Norwall Group Inc. to outsource manufacturing

BRAMPTON, ON, Feb. 18 /CNW/ - Norwall today announced that it had finalized arrangements to outsource its North American manufacturing to a South Korean corporation, DID Co., Ltd. (DID).

Under the agreement, DID will purchase Norwall's manufacturing equipment located at its Brampton, Ontario facility for a price of US$1.9 million and relocate the equipment to its facilities in Seoul, South Korea. There will be a non cash charge recorded in the fourth quarter of 2009 as a result of the sale of the equipment. Norwall will retain ownership of all of its engravings, print and embossing rollers, designs and collections and will continue to service all present and future product lines worldwide including the design of all new Norwall product. Norwall anticipates that manufacturing in Canada will cease by the end of the third quarter, 2010 and has listed its land and buildings located in Brampton, Ontario for sale.

DID has been manufacturing wallcoverings for over 60 years and is the largest manufacturer of wallcoverings in South Korea. Known for its quality, DID is part of a much larger manufacturing conglomerate with annual sales in excess of US$190 million.

Mr. James Patton, President and CEO of Norwall, stated that increased manufacturing costs due to the decline in the wallcovering market coupled with the strength of the Canadian dollar had made it impossible to maintain Norwall's profitability. "Our new arrangement with DID will allow us to maintain our competitive price point while at the same time preserving our quality of design, our product service and our trade programs. We are excited with the prospect of returning our company to profitability and, with the involvement of DID, expanding our business in North America as well as export markets. We anticipate that we will be introducing four new wallcovering collections in the first quarter of 2010 which, based on preliminary reaction, are expected to be favourably received by both foreign and domestic markets."

Norwall Group (TSX:NGI) designs and distributes quality residential wallpapers and borders to thousands of home centres, specialty stores and mass merchants in Canada and through its wholly-owned operating subsidiary, Patton Wallcoverings, in the United States.

This Press Release contains forward-looking statements reflecting management's current expectations regarding future results of operations, economic performance, financial conditions, and achievements of the Company. Actual results may differ materially from those in such statements. The Company wishes to caution the reader that those important factors described elsewhere in the management's discussion and analysis of operations could affect the Company's actual results and could cause such results to materially differ from those expressed in any forward-looking statement made by, or on behalf of, the Company.

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For further information: [phone]; James J. Patton, President and Chief Executive Officer, [email protected]; Edward Diochon, Vice President of Finance, [email protected]