Catalyst Paper Clarifies Media Reports on Nature of Recapitalization Process

• interest on the New Notes will be payable semi-annually in cash at an annual interest rate of 11 percent or, at the option of company, interest may be partially paid in kind, but if that option is taken for any semi-annual interest payment, interest for that payment will be calculated at an annual rate of 13 percent with 7.5 percent being paid in cash and 5.5 percent being paid in kind through the issuance of additional New Notes;