Finch Paper LLC FINCH WOODYARD MODERNIZATION PRESENTED TO WARREN COUNTY ECONOMIC DEVELOPMENT COUNCIL February 23, 2016

Who We Are Finch Paper: A Storied NY Business

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Founded in 1865 and located in the heart of downtown Glens Falls, NY

Integrated mill employs nearly 700 New Yorkers who convert raw logs into pulp, and pulp into paper

Four paper machines produce in excess of 250k tons of finished paper annually

Three converting machines cut and package paper rolls into a variety of sheet sizes

Onsite power plant generates necessary steam for the pulp mill and paper machines, plus a turbine that co-generates electricity

Purchases additional electricity from an onsite hydro operated by Brookfield Management

Woodyard chips approximately 650k tons of logs per year (majority sourced from New York logging operations) to feed the pulp mill that produces 120k tons of pulp annually

Owns and operates a 65 acre landfill in the nearby Town of Northumberland for the disposal of industrial paper sludge

Operates a warehouse in Glens Falls and owns multiple real estate holdings including residential estates in the Town of Queensbury and Blue Mountain Lake

Sustainably manages privately held forestland for small New York landowners and via an agreement with The Nature Conservancy to manage 161k acres of forestland

Who We Are Keystone Economic Engine of Upstate NY

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Indirectly employs over 2,240 full time New Yorkers1

Financial impact on the local economy is over $373mm1

Through a public-private 50/50 proceeds-sharing partnership with Saratoga County, Finch purchased and will operate a municipal solid waste landfill that will provide a projected $39mm in revenue to the county over the estimated 20-year lifetime of the landfill

• Finch paid Saratoga County $4mm upon closing in January 2014 and is expecting to pay an additional $2.1mm in 2016

• In addition, the project will expand the local tax base by over $100,000 per year

1 Economic Impact of Finch Paper of Glens Falls, New York. Prepared by Hugh Canham, PhD, Forest and Economic Research, State University of New York College of Environmental Science & Forestry. September 2012

Who We Are Environmental Stewardship

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Long history of sustainable practices starting one hundred years ago when Finch hired one of the nation’s first professional foresters with the mandate to cultivate our vast Adirondack lands to satisfy the growing demand for wood, while at the same time conserving the natural resources and the wildlife that make their homes here.

Manages forests primarily using the Shelterwood System - gradually harvest a forest in stages over a 70 to 150-year period, taking only the poorest-quality trees to give healthier trees room to grow

Using sustainable forestry practices, we cut less than what can grow every year (cut less than 4% of the forest) from acres lacking herbicides, insecticides, fertilizers or other chemicals to help trees grow

Recaptures biomass (i.e., bark and sawdust) produced during the pulping process to be used as fuel in the power plant

Recaptures cooking liquor from the pulp making process to burn as fuel

Recaptures CO2 emissions from the power plant to create Precipitated Calcium Carbonate (PCC) – a particle used in the paper-making process

Responsibly utilizes the Hudson River: • Each river gallon consumed at Finch is recycled an average of 18 times before it is cleanly discharged • In-house wastewater treatment plant with a DEC compliance rate of 99.9% - better than other New York state mills and Glens

Falls’ municipal wastewater treatment facility

After sustainable stewardship for nearly a century, Finch sold 161,000 acres of its Adirondack forestlands (featuring 415 miles of rivers and streams, 300 lakes and ponds, 90 mountain peaks and 16,000 acres of wetlands) to The Nature Conservancy, a nonprofit conservation group. The transaction ensured that this unique New York land is protected as wild space into perpetuity.

Who We Are Atlas / Blue Wolf Ownership

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Atlas Holdings Based in Greenwich, Conn., Atlas Holdings is comprised of 13 companies with more than 10,000 employees that operate from more than 90 facilities throughout North America, Europe, Asia, and Australia, generating revenue in excess of $3.0 billion annually. Atlas works closely with its operating partners and management teams to build strong companies that can sustain long-term success.

Blue Wolf Capital Partners Blue Wolf has decades of experience investing in and growing middle-market companies. The firm’s principals have extensive experience in not only the capital markets and working with middle market companies, but also in constructively working with government and organized labor.

• Disciplined, low debt structure

• Focused on building a sustainable business

• Works closely with its operating partners who have deep expertise in pulp and paper

• Active and committed sponsors with significant cash equity of approximately $40mm invested in the business

• Focused on employee safety – moved Recordable Incident Rate (RIR) from 5.65 in 2007 (year of purchase) to 1.84 in 2012

Atlas and Blue Wolf Are Responsible and Invested Owners

The North American Uncoated Freesheet Market Is In Secular Decline • Demand decline of 3%-4%

Five Largest Companies Control Approximately 80% of the Market • Finch’s market share is approximately 2%

Domestic Production Predominantly Occurs in the Southern United States • Most mill closures have historically occurred in the Northeast due to higher

electric, labor and other operating costs Competition from Imports Rising

• Domestic manufacturers are facing increasing offshore competition from Asia, Latin America, and Europe

Market Environment Caused Numerous Domestic Mill Closures and Layoffs • From 2001-2010 37 mills were shut down; 9 mills were shut down from 2011-

2012; multiple pulp mills/mills in New England shutdown in the past three years

• RISI expects capacity closures to average 234k tons per year between 2013 and 2017 to balance market

Finch’s Industry Position Industry Overview

Finch’s Industry Position Uncoated Freesheet Market Capacity by Company

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3,553

2,732

1,099 869

733

278 250 225 1552 155 152 137 116 105 99 88 86 79 71 70 50 20 -

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

North American UFS Capacity1

(By Company)

1UFS capacity (does not include uncoated mechanical or coated capacity) as of September 2013; excludes UFS capacity announced to be closed by end of 1st Quarter 2014 2Harbor Paper mill is currently idle

Finch’s Pulp Mill is at the Center of Upstate New York’s Integrated Forest Economy

Finch Pulp Mill

Paper Chips

Mulch Operations

Plywood & Furniture Facilities Biomass & Pellet Plants

Biomass Veneer Logs

Sawdust

Sawdust

Saw Logs

Sawmills

Pulp Logs

Working Forests

Bark

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Finch’s Impact on Rural Communities Dependent on Forest Jobs

The majority of Finch’s wood suppliers are independent, small businesses from rural towns in Upstate New York

Loggers, foresters, manufacturing employees and their families, live, volunteer, and spend money in their rural communities

The Finch Mill is extremely important to the City of Glens Falls

But equally important to the small rural communities in Upstate New York within Finch’s wood sourcing area

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Finch’s Fiber Sourcing & Forest Management Far-Reaching Impact On the Northeast

Finch buys pulpwood and chips, manages forestland and provides log supply to sawmills within a 200 mile radius of the mill

Finch’s activity is of extreme importance to rural communities, forest landowners, small-business owners and families within the Northeast that are participants in the integrated forest economy

Finch Paper Mill

Location of sawmill, plywood, pallet, biomass and pellet facilities that do business with Finch

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Investment in Finch Drives Investment in Rural New York

Finch Woodyard

Wood Yard Investment

An investment in the Finch wood yard provides loggers in rural communities with the confidence to reinvest (and banks to lend) and modernize. Thus, increasing long-term rural economic stability and industry sustainability.

Lacking investment in Finch’s wood yard, loggers and suppliers did not reinvested in their equipment. Loggers retained old equipment matching Finch’s out-of-date wood processing. This cycle has stalled reinvestment in New York’s logging sector, which negatively impacts efficiency and weakens economic stability.

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Investment Impact on the Upstate New York Integrated Forest Economy

Working forests are the foundation and pulp mills are the center of an integrated forest economy

Finch’s facility is New York’s second largest consumer of wood fiber

In New York’s integrated forest value chain, there are only two pulp mills, which together account for the largest portion of wood consumption in Upstate New York

Given the position and magnitude of wood consumption at Finch’s pulp mill, any positive or negative impacts on the pulp mill result in the greatest impact along the value chain of any participant in the value chain

The integrated forest economy is a keystone economic ecosystem in the Upstate New York economy and is critical for the health of rural communities in New York

Without Finch’s pulp and paper mill, the integrated forest value chain would suffer significant hardship

Investment in Finch, will spur investments by other companies in the value chain (i.e., saw mills, logging, trucking etc.) – Given the significance of the pulp mill in the value chain, an investment in Finch can stimulate considerable investments by other integrated forest participants

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Finch Woodyard Modernization Overview The Finch paper mill continually seeks to implement the most state-of-the-art

equipment in order to improve efficiency, especially in terms of energy consumption

Woodyard Modernization project is aimed at reducing Finch’s cost structure, advancing Finch’s competitive position in the wood basket, and improving product quality

Project has considerable positive implications for plant operation efficiency in terms of fuel, electricity, steam and wood yield – The significant reduction in energy usage is due to new debarking technology and

lessened conveying of wood, as well as providing the ability to eliminate process steps and shutdown equipment in the existing woodroom.

The new debarking technology is both more efficient in terms of energy consumption and in terms of yield – Yield increase comes from the fact that rotary debarking is able to remove bark with

less whitewood loss when compared to Finch’s existing drum debarking. – Additionally, a higher percentage of acceptable chips are made from each piece of 8ft

wood due to: • Half the “ends” versus 4ft wood (existing conveyors could not convey 8ft pulpwood) • Less damaged whitewood on logs going to the chipper when compared to drum debarking • Better chipper production due to positioning of 8ft wood in the chipper throat when hitting

the chipper disc.

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Finch Woodyard Modernization Overview The modernization project includes a new, state-of-the-art, side-discharging,

batch rotary debarker, infeed/outfeed decks and more efficient conveying lines (replacing longer lines)

The new debarker is located outside, as opposed to the existing (2), in-line drum debarkers

The drum debarkers required pulpwood to be steam heated during colder months, in order to soften the bark enough to allow for effective drum debarking – None of the aforementioned assets are utilized in the new debarking process and

therefore, their steam demand was eliminated – This significantly reduces natural gas consumption

In order to operate the new woodyard process, the yard required site-work including re-grading and reorganization to accommodate new rolling stock

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Finch Woodyard Modernization Overview The 8ft process requires new, more fuel-efficient rolling stock to handle 8-ft

wood and different unloading, storing and loading processes. Specifically, this equipment can handle 8ft wood and uses a wheel drive-

train versus track drive-train in order move 8ft stacked inventory quickly across the yard

The Caterpillar equipment has full GPS and diagnostic telemetry for increased uptime/preventative maintenance and significant fuel efficiency gains

The new yard layout and 8ft stacking eliminates/greatly reduces the need to store wood at Pruyn’s office, significantly reducing truck traffic

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Even with the enormous benefits for Finch and its suppliers, the upfront capital commitment was too great for the business case without REDC funding

The fact that this project had stopped and started over the past 30 years is a testament to this difficulty

Finch Woodyard Modernization Overview New System Diagram

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Infeed Apron Bark Pad

Bark Stackout Conveyor

Side-Discharging Rotary Debarker

Infeed Deck

Bark Collection Conveyor w/ Bark Chute Under Debarker

Debarker Outfeed Chute

Outfeed Deck 1

Outfeed Deck 2

Log Transfer 1

Log Transfer 2

Curved Rolls (1,2&3)

Chipper Feed 1 Transition Slide

Outfeed Deck Discharge Apron

Chipper Feed 2 (w/Kone Infeed Speedup Roll, referred to as “Kone Feed System”)

Chipper Feed 1 Kicker Roll

Log Transfer Apron

Finch Woodyard Modernization Overview New Yard Diagram

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South Road

East

Roa

d

Truck Clean-Off Area All Traffic Exit

All Traffic Entrance

Finch Woodyard Modernization Results Woodyard Modernization

– Safely executed the installation of equipment in September 2016 – Significant, visible logger reinvestment directly a result of Finch’s woodyard

investment • Significant decrease in average turnaround times (1-1.5 hrs down to <30 min) for

logger deliveries • All but eliminated need for Pruyn’s Island log storage in first season of operation,

greatly reducing truck traffic • Substantial increases in load sizes (5-6 tons more per truck) due to new trailer

investments – more wood per gallon of fuel • Leads to significant increase in profitability of the logging businesses and stabilization

of their longer-term business (profits and reliability) • Finch’s wood inventories are at more sustainable levels

– ROI in energy, wood yield, quality, and other production metrics meeting or exceeding expectations

• Woodyard can now support a higher digester rate, meaning Finch can produce more pulp (supporting local suppliers) instead of buying off the market

• Improves cost structure of the mill to make it competitive in the modern UFS market 18

Yard Cleanup – Biomass Reclaimed, Yard Design for Cleanliness & Inventory Mgmt

Before – Yard Filled With Debris Piles and Biomass

After– Yard cleanup (waste materials without a higher-better-use are being used for cover at the MSW landfill);

Better inventory management of fibers

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Yard Cleanup – Biomass Constrained, Yard Resurfacing

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Before – Unconstrained biomass with biomass floor proliferation;

Sloppy roads resulted in lost fiber, dirt in process and suppliers

experiencing difficulty delivering

After– Reclaimed biomass inventory; Yard resurfacing; Proper constraining of biomass

inventories and management in new yard structure improves lb of bark per lb of

steam for biomass boiler; New roads, water management to further ensure Finch is the

mill of choice for suppliers

Inefficient & Unreliable Legacy Equipment Upgrade

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Before – Oversized, unreliable Hitachi equipment, past useful life; Incorrectly

sized/wrong application front-end loaders/buckets

After– New, efficient, leased Cat equipment with maintenance program and telemetry; wheeled versus tracked

machines allow for new 8ft yard process

Piling 8ft Pulpwood In Yard

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Before – Hay-stacking

4ft

After– Piling 8ft

E&I Upgrades for Improved/Reliable Operations, Control & Data

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Before – Antiquated E&I cabinets

In Process– Modern electrical; clean-design at specs above mill/legal standards, including

new safety redundancy

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New Equipment Debarking & Conveying

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New Equipment – Debarker Rotors