US Bankruptcy Court in New Jersey Approves Sale of Marcal

- Funds Managed By Highland Capital Management, LP To Become
Majority Owner of Company Upon Closing
DALLAS--(Business Wire)--Under a sale approved by Judge Morris Stern of the U.S. Bankruptcy
Court for the District of New Jersey in Newark, funds managed by
Highland Capital Management, LP have been approved to become the new
majority owner of the assets of Marcal Paper Mills, Inc., Highland
announced today. Highland managed funds participating in a second lien
facility, which comprise the majority lenders relating to the pending
transaction, have agreed to convert a portion of their outstanding
debt into an equity investment as part of the restructuring.

The sale of Marcal Paper Mills' assets to the second lien lenders
is pending closing requirements. Marcal had filed for Chapter 11
bankruptcy protection in November 2006. Other elements of the proposed
transaction include:

-- Aggregate total consideration of the transaction is $121.6
million plus assumed liabilities.

-- Dallas-based NexBank SSB is acting solely in its capacity as
Agent for the second lien lenders involved in the planned
debt/equity conversion.

-- The transaction remains subject to certain closing conditions,
including the completion of an agreement with the New Jersey
Department of Environmental Protection to ensure compliance
with the state's Industrial Site Recovery Act.

"We are pleased that we are making progress with Marcal's key
constituencies," Jim Dondero, President of Highland, commented on the
Court's decision. "Marcal has a great and longstanding history, brand
and products. We can and will restore the company's momentum and
industry leadership," Mr. Dondero added.

"We appreciate Highland's continued commitment to our company and
its key constituencies," said Bob Lynch, Chief Financial Officer of
Marcal Paper. "Upon the closing of the sale, Highland's financial
acumen and resources will strengthen our ability to serve our
customers, provide for our employees, and support our vendors," he
added.

About Marcal Paper Mills - Marcal, founded in 1932, is a
privately-held, family business. It employs over 900 people in its
Elmwood Park, New Jersey and Chicago, Illinois manufacturing
operations. The company produces over 160,000 tons of finished paper
products, including bath tissue, kitchen towels, napkins and facial
tissue, distributed to retail outlets for home consumption and to
distributors for away-from-home use in hotels, restaurants, hospitals,
offices and factories. For over fifty years, Marcal has been a leader
in recycling recovered paper as a source of high-grade cellulose fiber
for manufacturing tissue products. Each year, Marcal recycles over
200,000 tons of recovered paper. Marcal's slogan, "Paper from Paper,
Not from Trees," (R) symbolizes the commitment of the company to
sustainable manufacturing.

About Highland Capital Management - Founded in 1993, the firm is a
leading investment management firm specializing in alternative
investments, with approximately $38 billion in assets under
management. A privately held registered investment adviser, the firm
is a recognized leader and innovator in the credit and structured
products markets. Highland is headquartered in Dallas, Texas, with
offices in New York and London. For more information, please visit
www.hcmlp.com.

For Highland Capital Management, LP
Thomas Clohesy, 212-792-5673
thomas.clohesy@tmccommunications.com

Copyright Business Wire 2008