May 27, 2009 / 3:45 AM / 9 years ago

UPDATE 1-Catalyst Paper to cut jobs on lower demand

* Staff reductions to affect 100 positions

* Says severance charge not to exceed $5 mln

* Sees savings of $350,000 a month

May 27 (Reuters) - Canadian papermaker Catalyst Paper CTL.TO said it is making job cuts, affecting about 100 staff positions, due to a severe decline in demand and the possibility that curtailed production will not restart in the short term.

Catalyst Paper expects to save about $350,000 a month, with a further $4 million in annualized savings from the permanent staffing reductions. One-time severance costs are expected to not exceed $5 million.

The permanent reductions will occur mainly at the company’s Richmond and Nanaimo offices, the company said in a statement on Tuesday.

An indefinite layoff of 55 staff will take place at the Elk Falls mill and Crofton pulp mill. Production at these two mills was curtailed indefinitely at the end of February due to the global economic slump and deteriorating market conditions. (Reporting by Esha Dey in Bangalore; Editing by Muralikumar Anantharaman)

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