NORWALL GROUP INC. ANNOUNCES PROPOSED GOING PRIVATE TRANSACTION

BRAMPTON, ON, Oct. 21 /CNW/ - Norwall Group Inc. (TSXV: NGI) ("Norwall" or the "Corporation") announced today that it intends to seek shareholder approval for a proposal to take the Corporation private.

Norwall plans to effect the going-private transaction by way of a share consolidation (the "Consolidation") on the basis of one post-Consolidation common share for every 3,739,155 common shares held immediately prior to the Consolidation. Upon completion of the Consolidation, Patton Wallcoverings, LLC ("Newco"), a Florida limited liability company wholly-owned and controlled, directly or indirectly, by James J. Patton, Norwall President and CEO, and Bruce Mitchell, a control block shareholder of Norwall, will be the sole shareholder holding at least one whole common share. (Messrs. Patton and Mitchell collectively own 3,739,155 common shares, representing 52.4% of the issued and outstanding Norwall shares).

Shareholders who hold fractional shares upon completion of the Consolidation (collectively, "Minority Shareholders") will receive a cash payment of $0.93 per pre-Consolidation common share on account of such fractional shares. This cash payment represents a premium of approximately 16% over the closing price of Norwall shares on September 20, 2010 (being the last date on which Norwall shares traded) and a 36.5% premium over the weighted average trading price of the Norwall shares over the past 12 months.

Concurrent with the completion of the Consolidation, Norwall will apply to have its common shares de-listed from the TSX Venture Exchange. It will also apply to the securities regulatory authorities to cease to be a reporting issuer in each province in which it is currently a reporting issuer.

A special meeting (the "Meeting") of Norwall's shareholders has been called for December 3, 2010, at which time shareholders will be asked to consider and, if deemed advisable, approve the Consolidation. All shareholders of record as of November 1, 2010 (the "Record Date") will be entitled to receive notice of and to vote at the Meeting on the basis of one vote for each common share held. In connection with the Meeting, Norwall will distribute a management information circular and accompanying materials on or about November 9, 2010 to all shareholders of record as of the Record Date.

Under the Business Corporations Act (Ontario), the Consolidation requires the approval of two-thirds of the votes cast by shareholders at the Meeting.

Because the going private transaction constitutes a "business combination" for the purposes of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"), the Consolidation must also be approved by a simple majority of the votes cast by minority shareholders at the Meeting.

In this regard, Norwall, Mr. Patton, Mr. Mitchell, Newco, Albeem B.V. and Lorraine Ashton (personally as a shareholder of Norwall and in her capacity as sole trustee ("Trustee") of the Richard Derek Arnold Ashton Trust (the "Ashton Trust") and sole executrix and trustee ("Estate Trustee") of the estate of the Late Richard Derek Arnold Ashton (the "Estate")) have entered into a support agreement dated October 20, 2010, pursuant to which, among other things:

• Lorraine Ashton, the Ashton Trust, the Estate and Albeem B.V. (collectively, the "Ashton Shareholders") have agreed to vote their shares in favour of the Consolidation.
  
  The Ashton Shareholders collectively own 2,713,084 common shares, representing approximately 38% of the issued and outstanding shares and approximately 80% of all shares held by Minority Shareholders; and
  
  
• The Ashton Shareholders have agreed, effective upon completion of the Consolidation, to dismiss without costs the court proceedings (the "Ashton Litigation") commenced before the Ontario Superior Court of Justice on June 18, 2010 against Norwall, Mr. Mitchell and certain of Norwall's current and former directors and officers. (See Norwall's press release dated June 1, 2010 for further details concerning the Ashton Litigation. )

The Consolidation is exempt from the formal valuation requirement of MI 61-101 because Norwall is not listed on a "specified market" within the meaning of section 4.4(a) of MI 61-101.

The board of directors of Norwall, with Mr. Patton as an interested director abstaining and acting on the recommendation of an independent committee of directors formed to consider the Consolidation, has unanimously approved the Consolidation and determined it to be in the best interests of Norwall and fair to Minority Shareholders. The reasons for the board's recommendation of the proposed transaction include:

• the Consolidation represents a liquidity opportunity in the absence of a liquid market for Norwall shares and in the face of a declining market for wallpaper products;
  
  
• the value of the cash consideration and the premium to the recent trading range of the Norwall shares;
  
  
• the unanimous favourable recommendation of the independent committee;
  
  
• the Consolidation will be subject to Minority Shareholder approval under MI 61-101;
  
  
• the Consolidation, if approved, will result in a full and final settlement of the Ashton Litigation; and
  
  
• the absence of available strategic alternatives.

In connection with the going private transaction, Newco has provided Norwall with a secured term loan (the "Newco Loan") in the principal amount of $2.7 million, bearing interest at a rate of 6% per annum, which funds will be used to make cash payments to Minority Shareholders commencing upon closing of the Consolidation. The Newco Loan constitutes a "related party transaction" for the purposes of MI 61-101 but is exempt from the formal valuation requirement because Norwall is not listed on a "specified market" within the meaning of section 5.5(b) of MI 61-101. It is also exempt from the minority voting requirement by virtue of section 5.7(f) of MI 61-101, which exempts related party loans that have no equity or voting component and are made on commercial terms not less favourable to the issuer than if the financing had been obtained from an arm's length lender.

About Norwall

Norwall designs quality residential wallpapers and borders and distributes them to specialty stores in Canada and through its wholly-owned operating subsidiary, Patton Wallcoverings, in the United States and in 52 countries worldwide.

Forward-looking Statements

Certain statements included in this release contain words such as "could", "expects", "expectations", "may", "anticipates", "believes", "intends", "estimates" and "plans" (and similar expressions) and constitute "forward-looking statements" within the meaning of applicable securities law. These statements are based on Norwall's current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which Norwall and its subsidiaries operate. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which are difficult to predict and may cause the actual results, performance or achievements of Norwall, or outcomes or results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, such factors which are described in Norwall's management's discussion and analysis of operations and other filings with Canadian regulatory authorities. These statements, although considered reasonable by Norwall at the date of this press release, may prove to be inaccurate and consequently Norwall's actual results could differ materially from its expectations as set out or implied in this release. Unless otherwise required by applicable securities laws, Norwall disclaims any intention or obligation to update or revise any forward-looking statements.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

%SEDAR: 00002584E

For further information:

James J. Patton, President and Chief Executive Officer at [phone], ([email protected]); or Edward Diochon, Vice President of Finance at [phone], ([email protected]).