Arclin Reaches Agreement In Principle  With Key Lenders To Restructure Debt
Customer Supply to Continue Uninterrupted
Receives US$25 Million Financing Commitment
Elects to File Voluntary Chapter 11 and CCAA Proceedings to Implement Financial Restructuring
 MISSISSAUGA, Ontario – July 27, 2009 – Arclin, a privately held provider of bonding and surfacing solutions, announced today that it has reached an agreement in principle (“the agreement”) with certain of its key senior lenders on the terms of a financial restructuring to strengthen the Company’s balance sheet and enhance its financial flexibility.
Under terms of the agreement, Arclin’s funded indebtedness will be reduced from US$234 million to US$60 million.  A post-petition financing facility of US$25 million is also part of the financial restructuring.

In order to facilitate its financial restructuring, Arclin today elected to file for court-supervised restructuring proceedings in the United States and in Canada.  Arclin’s U.S. companies have filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.  Arclin’s Canadian companies have made a filing with the Ontario Superior Court of Justice and have obtained an Initial Order authorizing Arclin to reorganize under the Companies’ Creditors Arrangement Act (“CCAA”).  Arclin’s subsidiaries in Mexico are not included in the filings.  

Claudio D’Ambrosio, Arclin’s President and Chief Executive Officer, said, “We are very pleased to have reached an agreement in principle with certain of our key senior lenders, which we believe underscores their confidence in our business, and represents an important step forward for our company.  Although our operations are strong and our diverse portfolio of businesses has helped us maintain positive operating EBITDA in 2009, continued weakness in our core markets has reduced our cash flow and our ability to comply with certain covenants under our debt obligations.  Our current capital structure was put in place in 2007, under a different economic climate and at the top of the last business cycle.  We are now taking appropriate steps to align our capital structure with the realities of today’s markets and economy. Having reviewed the options available, we determined that the court-supervised restructuring proceedings will accelerate – and finalize – our financial restructuring and that this is the best course of action for Arclin.  This restructuring process will allow us to continue to support our customers, suppliers and employees while we work to enhance Arclin’s position as a strong and innovative supplier.”

In conjunction with the filings, Arclin has received a commitment for US$25 million in financing.  Upon approval by the U.S. Bankruptcy Court and the Ontario Superior Court of Justice, the new financing, combined with cash generated from the Company’s ongoing operations, will be used to support the business during the restructuring process.  Arclin intends to continue to meet its obligations going forward to its customers, suppliers and employees.

Mr. D’Ambrosio added, “We look forward to working together with all of our stakeholders to complete a successful financial restructuring.  Arclin remains committed to providing our customers with innovative bonding and surfacing solutions for today’s building and construction, engineered materials and natural resource markets.  We appreciate the ongoing dedication of all of our employees, whose hard work is critical to our success and the future of Arclin.  I also would like to thank our customers, suppliers, lenders and business partners for their support as we work to position Arclin for continued profitable growth.”

Arclin has established a toll-free Restructuring Information Hotline for interested parties, at (866) 967-1787 in the U.S. or at (888) 802-3216 in Canada.  In addition, websites have been set up by Arclin’s Court appointed Monitor in Canada and by the Company’s Claims Agent in the U.S., both of which contain Court documents and other updates (www.ey.com/ca/arclin and www.kccllc.net/arclin).

About Arclin
Based in Mississauga, Ontario, Arclin is a leading provider of innovative bonding and surfacing solutions for the building and construction, engineered materials and natural resource markets. Arclin provides bonding solutions for a number of applications including wood based panels, engineered wood, non-wovens and paper impregnation. As a world leader in paper overlays technology, Arclin provides high value surfacing solutions for decorative panels, building products and industrial specialty applications for North American and export markets.

Contacts
Kevin Griffin Director, Marketing and Communications (919) 542-2526 ext 3020
Andy Brimmer / Andrew Siegel / Ariel LeBoff Joele Frank, Wilkinson Brimmer Katcher (212) 355-4449