commission, dialogue with the Province and recent consultations that included the Government of Canada," said Jimmy Lee, President and CEO. Mr. Lee also reiterated that: "Under Provincial policy, the Mill's ability to effectively utilize its own generation assets and to sell and purchase energy is severely and unfairly restricted. All other competing pulp mills in British Columbia receive more favorable treatment with respect to their ability to purchase and sell energy. This puts the Mill at a competitive disadvantage."

Under the NAFTA Claim Mercer is seeking damages in the amount of approximately CDN $250 million, consisting of past losses of approximately CDN $19 million per year accruing since 2008 and the net present value of projected losses that would result from the ongoing application of discriminatory Provincial policies should the status quo remain unchanged.

About the Claim

The Province of British Columbia is primarily served by two regulated utilities, BC Hydro, whose service area covers approximately 90% of the Province by area, and FortisBC Inc. ("FortisBC"), whose service area covers most of the remainder of the Province.

In the Arbitration Request, Mercer describes how the Mill has received unfair and discriminatory treatment as compared to other pulp mills and entities that generate and sell electricity within the Province of British Columbia.

As set forth in Mercer's press release of January 26, 2012, the basis for the Claim is that:

- In August, 2008, the Mill entered into an agreement with FortisBC (the "2008 PPA") to purchase all of its electricity needs from FortisBC, and filed the agreement for approval with the Commission. The 2008 PPA would have enabled the Mill to sell all of its self-generated electricity to third party purchasers. At the time that the Mill entered into the 2008 PPA, the agreement complied with all existing regulatory requirements.

- At such time, BC Hydro was obliged to supply a significant portion of FortisBC's energy requirements pursuant to an energy purchase agreement between BC Hydro and FortisBC (the "3808 Agreement") at lower embedded cost rates, the benefits of which were passed on to FortisBC's customers. The energy generated by BC Hydro's hydroelectric facilities is commonly referred to as "Heritage Power" and, as a matter of Provincial policy, is supposed to be made available to all BC Hydro ratepayers, including FortisBC for the benefit of its customers.

- In September, 2008, approximately three weeks after the Mill and FortisBC filed the 2008 PPA with the Commission, BC Hydro made application to the Commission to amend the 3808 Agreement for the purpose of restricting access by customers of FortisBC, such as the Mill, to energy (inclusive of Heritage Power) purchased under the 3808 Agreement, while such customers were selling their own self-generated electricity. The Province of British Columbia argued in favor of BC Hydro's application and the Commission ordered the requested amendment. The Mill was the only pulp mill in British Columbia operationally affected by the amendment.

- The 2008 Agreement was frustrated by the Commission's order. The Mill's ability to purchase energy from FortisBC, while selling its self-generated electricity, was blocked. As a result, the Mill became the only pulp mill in the Province of British Columbia that was required to service all of its internal electricity needs, from self-generation, before being entitled to sell any of its self-generated electricity.

- Other pulp mills throughout the Province have entered into agreements with BC Hydro that entitle them to purchase electricity from BC Hydro at the same time that they sell electricity. A similar arrangement between the Mill and FortisBC was prevented by the Commission order.

- As a result, competing pulp mills within the Province have been and continue to be provided an economic and competitive advantage over the Mill, in perpetuity, not because of technological innovation, greater investment or superior infrastructure, but because of government policy and regulatory intervention. In addition, such pulp mills have been the recipients from BC Hydro of direct subsidies or low interest rate loans, together with agreements to purchase power generated by such pulp mills, below their internal requirements, at favorable, market-based rates. Similar incentives, loans and below net-of-load purchase arrangements have not been made available to the Mill.

-Mercer has engaged in dialogue with the Province and has undertaken subsequent applications and proceedings before the Commission, seeking a reconsideration of the Commission's initial decision, and seeking other alternative remedies. However, the Mill remains barred from purchasing any energy from FortisBC, and continues to be the only pulp mill in the Province of British Columbia that is denied access to any Heritage Power, while selling energy that is not in excess of its operational needs.

OMNOVA Solutions Chairman and Chief Executive Officer Kevin McMullen will speak at Houlihan Lokey's 2012 Global Industrials Conference in New York on Thursday, May 10, 2012.  The presentation will be webcast live beginning at approximately 12:15 p.m. ET.  

Participants may access the live webcast from the Investors page of OMNOVA Solutions' website at www.omnova.com.  Following the conference, an archive will be maintained on the OMNOVA website until May 31, 2012. 

OMNOVA Solutions is a technology-based company with pro forma sales for the twelve months ending February 29, 2012, of $1.2 billion and a global workforce of approximately 2,300.  OMNOVA is an innovator of emulsion polymers, specialty chemicals, and decorative and functional surfaces for a variety of commercial, industrial and residential end uses.  Visit OMNOVA Solutions on the internet at www.omnova.com.

SOURCE OMNOVA Solutions

Clearwater Paper Corporation has announced that Gordon Jones, chairman and CEO, and John Hunter, interim chief financial offer, vice president, and corporate controller, will present at the Stephens Spring Investment Conference onTuesday, June 5, at 8:30 a.m. ET. A live audio webcast of the presentation and accompanying slide materials will be accessible via Clearwater Paper'sinvestor relations section of the company's website at http://ir.clearwaterpaper.com/events.cfm. An audio replay of the webcast will be available at the site for 90 days.

Source: Clearwater Paper Corporation

AbitibiBowater Inc., doing business as Resolute Forest Products, has reported net income of $23 million for the first quarter, or $0.23 per share, on sales of $1.1 billion. This compares with net income of $30 million, or $0.31 per share, on sales of $1.2 billion in the first quarter of 2011.

Excluding $16 million of special items described below, net income for the quarter was $7 million, or $0.07 per share.  Net income excluding special items for the first quarter of 2011 was $10 million, or $0.10 per share.

"Our balance sheet continued to strengthen despite seasonal softness and market headwinds," said Richard Garneau, president and chief executive officer.  "We demonstrated the discipline that sets us apart by taking market-related downtime to control finished goods inventory and by advancing annual pulp mill major maintenance to the first quarter from the second."

DESCRIPTION OF SPECIAL ITEMS

Special items incurred in the first quarter of 2012, net of tax, included:

• $15 million non-cash gain on translation of Canadian dollar net monetary assets
• $12 million gain on disposition of assets
• $4 million charge related to closure costs, impairment and other related charges
• $4 million of transaction costs related to the acquisition of Fibrek
• $3 million non-cash charge related to reorganization tax adjustments
• Income from other items, offset by a severance charge and post-emergence costs

Special items incurred in the first quarter of 2011, net of tax, included:

• $29 million non-cash gain on translation of Canadian dollar net monetary assets
• $10 million non-cash income related to reorganization tax adjustments
• $9 million charge related to closure costs, impairment and other related charges
• $8 million charge for post-emergence costs
• $3 million severance charge
• $1 million income, net, from a gain on disposition of assets, a charge for inventory write-downs and other income

Non-GAAP financial measures, such as adjustments for special items, are reconciled below.

SEGMENT DETAILS

Newsprint

The newsprint segment generated operating income of $21 million, a $5 million decrease from the fourth quarter of 2011.  The decrease reflects a 9% seasonal reduction in shipments and the stronger Canadian dollar, largely offset by lower input costs, mainly recovered paper and power.  The average transaction price remained unchanged and inventories were stable as the Company took 85,000 metric tons of production downtime.

Coated Papers 

Operating income in the coated papers segment was $14 million lower in the first quarter than in the previous quarter, resulting in an operating loss of $1 million. Shipments were stable but the average transaction price declined approximately $30 per short ton on weaker market conditions.  Costs increased by $56 per short ton, primarily as a result of the annual maintenance outage in Catawba, South Carolina.

Specialty Papers

The specialty papers segment generated operating income of $15 million, down from $24 million in the previous quarter.  Shipments were down 13% from the seasonally stronger fourth quarter and operating costs were higher due to a stronger Canadian dollar, offset in part by lower maintenance costs.  The average transaction price remained stable, notwithstanding a decline in market demand to which the Company responded with approximately 36,000 metric tons of production downtime.

Market Pulp

Operating loss in the market pulp segment was $21 million, compared to operating income of $12 million in the previous quarter. The average transaction price continued its downward trend, falling another $38 per metric ton in the first quarter.  Results also included an $11 million charge for annual maintenance outages at two mills, including one advanced from a later quarter in light of softer demand.  Shipments were essentially unchanged from the fourth quarter as the Company took production downtime of over 77,000 metric tons.

Wood Products

The wood products segment reported an operating loss of $6 million in the first quarter, compared to a loss of $5 million in the fourth quarter. Shipments decreased by 8% over the same period, offsetting the $24 increase in average transaction price.

Corporate

Operating income in the corporate segment included a $9 million refund of certain group benefit premiums paid in prior years.

OUTLOOK

"Our outlook for newsprint remains the same: despite modest secular decline in North America, we expect stable pricing, with continued weakness in Asian and European markets as long as the combination of lower ONP prices, a strong U.S. dollar and weaker euro continues," said Mr. Garneau.  "We remain somewhat cautious in our outlook for pulp over the balance of the year, and we plan to complete the bulk of annual pulp mill maintenance in the second quarter.  Pricing pressure in the specialty grades is building as a result of weak demand, especially in high gloss grades, but we expect the coated segment to recover as a result of recent price increase announcements by us and a number of our competitors.  For their part, lumber markets are starting to reflect the gradual improvement in U.S. housing starts." 

Xerium Technologies, Inc, a leading global manufacturer of industrial textiles and rolls used primarily in the paper production process, today announced that since its formal introduction in February 2012, Formsoft has become the fastest-growing tissue fabric product in the company's history with more than 200 orders to date. Formsoft is an advanced tissue forming fabric technology that is specifically designed to help tissue fabric manufacturers improve operational performance at lower costs.

"We continue to match technological innovation with customer demand for products that help them run their machines better and longer," said Stephen R. Light, Xerium's President, Chief Executive Officer and Chairman.

Formsoft is a triple layer tissue forming fabric that has been engineered to provide high drainage performance that produces tissue with improved sheet properties, including formation, tensile strength, and softness. Formsoft delivers the highest fiber support with superior dimensional stability and uniformity throughout the life of the fabric, while also providing improved life potential that is well-suited for the rigors of a demanding tissue machine.

More information on Formsoft is available in the products section of http://www.xerium.com

Source: Xerium Technologies, Inc.

Mercer International Inc. (Nasdaq:MERC) (TSX:MRI.U) ("Mercer") announced that its offer (the "Offer") for all of the common shares (the "Fibrek Shares") of Fibrek Inc. ("Fibrek") expired on April 27, 2012 (the "Expiry Time").

The Offer was conditioned upon, among other things, at least 50.1% of the outstanding Fibrek Shares, on a fully-diluted basis, having been tendered thereunder, which was not met as of the Expiry Time. Accordingly, Mercer and MERC Acquisition Inc. will not acquire any Fibrek Shares that were tendered under the Offer.

In connection with the foregoing, the Support Agreement between Mercer and Fibrek dated February 9, 2012, as amended, has been terminated. All Fibrek Shares that were previously tendered under the Offer and not withdrawn will be returned promptly.

The final round of the “SHOTS Heard Around the World” print simulator-based productivity contest culminates at the drupa exhibition in May.

“Over 150 students from Asia, Europe and North America have been remotely competing at their technical schools and the best students will now meet face-to-face at drupa”, explains Erik Ohls, Senior Adviser from UPM’s Technical Sales.

“The competition is based on solving a series of simulated printing problems in a limited time. The winner will be determined after five 10-minute heats and will be based on who completes the problems to the highest quality and with the lowest production cost.”

Simulation-based training is now the worldwide norm in almost every profession for optimising problem solving skills. UPM has been successfully using printing simulators for several years to train customers and staff to improve their process understanding of printing technology.

The simulators allow the user to see the results of process adjustments on the simulated print copy and the related production cost. UPM works closely with Sinapse Print Simulators, the leader in this field, to implement a unique set of training tools.

The productivity contest encourages the improvement of printing students’ skills globally. The event is co-sponsored by UPM, Printing Industries of America (PIA) and Sinapse.

The final round of this contest will be held on 7th May at 15:00 at the Sinapse Print Stand E64 in Hall 6, close to the UPM stand.

Join us at the SHOTS finals and get a chance to interview the students and to learn more about the unique training programmes.

Verso Paper Corp. has announced the publication of its 2011 Sustainability Report titled "Count on Verso." The report details Verso's progress against its commitment to respect a sustainable balance among environmental, social and economic needs.

"The title of our 2011 report reflects Verso's belief that our company's sustainability commitment carries with it a responsibility to deliver a high level of certainty to everyone we interact with, even in these uncertain times," explains Verso President and CEO Mike Jackson. "Our corporate strategy and disciplined approach to executing it assure our customers and other stakeholders that they can count on Verso to do what we say we will do when it comes to our business, our people and our planet."

2011 Sustainability Report Highlights

• Our excellent safety performance continued in 2011 with a total incidence rate (TIR) of 1.58 and a world-class lost workday incidence rate (LWIR) of 0.20. We believe that zero injuries is achievable and continue to strive toward that goal.
• Our 2011 energy initiatives moved us nearly half the way toward keeping our 2009 Save Energy Now LEADER pledge to reduce energy per unit of production 25 percent by 2019.
• We completed a $45 million renewable energy project at our Quinnesec Mill in Michigan that will deliver 28 megawatts of green energy, an amount equivalent to the electricity used by 21,000 households annually.
• Sixty percent of the energy generated by Verso in 2011 came from renewable, greenhouse gas-neutral biomass.
• 70 percent of the wood fiber Verso used was third-party certified to a credible forest management certification standard and all four Verso mills maintained compliance with the Programme for the Endorsement of Forest Certification (PEFC™ - PwC-PEFC-319) and Forest Stewardship Council™ (FSC^® License Code FSC^®-C019085) chain of custody standards.
• We increased our sale of chain-of-custody certified papers to 33% of total sales, up from 26% in 2010.
• The company completed an innovative, two-year pilot project with several customers and other stakeholders that added 1.4 million certified acres in Maine, an increase of 20 percent.
• Each of Verso's four mills applied for and received ISO 14001:2004 recertification after successfully completing an independent audit of its environmental management system.
• Verso once again had a near perfect environmental compliance record with only one notice of violation. Cited issues were corrected immediately and no fines were assessed.
• Verso's combined employee and company United Way contributions totaled more than $300,000, a 3 percent increase over 2010.

For more information, download a full copy of the Verso 2011 Sustainability Report from the company's website at www.versopaper.com/sustainability.

Source: Verso Paper Corp.

International technology Group ANDRITZ has successfully started up a PrimeLineCOMPACT tissue machine delivered to Saigon Paper Corporation, one of the leading Vietnamese producers of tissue and board. With a speed of 1,650 m/min, the 2,850 mm wide machine has an annual production capacity of 25,000 t.

ANDRITZ’s scope of supply included the complete tissue machine (from stock preparation to the finished reel, including automation) in a modularized design that is easy to configure, install, and operate. The machine is equipped with a PrimeDry Steel Yankee cylinder (diameter: 3.66 m) to enable high production capacity and high operational safety.

With this successful start-up, ANDRITZ PULP & PAPER, which manufactures its tissue machine components in Europe and China, is strengthening its position as one of the leading suppliers of tissue machines and local services in Asia.