Pioneer Announces the Expansion of its Chlor-Alkali Plant in St. Gabriel, Louisiana

Jan 30, 2007, 00:00 ET from Pioneer Companies, Inc.

    HOUSTON, Jan. 30 /PRNewswire-FirstCall/ -- Pioneer Companies, Inc.
 (Nasdaq:   PONR) announced that it is expanding its St. Gabriel, Louisiana
 chlor-alkali plant by approximately 25% from its current annual production
 capacity of 197,000 ECUs to 246,000 ECUs. The project will include the
 conversion of the plant to membrane cell technology from the existing
 mercury cell technology. The additional chlorine production from the
 planned expansion will be shipped to nearby customers via Pioneer's three
 existing chlorine pipelines at the St. Gabriel site. The project will
 commence in the first quarter of 2007 with an anticipated completion in the
 fourth quarter of 2008.
     Pioneer believes that the anticipated financial and strategic benefits
 of the project will commence upon its completion and are expected to
     -- expanding the site's manufacturing capacity by 49,000 ECUs to meet the
        demand from nearby industrial customers for chlorine supplied by
        pipeline at a competitive delivered price;
     -- meeting increasing customer demand for high-quality membrane caustic
     -- significantly lower variable and fixed  unit costs at the plant, due
        - improved energy efficiency from the new membrane cells which use
          approximately 29% less energy than the technology currently used at
          the plant; and
        - reduced maintenance and operating costs resulting from the use of
          the newer technology;
     -- the incremental gross margin contribution from the additional 49,000
        ECUs of production capacity; and
     -- eliminating the use of mercury at this plant.
     The capital costs associated with this project are estimated to be
 approximately $142 million. In addition to using existing cash reserves and
 projected future cash flows, Pioneer plans to seek additional financing
 from the capital markets to finance this project and other capital needs.
 At December 31, 2006, Pioneer had cash and cash equivalents of
 approximately $115 million and long-term debt of approximately $103
 million, primarily consisting of $100 million of senior notes due in
 December 2008. Pioneer redeemed $25 million of its senior notes on January
 12, 2007.
     This project will also provide Pioneer with the ability to further
 expand the plant's annual production capacity by an additional 97,000 ECUs,
 to an aggregate annual plant capacity of 343,000 ECUs. The estimated
 additional cost of this further expansion would be approximately $25
 million. Pioneer believes that the further expansion, if undertaken, would
 significantly enhance the anticipated economic benefits from this project.
 Before making this further expansion decision, Pioneer plans to determine
 whether customer commitments can be obtained for the additional chlorine
     Michael Y. McGovern, the President and CEO of Pioneer commented: "We
 believe this project positions Pioneer for the future. The St. Gabriel
 plant is strategically located in one of the largest industrial complexes
 of chlorine buyers in North America, and transports all of its chlorine
 through three pipelines to nearby customers. This project will enable us to
 meet the needs of our customers who are seeking chlorine delivered by
 pipeline at a competitive delivered price. During 2006, we estimate that
 approximately 150,000 tons of chlorine were shipped by rail into the St.
 Gabriel industrial complex by other chlorine manufacturers, for subsequent
 transportation to end customers via Pioneer's chlorine pipelines at the St.
 Gabriel site. We believe that this volume presents an excellent market
 opportunity for Pioneer. These customers want to be supplied by pipeline,
 and this project will enable us to meet their needs."
     Mr. McGovern continued, "We also believe this project will allow us to
 significantly lower our production costs at the St. Gabriel plant. One of
 the key reasons is that the membrane cells are approximately 29% more
 energy efficient than mercury cells. If natural gas prices increase, the
 economic benefits of this conversion will be more significant. Finally,
 this project will eliminate the use of mercury at this plant, and allow us
 to supply our customers with membrane caustic soda. For all of these
 reasons, our management and employees, especially at our St. Gabriel plant,
 are very excited by this project. We believe this project will position
 Pioneer to meet the future challenges of the marketplace and create value
 for our shareholders."
     Pioneer, based in Houston, manufactures chlorine, caustic soda, bleach,
 hydrochloric acid and related products used in a variety of applications,
 including water treatment, plastics, pulp and paper, detergents,
 agricultural chemicals, pharmaceuticals and medical disinfectants. Pioneer
 owns and operates four chlor-alkali plants and other downstream
 manufacturing facilities in the United States and Canada.
     Pioneer will conduct a teleconference on Wednesday, January 31, 2007 at
 10:00 a.m. CST to discuss this conversion and expansion of its St. Gabriel
 chlor-alkali plant. A live webcast of the conference call, together with
 other supplemental information, can be accessed through the Company's
 website at, by going to the "Investors" tab and then to
 "Conference Calls". To listen to the live webcast, please go to this
 website approximately fifteen minutes prior to the start of the call to
 register, download, and install any necessary audio software. For those
 unable to participate during the live webcast, a replay will be available
 shortly after the call on Pioneer's website.
     To participate in the live conference call by telephone, please call
 (800) 967-7141 at approximately 10.00 a.m. CST. Please note that there will
 be supplemental information that is available on the webcast mentioned
 above that will not be available if the conference call is accessed by
 telephone only. A telephonic replay will be available from 1:00 p.m. CST on
 Wednesday, January 31, 2007 through 12:00 a.m. CST on Sunday, February 4,
 2007. To access the replay, please call (888) 203-1112. Please enter the
 following ID Number: 9867148.
     Certain statements in this news release are "forward-looking
 statements" within the meaning of the Private Securities Litigation Reform
 Act. Forward- looking statements relate to matters that are not historical
 facts and include, but are not limited to, statements relating to the
 expected additional production capacity of the St. Gabriel plant,
 commencement and completion dates of the project, anticipated benefits of
 the project, costs and financing of the project, and economic and other
 implications of the project. Such statements involve risks and
 uncertainties, including, but not limited to, increases in costs and delays
 in the completion of the St. Gabriel project, risks that appropriate
 financing will not be obtained or will be obtained on terms that are
 unfavorable to the company, the cyclical nature of the demand and prices
 for the company's products, the availability and costs of the raw materials
 used to make the company's alkali products, the company's access to and the
 cost of rail transportation, environmental risks, governmental regulation,
 and the ability of the company to meet its business and financial goals and
 the risks and uncertainties described in Pioneer's filings with the
 Securities and Exchange Commission. Actual outcomes may vary materially
 from those indicated by the forward-looking statements.

SOURCE Pioneer Companies, Inc.