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Georgia-Pacific To Reduce Gypsum Wallboard Production, To Take $75 Million Charge

Press release from the issuing company

ATLANTA, June 13 -- Georgia-Pacific Corp. today announced plant closures and indefinite curtailments equaling approximately 45 percent of the company's gypsum wallboard production capacity in the United States and Canada. "Current market conditions for wallboard are forcing us to take action now to close these facilities and reduce our overall production,'' said A.D. "Pete'' Correll, chairman and chief executive of Georgia-Pacific. "These steps are critical for the long-term viability of our wallboard business. Current capacity and pricing levels in the wallboard business are unsustainable and operating our plants at full production is unprofitable for Georgia-Pacific.'' Based on analysis of its gypsum wallboard production capacity, Georgia- Pacific will close wallboard plants at Savannah, Ga.; Long Beach, Calif.; and Winnipeg, Manitoba, Canada. The company also will indefinitely idle commodity wallboard production lines at Acme, Texas; Sigurd, Utah; and Blue Rapids, Kan.; and reduce operations at its remaining 13 wallboard production facilities to a maximum five-day work schedule for as long as current market conditions exist. In addition, Georgia-Pacific will offer for sale its recycled paperboard plant at Delair, N.J., due to the decreased need for face paper used on the company's wallboard. "These types of decisions are difficult to make, particularly in light of the more than 500 employees who will be impacted, but we cannot continue at the current level of production given the weak market conditions, surplus capacity and increased energy costs, especially in California,'' said David Fleiner, president of G-P Gypsum, the corporation's gypsum products subsidiary. "This capacity reduction allows G-P Gypsum to meet commitments for our new ToughRock(TM) wallboard product line, as well as our Dens-Glass® portfolio of products and our industrial plaster and door components businesses, while maintaining our market presence across North America. Given the current economic forecasts, we do not foresee altering the limited production schedule in the near future.'' The company expects to take a charge against earnings in second quarter 2001 of approximately $75 million to cover all costs associated with these actions, including severance and other related costs.

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