Catalyst Paper CorporationBusiness Review

September 17, 2009

Barclays Capital 2009 High Yield Paper & Packaging ConferenceNew York

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Catalyst Paper Corporation

Largest producer of specialty printing papers and newsprint in Western North America

Six mills with a combined annual capacity of 2.5 million tonnes of production– Paper: 2.1 million tonnes– Pulp: 0.4 million tonnes

Last twelve months to June 30, 2009– Sales: $1,641 million– EBITDA before specific items: $216 million

Headquartered in Richmond, B.C., Canada

Common shares trade on the Toronto Stock Exchange under the symbol CTL

TSX filer and SEC registrant

Website at www.catalystpaper.com

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Forward-looking Statements

The presentation and answers to questions today contain forward-looking statements that are based on management’s assumptions, including assumptions relating to overall economic conditions, levels of advertising and circulation, market conditions and demand for the Company’s products, production volumes and pricing, structural changes in industries which consume the Company’s products, our ability to successfully obtain cost reductions, anticipated curtailments of operations, fluctuations in foreign exchange rates, future cash flows and liquidity, and other factors beyond the Company’s control. These statements are subject to risks and uncertainties and no assurance can be given that any of the events anticipated by the Company may occur or what benefits the Company may derive from them. A number of actors could cause actual results to differ materially from those expressed or implied in these statements.

For further details on these factors and our assumptions and applicable risks and uncertainties, please refer to Catalyst Paper’s 2008 Annual Report and 2009 Q1 and Q2 Reports, including our management’s discussion and analyses in respect thereof.

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Non-GAAP MeasuresExcept where otherwise indicated, the financial information in this presentation is determined on the basis of Canadian GAAP.

“EBITDA” is a non-GAAP measure, calculated as operating earnings (loss) plus amortization and impairment. The Company focuses on EBITDA as the Company believes this measure enables comparison of the Company’s results between periods without regard to debt service, income taxes and capital expenditure requirements.

“EBITDA before specific items”, “net earnings (loss) before specific items” and “net earnings (loss) per share before specific items” are non-GAAP measures. The Company uses measures excluding specific items in evaluating its results between periods without regard to specific items that adversely or positively affect its EBITDA and net earnings (loss).

“Free cash flow” is a non-GAAP measure, calculated as EBITDA after capital expenditures, interest and taxes paid, and adjustments to reflect employee future benefit payments. The closest GAAP measure is cash provided by operating activities less cash used by investing activities. The Company reports free cash flow as it believes it is useful for investors and other users to be aware of this measure so they can better assess the Company’s operating performance.

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Agenda

Catalyst OverviewKey PrioritiesFinancial OverviewNext Steps

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Catalyst Overview

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Capacity

Largest producer of specialty mechanical printing papers and newsprint in Western North America

One of the largest producers of directory paper in the world

Only producer of coated mechanical paper in Western North America

Owns the largest paper recycling facility in Western Canada and 100% recycled newsprint mill in Arizona

Paper 2.1 million tonnes Pulp 0.4 million tonnes Total 2.5 million tonnes

Snowflake

Elk Falls Powell River

Vancouver

Port Alberni

Crofton

Catalyst is the Leading Paper Producer in Western North America

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60

339

208

67

344

217

116

314

213

154

338

225

169

344

211

201

361

203

177

329

169

0

200

400

600

800

1,000

2003 2005 2007 LTM06/30/09

Hi-Gloss Standard LWC

675

Sales Volumes (MT 000’s)

Strategy is to Grow Specialty Grades and Optimize Directory and Newsprint Competitive Position

769

361

755

367

707

300

699

273

496

330

388

214

316

342

263

295

0

200

400

600

800

1,000

1,200

1,400

2003 2005 2007 LTM06/30/09

BC Newsprint SF Newsprint Directory

1,007

Sales Volumes (MT 000’s)

724717643628607 826

918972

1,1221,130

2008 newsprint includes approximately 9 months of Snowflake volume post-acquisitionSF = Snowflake

Uncoated Coated

765

900

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8061

96116 105

73

1501749.3%

6.7%

10.2%11.4%

8.0%

18.5%

12.9%

15.0%

2002 2003 2004 2005 2006 2007 2008 LTM6/30/09

EBITDA EBITDA Margin

856907 935 901 918 920

1,001941

2002 2003 2004 2005 2006 2007 2008 LTM6/30/09

Sales $941 million

• Largest segment with total production capacity of 1,135,000 tonnes

• Relatively stable segment in terms of profitability and margins; Q2 2009 EBITDA margin of 14.5%1

• Markets under cyclical pressure but underlying fundamentals point to recovery linked to advertising cycle

OverviewLTM 6/30/09 Performance

2002-2009 Sales (C$ millions) 2002-2009 EBITDA1 (C$ millions)

1 2007, 2008 and 2009 EBITDA adjusted to exclude impact of specific items which include restructuring, change-of-control costs and impact of coastal sawmill strike.

2 Ratio includes segment EBITDA as a percentage of total EBITDA for speciality printing papers and newsprint only as pulp segment had a negative EBITDA for this period.

Specialty Printing Papers – Segment Overview

EBITDA1 $174 million

76%2

57%

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Specialty Printing Papers Demand Down …

Unprecedented demand decline in specialty grades over the past yearLTM sales and EBITDA robust given the market demand decline in these gradesAdvertising budgets for 2010, and the allocation to print advertising versus other media, will be key – particularly in retail sector where Catalyst has largest exposure

Year-Over-Year % Change in Specialty Printing Papers Demand (MT 000’s)

Source: PPPC – July 2009

3,066 3,024

531

2,3842,172

402

Uncoated Coated Directory

(22.2%) (28.2%) (24.3%)

July YTD 2008 July YTD 2009

Year-over-year Change

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Directory29%

Retail Inserts51%

Other4%

Catalogs7%

Magazines9%

Which ONE of the following media most influences your buying decisions?

For total adults, advertising inserts or circulars, as favoured by retailers, are the media that MOST affects buying decisions

… But Catalyst’s Exposure to Retail Advertising Provides Strong Upside to Economic Recovery

Source: CatalystNote: LTM as of June 30, 2009

Total Adults 18 - 34 35 - 49 50+

Advertising Inserts or Circulars 27% 21% 30% 29%TV 19% 24% 20% 15%Advertisements on the page of a Newspaper 12% 7% 11% 17%Internet 9% 17% 8% 5%Catalogs 6% 5% 5% 7%Direct Mail 5% 6% 6% 4%Magazines 4% 5% 3% 3%Radio 2% 3% 3% 2%E-mail 1% 2% 2% 0%Don't Know 2% 2% 3% 2%None of these 12% 7% 10% 16%

Catalyst’s End Use Markets for Specialty Printing Papers in North America

Source: 2008 Vertis Customer Focus, Retail 2008

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Outlook for Specialty Printing Paper Products

Pricing pressure seems to have slowed for coated and uncoated mechanical grades as demand declines moderate

– The second half of the year should see seasonal volume improvement– Recent price increase announcements in newsprint, coated and

uncoated freesheet, and coated mechanical #4, should help support price increases in other coated and uncoated mechanical grades

– Too early to call timing and speed of advertising recovery

Directory will see a price decrease for 2010 as annual pricing is being influenced by low prices for newsprint and other paper grades and weak demand

– Catalyst directory volume expected to be lower in 2010

Continued focus to optimize specialty printing papers volume– Product development opportunities to fill out specialty grades– Leverage machine flexibility and west coast focus to improve margins

and gain share

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518 539 553529 530

338

464 483

2002 2003 2004 2005 2006 2007 2008 LTM6/30/09

• Significantly reduced newsprint production from B.C. mills to match freight logical footprint

• Significantly curtailed newsprint production due to market conditions; Q2 2009 EBITDA margin of negative 11.8%1

• Focused on low-cost production base – essential for successful newsprint business

1 2007, 2008 and 2009 EBITDA adjusted to exclude impact of specific items which include restructuring, change-of-control costs and impact of coastal sawmill strike.

2 Ratio includes segment EBITDA as a percentage of total EBITDA for speciality printing papers and newsprint only as pulp segment had a negative EBITDA for this period.

Newsprint – Segment Overview

Sales $483 million

EBITDA1 $56 million

OverviewLTM 6/30/09 Performance

2002-2009 Sales (C$ millions) 2002-2009 EBITDA1 (C$ millions)

(23)

545 58 72

(4)

47 56(4.4%)

0.9%

8.2%

13.6%11.5%

(1.2%)

11.0% 10.2%

2002 2003 2004 2005 2006 2007 2008 LTM6/30/09

EBITDA EBITDA Margin

30%

24%2

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(16.1%)

(10.6%)

(14.0%)

(29.4%)

(8.4%)

(24.3%)

(11.0%)

(16.8%)

4.2%

World Asia (NJ) WE NA Japan LA EE Oceania Africa

World Newsprint Demand DownNewsprint demand has sharply declined in all major marketsNewsprint in North America is in secular and cyclical decline– Future of the newspaper model is uncertain but clearly smaller than it is today– Newsprint industry operating rate of 79% in 2009 YTD, down from 92% in 2008

Source: PPPC – July 2009

July YTD Year-Over-Year % Change in Newsprint Demand

News and media industry restructuring is changing fundamentals

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Improved Competitive Position in Newsprint

Reduced newsprint sales from B.C. mills by 44% from 2006 to 2008

– 53% reduction to North America– 30% reduction to International

B.C. serving freight logical markets– Western Canada– U.S. North West– International – Asia / Latin America

Snowflake primarily services U.S. South West – lower cost transportation

Q2 YTD 2009 total newsprint shipments 54% of capacity

– Matching production to customerorders and managing inventory levels

Source: Catalyst

Newsprint Sales from BC Mills – Total (MT 000’s)

487 467 443

309210 172

268240 256

188

178171

755707 699

388343

497

2004 2005 2006 2007 2008 LTM6/30/09

North America International

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Outlook for Newsprint

Newsprint in North America is in secular and cyclical decline– Future of the newspaper model is uncertain but clearly smaller than it is

today– Community newspapers and handful of national titles are best

positioned to form base level for future demand– Lowest cost newsprint producers with logical freight footprint will survive– Freight logical access to offshore growth markets in Asia and Latin

America is a key advantage for Catalyst

Rapid pricing decline appears to have reached the bottom– Price increase announced for US$35/mt in October and US$35/mt in

November– Operating rates still very low and don’t support sustained improvement

at current levels– Producers with less exposure to newsprint are better positioned to

withstand this transition; otherwise access to liquidity will be key

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• Crofton pulp, which has been indefinitely curtailed since March, 2009, is scheduled to restart production on one of its two NBSK lines in October, 2009. The second pulp line continues to be indefinitely curtailed due to fibre availability.

• NBSK pricing has improved due to strong demand in China - sustainability remains to be seen

• Elk Falls kraft pulp and white top linerboard operation was permanently closed effective November 30, 2008 due to permanent loss of sawdust supply on B.C. Coast

1 Net of inter-segment sales.2 2007, 2008 and 2009 EBITDA adjusted to exclude impact of specific items which include restructuring, change-of-control costs and impact

of coastal sawmill strike.3 Ratio includes segment EBITDA as a percentage of total EBITDA for speciality printing papers and newsprint only as pulp segment had a

negative EBITDA for this period.

Pulp – Segment Overview

2002-2009 Sales1 ($ millions) 2002-2009 EBITDA2 ($ millions)

OverviewLTM 6/30/09 Performance

Net Sales1 $217 million

EBITDA2 ($14) million

330375 390 394

434457

385

217

2002 2003 2004 2005 2006 2007 2008 LTM6/30/09

N/A3

(1)

12 12

(19)

34 48

(8) (14)

(0.2%)

3.3% 3.1%

7.9%

(6.4%)

9.8%

(4.7%)

(2.1%)

2002 2003 2004 2005 2006 2007 2008 LTM6/30/09

EBITDA EBITDA Margin

13%

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Key Priorities

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Industry Challenges

Market conditions are expected to remain very challenging for the foreseeable future – while a bottom seems to have been reached, there is no evidence to suggest a sustainable recovery at this point

Newsprint and, to a lesser extent at this stage, directory are in structural as well as cyclical decline

– No visibility on where the bottom for demand could be– Operating rates will impact potential for sustained pricing improvement– Annual directory pricing will be lower in 2010

Timing and extent of demand recovery for coated and uncoated is uncertain

Massive restructuring underway – large number of competitors, customers, and suppliers reshaping their business model and capital structure through insolvency proceedings or balance sheet restructuring

– Outcome will impact Catalyst’s future competitiveness

For Canadian producers, the potential for further strengthening in the CAD means cost reduction remains essential

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Catalyst’s Response - Key Priorities

Focus on cash flows and liquidity:– Free cash flow and liquidity under pressure due to difficult market

conditions – significant focus on capital expenditures, discretionary spending, working capital, and all other means to preserve cash

– Snowflake acquisition financed through equity issue in April 2008– Credit facility refinanced for five years in August 2008– Powell River Energy Inc. non-recourse debt successfully refinanced in

July 2009– Review of 2011 and 2014 debt maturities announced

Focus on matching production to customer orders and keep inventories at appropriate levels

– 33% of paper capacity and 100% of pulp capacity curtailed in Q2;similar levels forecast for Q3

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Catalyst’s Response - Key Priorities

Identify further opportunities to reduce “fixed” costs during periods of production curtailment to minimize the financial impact of operating at reduced volumes:– Aggressively reducing mill “fixed” costs– Headcount reduction of mill and head office salaried staff announced in Q2

Reduce labour costs:– 30% reduction in headcount (excluding layoffs due to volume reductions)

since 2007 – Exploring further opportunities to realize labour cost savings beyond our

$80 per tonne target through new cost per hour targets

Reduce municipal property taxes levied on Catalyst’s B.C. mills:– Catalyst has paid $6.0 million of $19.3 million assessed by the four relevant

B.C. municipalities– Legal challenge currently before the courts

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Financial Overview

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Summary of Historical Financials(C$ millions)

1,878 1,824 1,8831,715

1,8491,641

1,166

2004 2005 2006 2007 2008 LTM06/30/09

Q2Annualized

Total Sales

Free Cash Flow

EBITDA Before Specific Items

153 155

211190

216

117

74

0.7680.825

0.8820.930 0.938

0.8570.857

2004 2005 2006 2007 2008 LTM06/30/09

Q2Annualized

EBITDA before specific items Foreign Exchange

(90)

3031

(120)

7845

(26)

50

(19)

7

2004 2005 2006 2007 2008 LTM06/30/09

Q2Annualized

Free Cash Flow Specific Items

(90)Specific items

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EBITDA 1 Q1 2009 EBITDA $61.1

Restructuring costs 4.2 Q1 2009 EBITDA before specific items $65.3

Paper prices (32.9) Impact of CAD on sales, inclusive of hedging 2 (10.5) Volume and mix (7.1) Labour costs 11.5 Lower of cost or market write-down in inventories (8.4) Other, net 0.5

Q2 2009 EBITDA before specific items $18.4 Restructuring costs (12.3)

Q2 2009 EBITDA $6.1

EBITDA Reconciliation – Q2 2009 vs. Q1 2009

1 EBITDA and EBITDA Before Specific Items are non-GAAP measures.2 Estimated total impact on EBITDA of average foreign exchange effective rate movement period-to-period is negative $6.3 million.

(C$ millions)

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6.7x

5.0x

3.5x

10.4x

2007 2008 LTM06/30/09

Q2Annualized

Capitalization(C$ millions, except where otherwise stated)

1 8.625% notes, due June 2011 (US$354.2 million).2 7.375% notes, due March 2014 (US$250.0 million).3 Net debt ratio equals net debt (i.e. total debt less cash) divided by net capitalization.4 EBITDA adjusted to exclude impact of specific items which include restructuring, change-of-control costs and impact

of coastal sawmill strike.

Jun 30 2009

Total Debt Senior notes 1 $408 Senior notes 2 291 Revolving asset based loan Capital lease obligation 12 Other non-recourse (PREI) 95

Total $806 Shareholders’ equity 899

Total capitalization $1,705

Cash 42

Net debt ratio 3 46%

Net Debt / EBITDA4

(EBITDA4 – CapEx) / Interest

0.4x

2.0x

1.0x

2.5x

2007 2008 LTM06/30/09

Q2Annualized

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Liquidity(C$ millions)

Historical Borrowing Base

2008 2009 Q3 Q4 Q1 Q2

Borrowing base1 $304.1 $263.3 $241.5 $159.4 Letters of credit (24.5) (27.9) (25.8) (24.8) Net amount drawn (113.5) (60.1) (38.8) - Available to be drawn2,3 $166.1 $175.3 $176.9 $134.6 Cash on hand 6.2 5.0 6.0 41.6 Total gross liquidity 172.3 180.3 182.9 176.2 Covenant restriction (35.0) (35.0) (35.0) (35.0)

Total net liquidity 137.3 145.3 147.9 141.2

1 The borrowing base at Q2 2009 includes a reserve of $15.1 million for unpaid property taxes and associated penalties.2 Availability relates to the Company’s $330 million ABL Facility.3 The Company’s ABL Facility is subject to certain financial covenants as disclosed in the Company’s interim consolidated financial statements for the

three-month period ended June 30, 2009, in note 6, “Long-term debt”.The amount “available to be drawn” is before taking into account the financial covenant to maintain excess availability above $35 million.

$346 $335 $350 $350 $350 $350 $327 $309 $311 $319 $304$263 $242

$159

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2006 2007 2008 2009

1

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(C$ millions)

Product Prices1

US$10 per tonne change in sales price of:Specialty Printing Papers 13.0Newsprint 11.0Pulp 4.0

Foreign Exchange2

US$0.01 change in the USD relative to the CAD 7.0

Energy Cost Sensitivity3

5% change in the price of:Natural gas and oil - direct purchases 1.0Electricity - direct purchases 6.0Coal 1.0

Fibre Sensitivity3

US$5 per unit change in the price of:Wood Chips (Bdt) 5.0ONP (ST) 3.0

EBITDA SensitivityCatalyst’s financial performance is highly sensitive to pricing changes and currency movements

Sensitivity Analysis – EBITDA Impact

1 Based on sales at full 2009 production capacities and foreign exchange rate of US$0.86.2 Based on Q2 2009 annualized net cash flows and a movement from US$0.86 to US$0.87 and excluding the Company’s hedging

program and the impact of the Company’s translation of U.S. dollar denominated debt.3 Based on Q2 2009 annualized consumption levels and exchange rate of US$0.86.

Source: Q2 2009 MD&A

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Next Steps

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Structural decline in newsprint and directory business exacerbated by ongoing recessionary pressures

Future competitiveness impacted by restructuring underway by other industry players

Strengthening of the C$ vs. US$ has had dramatic impact on bottom line Energy prices are trending upwards again after hitting lows in early 2009

Borrowing base has eroded from over $300 million in Q3 2008 to less than

$160 million in Q2 2009 LTM interest expense of ~$75 million with LTM capex of ~$31 million

US$604 million of notes maturing in 2011 and 2014 in addition to pension

and benefit obligations of $277 million Net debt / Q2 annualized EBITDA ratio of 10.4x

Industry

Macro Trends

Liquidity

Leverage

Summary Observations

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Transition volume to specialty paper / higher margin grades Announced and executed numerous cost-cutting initiatives including major

ongoing reductions in manning Closures and curtailment to manage inventory

Focus on cash conservation and cash generation Prudent steps to finance acquisition and refinance credit facility and debt

related to PREI Municipal taxes dispute and application for judicial review

Announced intent to review alternatives to address the maturity of the 2011 and 2014 notes

Operations

Liquidity

Recapitalization

Proactive Response Strategy

Proactive response positioning the Company as a long-term survivor

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Appropriate debt stratification — ABL drawn to finance working capital — Term debt matched with longer term capital commitments

Right size balance sheet — Cyclical industry requires conservative leverage — Positioning for smaller industry going forward — Retain option to access capital

Reduce debt service cost Afford sufficient cash flow cushion to withstand economic downturn and

industry restructuring

Obtain broad participation by 2011 / 2014 noteholders

De-Risk Pro Forma Capital Structure

Reduce Interest Burden

Execution

Recapitalization Objectives

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Questions