Caraustar Industries, Inc. Announces Facilities Closures and Equipment Investments

Atlanta, Georgia, USA, 10 January 2007 -- /PRNewswire/ -- Caraustar Industries, Inc. (NASDAQ:CSAR) today announced the closure of its Lafayette Paperboard mill in Lafayette, Indiana.

The Lafayette mill is an uncoated recycled boxboard (URB) manufacturing facility with an annual capacity of 64,000 tons. Associated with this mill closure, the company will record a pre-tax charge of approximately USD 9.3 million, of which approximately USD 7.9 million will be non-cash.

This rationalization is expected to generate an estimated USD 5.0 million in annual pre-tax savings. The closure of the Lafayette mill will affect approximately 73 salaried and hourly employees.

The company also announced the rationalization of four tube and core converting facilities in Amarillo, Texas; Vacaville, California; Grand Rapids, Michigan; and Leyland, UK. The company will record pre-tax charges of approximately USD 2.6 million with these closures, of which approximately USD 1.2 million will be non-cash.

These rationalizations are expected to generate an estimated USD 1.5 million in annual pre-tax savings. The closure of the tube and core facilities will affect approximately 58 salaried and hourly employees.

The closure of the Lafayette mill and the tube and core facilities reflects the company's previously announced plans to achieve greater cost efficiencies throughout its system and better use capacity. With the exception of the Leyland, UK, facility, Caraustar expects to consolidate most of its mill and tube and core converting facility production into other existing Caraustar locations. Caraustar will provide a comprehensive program of separation pay, benefits coverage, and job assistance to the affected employees to facilitate their transition to alternate employment.

The company additionally announced an investment of USD 4.0 million in five high-speed tube winders. These machines will be installed throughout the Caraustar system in 2007. This investment will allow Caraustar to reduce its manufacturing costs, and provide higher quality products and better service to its customers.

Caraustar, a recycled packaging company, is one of the world's largest integrated manufacturers of converted recycled paperboard 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, cores, and composite cans; folding cartons; gypsum facing paper; and other specialty paperboard products. For additional information on Caraustar, visit the company's Web site at www.caraustar.com.

Source: Caraustar Industries, Inc.