Glatfelter Comments on Mill Fire in Scaer, France

P. H. Glatfelter

announced today that it has completed a preliminary assessment of the damage resulting from an October 14th fire at its paper mill in Scaer, France. The fire damaged the electrical system primarily servicing paper machine #3 and certain mill infrastructure. There were no injuries or environmental impact to report. While the initial inspection of the mill's two paper machines indicates there was no damage, it may take several weeks to restart the machines following the restoration of electrical equipment and completion of clean up activities. Paper machine #4 is expected to be down approximately 3-4 weeks and paper machine #3 approximately 6-8 weeks. The finishing and shipping operations were not impacted by the incident. Shipment of customer orders resumed within 24 hours and on site inventories are adequate to satisfy orders through mid-November. Given the flexibility of its assets and mill production systems, and available capacity at other Company facilities to meet production needs, the Company expects no interruption in its ability to supply customers. An assessment of the costs for the impact of inventory loss, equipment damage, and clean up costs is underway. Based on its preliminary assessment, the Company expects no significant financial impact from this incident as it is expected to be covered by insurance, subject to a deductible of $0.5 million. However, there may be an impact to fourth quarter results due to downtime and the timing of recording costs associated with the fire versus recognition of the insurance recovery under the applicable accounting standards. The Scaer mill produces specialty papers and wet-laid nonwovens on two inclined wire paper machines for the food and beverage markets as well as technical specialty paper grades. Approximately 130 Glatfelter employees work in this mill.