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SPECIALTY PAPERBOARD INC. DISCUSSES SECOND-QUARTER OUTLOOK; ANNOUNCES AGREEMENT FOR COGENERATION FACILITY

 BRATTLEBORO, Vt., June 1 /PRNewswire/ -- Specialty Paperboard Inc. (NASDAQ: SPBI), a producer of special paper grades used in the manufacture of office products, book covers and gaskets, today announced that it anticipates results from continuing operations in the second quarter of 1993 to be substantially below current analysts' estimates, which range from 38 cents to 42 cents per share. Net earnings for the period, however, will be favorably impacted by an extraordinary item -- receipt of a $4.5-million payment related to an agreement for a cogeneration facility to be located at the company's Beaver Falls, N.Y., mills. The cogeneration payment will add approximately 71 cents per share to the second quarter's earnings and will result in total earnings for the quarter substantially exceeding the original estimates.
 According to Alex Kwader, president and chief executive officer, "The level of sales activity in April and May has been well below normal for what is typically our strongest quarter of the year." Kwader explained that Specialty Paperboard customers, who manufacture office products, book covers and gaskets from material produced by the company, are ordering less than anticipated, due principally to the sluggish economy and inventory reduction programs by the company's largest customers.
 "We're seeing lower-than-anticipated sales for office products and book cover materials, while gasket materials remain essentially in line with our earlier expectations," Kwader added. "It's important to note that we believe the sales downturn is not linked to structural changes or market share loss. We expect our sales level to return to normal as economic conditions improve in our office products and book cover markets."
 The company also announced the successful conclusion on May 28, of its cogeneration agreement with Kamine/Beiscorp Beaver Falls L.P. for a cogeneration project at SPI's Beaver Falls, N.Y., mills. Under the agreement with Kamine/Beiscorp, the company will receive a total of $11.5 million of cash plus significant discounts on its purchase of steam for a period of 15 years beginning on the start-up date of the cogeneration facility which is expected to occur in mid 1995. While the company did not forecast the anticipated savings over the 15-year period, it disclosed that it incurred steam costs for the year of 1992 of $2.0 million.
 The company received the first payment of $4.5 million on May 28. This payment will be reflected in the company's second-quarter results. The company will receive the remaining $7.0 million over a two-year period, beginning with a $3.0-million payment to be received upon the facility's anticipated start-up date in mid 1995. Of the remaining $4.0 million, $2.0 million will be received at the end of the facility's first year of operations with the remaining $2.0 million to be received one year later. These payments and the steam discounts will be reflected in earnings when received.
 Proceeds from the first Kamine payment have been used to lower the company's debt, which is a key objective in positioning the company for longer term performance. Savings from interest on the $4.5-million debt reduction will yield an additional 5 cents per share in operating results over the next 12 months. Kwader said that this debt reduction also favorably positions the company to restructure the remaining $25 million in debt with the expectation of achieving lower interest rates.
 "The successful conclusion of this transaction is viewed by the company as a major event as it brings the company significant economic benefits in the form of cash, which will be used to reduce both debt and ongoing interest expense and improve net worth," Kwader said. "The company has been pursuing this transaction for over four years and is extremely pleased with the final outcome."
 Specialty Paperboard, which had 1992 revenues of $84.2 million, manufactures office products materials which are converted by its customers into products such as databinders, report covers, ring binders and file and index guides. The company also produces latex reinforced book cover and gasket materials.
 -0- 6/1/93
 /CONTACT: Bruce Moore, vice president and chief financial officer, of Specialty Paperboard, 802-257-5902; or Dolores Chenoweth, investor relations counsel, of in.ves'com, 503-221-2087, for Specialty Paperboard/
 (SPBI)


CO: Specialty Paperboard Inc.; Kamine/Beiscorp Beaver Falls L.P. ST: Vermont IN: PAP SU: ERP

LM -- SE005 -- 3753 06/01/93 07:50 EDT
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Publication:PR Newswire
Date:Jun 1, 1993
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