January 15, 2009

Jobs Saved as National New Markets Fund and U.S. Bank Close Tax Credit Financing for Paper Mill in Rural Wisconsin

New Markets Tax Credit (NMTC) Investment Totaling More than $92 Million Will Enable Community's Largest Employer to Remain in Operation

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Los Angeles and Oconto Falls, WI -- National New Markets Fund, LLC -- a New Markets Tax Credit (NMTC) fund created by Los Angeles-based Strategic Development Solutions (SDS) and Boston-based Economic Innovation International, Inc. -- has closed $15 million in NMTC allocation funding to help ST Paper, LLC in Oconto Falls restructure debt, remain in business and continue serving as the rural community's largest employer.

The Fund's $15 million allocation is part of an overall NMTC package totaling more than $92 million in allocation authority. This makes it part of one of the largest NMTC allocations designated for a single project since the federal NMTC program was launched in 2000.

The $92 million in NMTC allocation funding comes from a variety of sources including National New Markets Fund, Wisconsin Housing and Economic Development Authority (WHEDA), Capmark Capital, U.S. Bank, United Fund Advisors, and Great Lakes Capital Fund. U.S. Bancorp Community Development Corporation (USBCDC), a subsidiary of U.S. Bank, serves as the tax credit investor.

"Without help in the form of New Markets Tax Credits, the mill faced a direct and immediate threat to its ability to remain in business," said Sharad Tak, president of ST Group. "Funding via NMTCs will enable us to restructure existing debt so we can remain the largest private employer and property tax payer in the area."

ST Paper is an outsourced manufacturer of 100 percent recycled fiber tissue, napkin and towel products for the paper industry. The mill, which was acquired by ST Paper in 2007, is more than 100 years old and produces 56,000 tons of product each year. At the time it was acquired, the mill was on the verge of entering into an involuntary bankruptcy.

Utilizing debt financing, ST Paper purchased the mill and invested more than $20 million to upgrade equipment, improve efficiency and commit the facility to environmentally sustainable outcomes. Despite substantial improvements made to the facility, the company was unable to support required debt service and faced foreclosure, loss of jobs and full closure of the mill.

"NMTCs are helping preserve the local manufacturing base by ensuring ST Paper's long-term survival," said Deborah La Franchi, co-founder and president of National New Markets Fund. "As paper mills continue to close across Wisconsin, ST Paper will have a secure future thanks to the targeted use of such tax credits, which are intended to support economic and social growth in targeted communities."

Oconto Falls is a rural community in northeast Wisconsin with a population of approximately 3000. The unemployment rate in surrounding Oconto County is 11.9 percent, as compared to 8.7 percent statewide. ST Paper currently employs 87 permanent full-time workers. In addition, the company's operations have a significant impact within its five-state supply chain region. It is estimated that ST Paper's current economic activity supports 251 indirect and induced jobs and $42 million in indirect and induced output.

Three major paper mills have closed in Wisconsin over the past two years, and two additional mills have announced plans to close this year. These closures are part of an ongoing trend that has seen the loss of roughly one third of the state's papermaking jobs since 1997.

"The number-one economic priority right now is job creation and retention, and nowhere is the need more acute than in rural areas that have been hit hard by both the Great Recession and intense global competition," said Belden Hull Daniels, CEO and controlling entity of National New Markets Fund, and CEO of Economic Innovation International. "Saving and growing ST Paper is a big win for northeast Wisconsin."

According to Marc Hirshman, senior vice president and director of New Markets, Historic, and Investment Tax Credits in Renewable Energy at U.S. Bancorp Community Development Corporation, the NMTC program has helped finance numerous businesses and real estate projects across the country that would otherwise find it difficult to secure adequate financing. Such projects serve a vital need in terms of creating and maintaining jobs, stimulating economic growth and ensuring community stabilization.

"We believe that restructuring ST Paper's debt will position the company for a successful future and preservation of its employment base," said Hirshman. "U.S. Bank is proud to help finance this project via the targeted use of NMTCs, and in-turn support a business operation that will help the community to thrive."

About the U.S. Treasury Department's New Markets Tax Credit Program

Created in 2000, the New Markets Tax Credit (NMTC) Program is administered by the U.S. Treasury Department's Community Development Financial Institutions Fund (CDFI Fund). The program serves as a catalyst for private investment in urban and rural lowincome communities by allowing investors to receive a credit against federal income taxes for equity investments in designated Community Development Entities (CDEs).

About National New Markets Fund

National New Markets Fund, LLC invests in projects that serve targeted low-income communities nationwide. Its mission is to provide funding and technical assistance for projects that foster job creation and overall economic and social development. The Fund, consists of $125 million in New Markets Tax Credit (NMTC) Allocations awarded by the U.S. Department of the Treasury. It was launched in 2005 as a partnership between Los Angeles-based Strategic Development Solutions (SDS) and Boston-based Economic Development International. SDS was founded in 2001 by Deborah La Franchi and has become a market leader in the creation of Double and Triple Bottom Line private equity and real estate funds. Economic Innovation International, Inc. was founded in 1970 by Belden Hull Daniels and is recognized internationally for building more than $100 billion of privately capitalized, innovative institutions that generate wealth and high quality jobs. More information about National New Markets Fund is available at www.SDSgroup.com/nnmf-project-list.html.

About U.S. Bancorp Community Development Corporation

With assets of over $6 billion, U.S. Bancorp Community Development Corporation (USBCDC) finances community development and affordable housing projects through the use of New Markets Tax Credits, Historic Tax Credits, Low-Income Housing Tax Credits, and Investment Tax Credits in Renewable Energy. USBCDC is a subsidiary of U.S. Bank, the 5th largest commercial bank in the United States, whose parent company is U.S. Bancorp (NYSE: USB). With $281 billion in assets, the company operates over 3,000 banking offices and over 5,100 ATMs in 24 states, and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions. Visit U.S. Bancorp on the web at www.usbank.com.

Contact:

Erik Deutsch
ExcelPR Group
(323) 851-2300 x112
erikd@excelpr.com