Atlanta, Georgia, USA, 22 July 2008 -- /PRNewswire/ -- Caraustar Industries, Inc. (Nasdaq: CSAR) today announced that effective 18 July 2008, it permanently ceased production of uncoated recycled boxboard (URB) at its Chattanooga Paperboard mill. Caraustar will continue to operate the recycling center at this location. Chattanooga Paperboard had an annual capacity of approximately 60,000 tons. The company expects to retain its Chattanooga customers and service their needs from other Caraustar locations.

In making the announcement, Thomas C. Dawson, Jr., vice president, Mill Group, stated, "The decision to cease production of URB at the Chattanooga mill reflects management's continued focus on maximizing capacity utilization and operating efficiencies in an increasingly challenging economic environment. We are pleased to continue a vital presence in Chattanooga through the operation of our recycling center, which has been beneficial to Caraustar, local municipalities, and the Chattanooga community."

Approximately 67 salaried and hourly employees are affected by the mill closure. Caraustar will provide a comprehensive program of separation pay, benefits continuation and job assistance to these employees.

Associated with the end of paperboard production in Chattanooga, the company will record a pretax charge of approximately USD 7.9 million, of which approximately USD 5.8 million will be noncash. This rationalization is expected to generate an estimated USD 9.0 million in annual pretax savings.

Caraustar Industries, Inc. is one of North America's largest integrated manufacturers of 100% recycled paperboard and converted paperboard products. The company is a socially responsible corporation, is committed to environmentally sound practices, and is dedicated to providing customers with outstanding value through innovative products and services. Caraustar has developed its leadership position in the industry through diversification and integration from raw materials to finished products. Caraustar serves the four principal recycled boxboard product end-use markets: tubes and cores, folding cartons, gypsum facing paper, and specialty paperboard products. For additional information on Caraustar, visit www.caraustar.com.