Mr. Giovanni Iadeluca reports

FORTRESS PAPER PROVIDES UPDATE ON AUXILIARY SYSTEM FAILURE AT ITS DISSOLVING PULP MILL

Fortress Paper Ltd. has completed an assessment of the failure of a pressurized auxiliary gas collection system at the Fortress specialty cellulose mill (FSC mill) in Thurso, Que., that was reported on Sept. 21, 2017. The company has identified the source of the failure, and is in the process of repairing and replacing the damaged components.

The company has dispatched personnel to multiple supplier and repair locations to further attempt to expedite the work to be completed. Based on best-effort commitments provided by equipment and parts suppliers, management believes that production at the FSC mill will be restarted on or prior to Oct. 9, 2017. The Fifth Digester project continues to advance in the normal course, and the cogeneration facility continues to operate at a reduced rate.

Giovanni Iadeluca, president of the FSC mill, commented, "Although the system failure was an unforeseen event, we are proud of our team's response to the incident, protecting all of our employees and workers from any injury."

The company has initiated an insurance claim pursuant to its property damage and business interruption insurance coverage, which has a $2.5-million deductible. Based on current information, the company is confident that costs associated with the replacement and repair of damaged equipment, and business interruption costs should be covered by the insurance claim.

About Fortress Paper Ltd.

Fortress Paper operates internationally in two distinct business segments: dissolving pulp and security paper products. The company operates its dissolving pulp business at the FSC mill, which has expanded into the renewable energy generation sector with the construction of a cogeneration facility. The company operates its security paper products business at the Landqart mill located in Switzerland, where it produces banknote, passport, visa, and other brand protection and security papers.

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