TORONTO, Oct. 1, 2012 /CNW/ – Cyrus Capital Partners, L.P. (“CCP“) today announced that, on September 28, 2012, CCP acquired indirect
control over an aggregate of 446,433 common shares (“Common Shares“) of Catalyst Paper Corporation (“Catalyst Paper“) as a result of completion of a private purchase and sale transaction
(the “Private Purchase and Sale“) pursuant to which Cyrus Opportunities Master Fund II, Ltd. (“CMF II“) acquired 378,771 Common Shares and Cyrus Select Opportunities Master
Fund, Ltd. (“CSOM“) acquired 67,662 Common Shares of Catalyst Paper from a third party at
a price of CDN$1.08 per Common Share.

Following completion of the Private Purchase and Sale, CCP now exercises
indirect control over an aggregate of 1,977,629 Common Shares,
representing approximately 13.73% of the issued and outstanding Common
Shares. Prior to completion of the Private Purchase and Sale, CCP
exercised indirect control over an aggregate of 1,531,196 Common
Shares, representing approximately 10.63% of the issued and outstanding
Common Shares. Ownership of the Common Shares indirectly controlled by
CCP is collectively held by CMF II, CSOM and other funds managed by
CCP, including Cyrus Opportunities Fund II, L.P. (“CLP II“), Crescent 1, L.P. (“CRES“), Cyrus Select Opportunities Fund, L.P. (“CSOP“) and CYR Fund, L.P. (“CYRF” and, collectively with CMF II, CSOM, CLP II, CRES and CSOP, the “Funds“). The table below sets forth the number and percentage amount of
outstanding Common Shares owned by each of the Funds after giving
effect to the Private Purchase and Sale:

CCP is the investment manager of each of the Funds and exercises sole
discretion over all investments decisions made by each of them.

For purposes of calculating the percentages of Common Shares owned by
the Funds and indirectly controlled by CCP, CCP has assumed that there
were 14,400,000 Common Shares outstanding as of September 28, 2012, as
disclosed by Catalyst Paper in its press release dated September 13,
2012 announcing completion of its reorganization under the Companies’ Creditors Arrangement Act, a copy of which press release was filed and is available on SEDAR at www.sedar.com.

Other Information

CCP acquired indirect control over, and CMF II, CSOM and the other Funds
acquired ownership of, the Common Shares that are the subject of this
report for investment purposes.

In connection with the investment by the Funds in the Common Shares, CCP
may engage in communications with members of management and the board
of directors of Catalyst Paper, other current or prospective
shareholders, industry analysts, existing or potential strategic
partners or competitors, investment and financing professionals,
sources of credit and other investors with respect to Catalyst Paper.
CCP intends to review the Funds’ investment in Catalyst Paper on a
continuing basis. Depending on various factors including, without
limitation, Catalyst Paper’s financial position, the price levels of
the Common Shares, conditions in the securities markets and general
economic and industry conditions, CCP’s or the Funds’ business or
financial condition and other factors and conditions CCP deems
appropriate, the Funds may in the future take such actions with respect
to their investment in Catalyst Paper as CCP deems appropriate
including, without limitation, seeking board representation, making
proposals to Catalyst Paper concerning changes to the capitalization,
ownership structure or operations of Catalyst Paper, acquiring
additional Common Shares, and/or selling or otherwise disposing of some
or all of their Common Shares. In addition, CCP may formulate other
purposes, plans or proposals regarding Catalyst Paper or any of its
securities to the extent deemed advisable in light of general
investment and trading policies, market conditions or other factors or
may change its intention with respect to any and all matters referred
to above.

Neither the issuance of this news release in connection with the matters
disclosed in this news release nor the anticipated filing by CCP of the
corresponding “early warning” report required to be filed in accordance
with applicable Canadian securities laws is an admission that an entity
named or otherwise referred to in this news release owns or controls
any described securities or is a joint actor with another entity named
or otherwise referred to in this news release.

CCP’s address and other contact information is set forth below.

SOURCE Cyrus Capital Partners, L.P.