Exhibit 99.1

1855 Lockeway Dr. Suite 501 — Alpharetta, GA 30004 — 678-393-2651 — Fax 678-393-2657

Cellu Tissue Holdings, Inc. Announces Second Quarter Fiscal 2011 Results

Alpharetta, GA – October 6, 2010 – Cellu Tissue Holdings, Inc. (NYSE: CLU), a North American producer of tissue products, today reported net sales of $136.6 million and a net loss of $3.8 million, or a loss of $0.19 per diluted share, for the fiscal 2011 second quarter ended August 27, 2010. As previously announced on September 16, 2010, we entered into a definitive merger agreement with Clearwater Paper Corporation (“Clearwater”), whereby Clearwater would acquire all of the outstanding common stock of the Company in an all-cash transaction, which values the company at approximately $502 million. Under the terms of the agreement, our stockholders will receive $12.00 per share in cash for each share of common stock they own.

Summarized consolidated fiscal 2011 second quarter results compared to fiscal 2010 second quarter results are as follows:

• Net sales for the fiscal 2011 second quarter were $136.6 million, down 0.8% compared to $137.8 million in the fiscal 2010 second quarter.

• Income from operations for the fiscal 2011 second quarter was $2.2 million compared to $16.2 million in the fiscal 2010 second quarter. The fiscal 2011 second quarter includes $1.0 million of costs related to the previously discussed merger with Clearwater.

• Adjusted EBITDA was $11.4 million in the fiscal 2011 second quarter compared to $23.1 million in the fiscal 2010 second quarter.

• Interest expense for the fiscal 2011 second quarter was $7.8 million compared to $12.3 million in the second quarter of fiscal 2010. The second quarter of fiscal 2010 includes approximately $3.9 million of non-recurring debt refinancing costs.

• Net loss for the fiscal 2011 second quarter was $3.8 million, or a loss of $0.19 per diluted share, compared to net income of $2.7 million, or earnings of $0.16 per diluted share for the fiscal 2010 second quarter.

“Our fiscal 2011 second quarter results reflect strong and improving fundamentals within our business offset by the continued impact of high pulp prices and no retail market price increase in converted tissue products,” said Russell C. Taylor, President and Chief Executive Officer of Cellu Tissue Holdings. “We made good progress in installing and starting up two new converting lines during the quarter, and made our first shipments out of our new converting facility in Oklahoma City.”

Fiscal 2011 Second Quarter Financial and Operating Results

	Quarter ended
	August 26, 2010		August 27, 2009		Increase (Decrease)
Net sales	$	136.6 million	$	137.8 million	$	(1.2) million	(0.8	)%
Gross Profit	$	8.8 million	$	22.6 million	$	(13.8) million	(61.0	)%
Income from operations	$	2.2 million	$	16.2 million	$	(14.1) million	(86.7	)%
Tons sold		82,204		89,328		(7,124)	(8.0	)%
Net selling price per ton	$	1,647	$	1,519	$	128	8.4	%

Net sales for the quarter decreased $1.2 million, or 0.8% quarter-over-quarter, primarily as a result of an 8.0% decrease in tons sold, partially offset by hardroll and away-from-home price increases. The decrease in total tons sold primarily reflects a decrease in converted tons sold and in-sourcing of an additional 1,781 tons of hardrolls for our converting operations, which were purchased on the external hardroll market in the prior year period. As a result, we reduced external hardroll shipments by a similar amount and improved the overall sales mix due to higher selling prices for converted tissue products, consistent with the our strategy to increase the vertical integration of our acquired operations and to improve quality control and profitability. Additionally, during the comparable prior year period, we shipped 3,009 tons of converted tissue to support two new substantial product launches.

Net selling price per ton increased 8.4% to $1,647 during the current period from $1,519 during the comparable prior year period. This increase in price primarily reflects increases in hardroll and away-from-home selling prices. Prices in the hardroll market increased in the second quarter of fiscal 2011 but lagged price increases in the pulp market.

Gross profit as a percentage of net sales decreased to 6.5% in the fiscal 2011 second quarter from 16.4% in the fiscal 2010 second quarter. The decline was primarily driven by higher pulp costs, partially offset by increases in hardroll and away-from-home selling prices.

Income from operations for the fiscal 2011 second quarter was $2.2 million compared with $16.2 million in the same period of the prior fiscal year. The decrease was primarily attributable to the decline in gross profit.

Interest Expense

Interest expense, net in the fiscal 2011 second quarter was $7.8 million compared to $12.3 million in the fiscal 2010 second quarter. The fiscal 2010 second quarter includes the effect of extinguishing our Senior Secured Notes due 2010 (the “2010 Notes”) and the issuance of our Senior Secured Notes due 2014 (the “2014 Notes”). Non-recurring costs of extinguishing our 2010 Notes includes both the write-off of deferred financing fees of $2.2 million as well as incremental interest expense of $1.7 million due to the period of time that elapsed between the issuance of the 2014 Notes and the extinguishment of the 2010 Notes.

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Income Tax Benefit

Income tax benefit for the fiscal 2011 second quarter was $1.8 million compared to income tax expense of $1.2 million for the fiscal 2010 second quarter. Our effective tax rate for the second quarter of fiscal 2011 was 32%, which includes the beneficial impacts of reductions in applicable foreign tax rates as well as the full phase-in of the tax benefits from the domestic production activities deduction. Management estimates the overall tax rate for fiscal 2011 will be approximately 32%.

Segment Operating Results

Tissue

	Quarter ended
	August 26, 2010		August 27, 2009		Increase (Decrease)
Net sales	$	105.9 million	$	107.8 million	$	(1.8) million		(1.7	)%
Income from operations	$	4.4 million	$	15.4 million	$	(11.0) million		(71.5	)%
Tons sold:
Converted tissue products		26,773		29,516		(2,743	)	(9.3	)%
Hardrolls		34,939		36,795		(1,856	)	(5.0	)%
Total		61,712		66,311		(4,599	)	(6.9	)%
Overall net selling price per ton	$	1,717	$	1,625	$	91		5.6	%

Net sales for Tissue during the quarter decreased to $105.9 million, or 1.7% quarter-over-quarter, primarily as a result of a 6.9% decrease in tons sold, partially offset by hardroll and away-from-home price increases. The decrease in total tons sold is primarily attributable to 3,009 tons of converted tissue shipments to support two new substantial product launches in the comparable prior year period and in-sourcing of an additional 1,781 tons of hardrolls for our converting operations, which were purchased on the external hardroll market in the prior year period. The 5.6% increase in net selling price per ton primarily reflects the increases in hardroll and away-from-home selling prices. Income from operations was $4.4 million in the fiscal 2011 second quarter compared to $15.4 million in the fiscal 2010 second quarter. Income from operations in the fiscal 2011 second quarter reflects rising pulp prices that were partially offset by hardroll price increases.

Machine-Glazed Tissue

	Quarter ended
	August 26, 2010		August 27, 2009		Increase (Decrease)
Net sales	$	29.5 million	$	27.9 million	$	1.5 million		5.5	%
Income (loss) from operations	$	(1.4) million	$	1.3 million	$	(2.7) million		(205.4	)%
Tons sold:
Hardrolls		17,782		19,893		(2,111	)	(10.6	)%
Converted tissue products		2,710		3,124		(414	)	(13.3	)%
Total		20,492		23,017		(2,525	)	(11.0	)%
Overall net selling price per ton	$	1,438	$	1,213	$	225		18.5	%

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Net sales in Machine-Glazed Tissue increased to $29.5 million from $27.9 million in the fiscal 2010 second quarter as a result of higher net selling prices, partially offset by lower sales volume. The operating loss for Machine-Glazed Tissue was $1.4 million in the fiscal 2011 second quarter, down compared to operating income of $1.3 million in the fiscal 2010 second quarter primarily attributable to higher fiber costs and lower production volumes, partially offset by higher selling prices.

Foam

	Quarter ended
	August 26, 2010		August 27, 2009		Increase (Decrease)
Net sales	$	1.2 million	$	2.1 million	$	(0.9) million	(40.8	)%
Income from operations	$	0.3 million	$	0.6 million	$	(0.3) million	(56.9	)%

Net sales in Foam were $1.2 million compared to $2.1 million in the prior fiscal year period due to reduced sales volumes.

Adjusted EBITDA

Earnings before interest, taxes, depreciation, amortization and special items (Adjusted EBITDA) for the second quarter ended August 26, 2010 totaled $11.4 million, compared to $23.1 million for the comparable period in the prior fiscal year.

Pending Merger; Discontinuing Financial Guidance

On September 15, 2010, we entered into an agreement and plan of merger with Clearwater Paper Corporation, pursuant to which a subsidiary of Clearwater will be merged with and into Cellu Tissue, with Cellu Tissue being the surviving corporation and continuing as a wholly-owned subsidiary of Clearwater. In light of the pending merger, we are discontinuing financial guidance for fiscal 2011.

Notice Relating to the Use of Non-GAAP Measures

Attached to this press release are tables setting forth our second quarter consolidated statements of operations, financial position and selected consolidated financial data, including information concerning our cash flow position, selected consolidated segment data, reconciliations of consolidated net income to consolidated EBITDA and reconciliations of consolidated EBITDA to consolidated Adjusted EBITDA.

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EBITDA represents earnings before interest expense, income taxes and depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted to reflect the additions and eliminations described in the table below. EBITDA and Adjusted EBITDA are supplemental measures of operating performance that do not represent and should not be considered as alternatives to net income or cash flow from operations, as determined by U.S. generally accepted accounting principles, or U.S. GAAP, and our calculation thereof may not be comparable to that reported by other companies. EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under U.S. GAAP. Some of the limitations are:

• EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;

• EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;

• EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; and

• other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our U.S. GAAP results and using EBITDA and Adjusted EBITDA only supplementally. We further believe that our presentation of these U.S. GAAP and non-GAAP financial measurements provide information that is useful to analysts and investors because they are important indicators of the strength of our operations and the performance of our core business.

Management uses EBITDA and Adjusted EBITDA:

• as measurements of operating performance because they assist us in comparing our operating performance on a consistent basis, as both remove the impact of items not directly resulting from our core operations;

• for planning purposes, including the preparation of our internal annual operating budget;

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• to allocate resources to enhance the financial performance of our business;

• to evaluate the performance and effectiveness of our operational strategies;

• to evaluate our capacity to fund capital expenditures and expand our business; and

• to calculate incentive compensation for our employees.

In addition, these measurements are used by investors as supplemental measures to evaluate the overall operating performance of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including these non-GAAP financial measures as a reasonable basis for comparing our ongoing results of operations. Many investors are interested in understanding the performance of our business by comparing our results from ongoing operations from one period to the next and would ordinarily add back events that are not part of normal day-to-day operations of our business. By providing these non-GAAP financial measures, together with reconciliations, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing strategic initiatives.

Cellu Tissue’s management invites you to listen to its conference call on October 7, 2010 at 9:00 a.m. ET regarding fiscal 2011 second quarter consolidated financial results. To participate in the conference call, you may either dial (800) 288-8967 or International (612) 332-0430, or join in listen-only mode to an audio webcast, accessible through the Investor Relations section at www.cellutissue.com. A taped replay of the conference call will be available after 11:00 a.m. on October 7, 2010 until October 21, 2010. The number to all for the taped replay is (800) 475-6701 or International (320) 365-3844, access code 173022. The taped replay information to access the call will also be available in the Investor Relations section of the Company’s website at www.cellutissue.com.

About Cellu Tissue Holdings, Inc.

Cellu Tissue Holdings, Inc. is a North American producer of tissue products, with a focus on consumer-oriented private label products and a growing presence in the value retail tissue market.

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For more information, contact Cellu Tissue Holdings, Inc. at www.cellutissue.com.

The statements contained in this release that are not purely historical, including information regarding our fiscal 2011 estimated tax rate, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on these forward-looking statements and any such forward-looking statements are qualified in their entirety by reference to the following cautionary statements. All forward-looking statements included in this document are based upon information available to Cellu Tissue as of the date hereof, and Cellu Tissue assumes no obligation to update any such forward-looking statements. Such statements and any other forward-looking statements are subject to risks, assumptions and uncertainties that may cause the statements to be inaccurate and readers are cautioned not to place undue reliance on such statements, including risks related to energy and pulp costs, the growth of our converted tissue business, changes in retail pricing levels and any other risks described in our Annual Report on Form 10-K for the fiscal year ended February 28, 2010 and Form 10-Q for the quarter ended May 27, 2010 and subsequent filings with the SEC.

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CELLU TISSUE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	For the three months ended						For the six months ended
	August 26, 2010			August 27, 2009			August 26, 2010			August 27, 2009
Net sales	$	136,632,083		$	137,796,650		$	268,736,228		$	256,724,872
Cost of goods sold		127,802,664			115,154,471			247,755,896			214,269,375
Gross profit		8,829,419			22,642,179			20,980,332			42,455,497
Selling, general and administrative expenses		5,594,748			5,355,748			10,987,101			10,856,909
Amortization expense		1,080,163			1,079,268			2,124,717			2,135,692
Income from operations		2,154,508			16,207,163			7,868,514			29,462,896
Interest expense, net		7,838,455			12,331,443			15,319,149			18,837,994
Foreign currency loss (gain)		(142,308	)		356,287			73,189			713,226
Other expense (income)		92,075			(355,871	)		89,056			(372,445	)
Income (loss) before income tax expense		(5,633,714	)		3,875,304			(7,612,880	)		10,284,121
Income tax (benefit) expense		(1,804,045	)		1,157,830			(2,435,852	)		5,255,782
Net (loss) income	$	(3,829,669	)	$	2,717,474		$	(5,177,028	)	$	5,028,339
Basic and diluted (loss) earnings per share	$	(0.19	)	$	0.16		$	(0.26	)	$	0.29
Basic shares outstanding		20,184,054			17,477,971			20,176,732			17,477,971
Diluted shares outstanding		20,184,054			17,477,971			20,176,732			17,477,971

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CELLU TISSUE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	August 26, 2010			February 28, 2010
ASSETS
Current Assets:
Cash and cash equivalents	$	2,229,594		$	3,299,033
Receivables, net		55,508,902			49,659,464
Inventories		55,881,584			56,586,982
Prepaid expenses and other current assets		3,033,423			3,810,934
Income tax receivable		3,162,572			2,788,118
Deferred income taxes		1,368,255			1,180,866
Total Current Assets		121,184,330			117,325,397
Property, plant and equipment, net		314,433,569			307,635,021
Goodwill		41,020,138			41,020,138
Other intangibles		25,215,236			27,339,953
Other assets		8,622,698			9,385,877
Total Assets	$	510,475,971		$	502,706,386
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Revolving line of credit	$	23,000,000		$	1,000,750
Accounts payable		27,143,324			34,275,598
Accrued expenses		27,630,519			27,820,255
Accrued interest		6,502,332			6,721,143
Other current liabilities		1,514,095			623,653
Current portion of long-term debt		760,000			760,000
Total Current Liabilities		86,550,270			71,201,399
Long-term debt, less current portion		242,854,431			242,538,125
Deferred income taxes		75,210,816			77,178,393
Other liabilities		821,809			956,444
Stockholders’ Equity:
Common stock, $.01 par value, 23,715,470 shares authorized, 20,186,892 and 20,145,176 issued respectively		201,869			201,452
Capital in excess of par value		103,643,310			103,076,890
Accumulated earnings		2,283,664			7,460,692
Accumulated other comprehensive income (loss)		(1,090,198	)		92,991
Total Stockholders’ Equity		105,038,645			110,832,025
Total Liabilities and Stockholders’ Equity	$	510,475,971		$	502,706,386

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CELLU TISSUE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Six Months Ended
	August 26, 2010			August 27, 2009
Cash flows from operating activities
Net (loss) income	$	(5,177,028	)	$	5,028,339
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		12,940,999			12,050,067
Amortization of intangibles		2,124,717			2,135,692
Amortization and write-off of debt issue costs		769,290			779,510
Accretion and write-off of debt discount		696,306			2,887,919
Stock-based compensation		513,000			422,480
Deferred income taxes		(2,154,966	)		2,393,930
Loss on disposal of fixed assets		220,601			147,241
Changes in operating assets and liabilities:
Receivables		(5,874,026	)		4,287,654
Inventories		623,423			8,699,026
Prepaid expenses, other current assets and income tax receivable		263,424			(757,153	)
Other assets and liabilities		17,703			368,092
Accounts payable, accrued expenses and accrued interest		(7,670,619	)		2,429,452
Total adjustments		2,469,852			35,843,910
Net cash (used in) provided by operating activities		(2,707,176	)		40,872,249
Cash flows from investing activities
Capital expenditures		(20,031,606	)		(11,162,014	)
Net cash used in investing activities		(20,031,606	)		(11,162,014	)
Cash flows from financing activities
Bank overdrafts		—			(3,285,420	)
Borrowings on revolving line of credit, net		36,245,609			22,350,147
Payments on revolving line of credit, net		(14,246,359	)		(40,880,971	)
Payments on long-term debt		(380,000	)		(380,000	)
Retirement of long-term debt		—			(222,255,572	)
Payment of deferred financing fees		—			(9,346,462	)
Net proceeds from bond offering		—			245,738,400
Expenses from initial public offering		(171,042	)		—
Proceeds from stock options exercised		224,880			—
Net cash provided by (used in) financing activities		21,673,088			(8,059,878	)
Effect of foreign currency		(3,745	)		15,194
Net (decrease) increase in cash and cash equivalents		(1,069,439	)		21,665,551
Cash and cash equivalents at beginning of period		3,299,033			361,035
Cash and cash equivalents at end of period	$	2,229,594		$	22,026,586

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CELLU TISSUE HOLDINGS, INC.

CONSOLIDATED BUSINESS SEGMENT INFORMATION (Unaudited)

BUSINESS SEGMENTS

	Three Months Ended
	August 26,			August 27,
	2010			2009
NET SALES:
Tissue	$	105,931,753		$	107,781,026
Machine-Glazed Tissue		29,462,776			27,925,877
Foam		1,237,555			2,089,747
Consolidated	$	136,632,084		$	137,796,650
INCOME (LOSS) FROM OPERATIONS:
Tissue	$	4,373,041		$	15,356,477
Machine-Glazed Tissue		(1,398,169	)		1,326,573
Foam		259,802			603,381
Segment income from operations		3,234,674			17,286,431
Amortization expense		(1,080,163	)		(1,079,268	)
Consolidated	$	2,154,511		$	16,207,163
	Six Months Ended
	August 26,			August 27,
	2010			2009
NET SALES:
Tissue	$	208,907,911		$	201,248,387
Machine-Glazed Tissue		56,795,589			51,519,942
Foam		3,032,728			3,956,543
Consolidated	$	268,736,228		$	256,724,872
INCOME (LOSS) FROM OPERATIONS:
Tissue	$	10,828,681		$	27,711,329
Machine-Glazed Tissue		(1,058,812	)		2,666,960
Foam		223,362			1,220,299
Segment income from operations		9,993,231			31,598,588
Amortization expense		(2,124,717	)		(2,135,692	)
Consolidated	$	7,868,514		$	29,462,896

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CELLU TISSUE HOLDINGS, INC.

RECONCILIATION OF CONSOLIDATED NET INCOME (LOSS) TO EBITDA

(Unaudited)

	Three Months Ended
	August 26, 2010			August 27, 2009
NET (LOSS) INCOME	$	(3,829,669	)	$	2,717,474
Add back:
Depreciation		6,551,931			6,122,062
Amortization		1,080,163			1,079,268
Interest expense, net		7,838,455			12,331,443
Income tax (benefit) expense		(1,804,045	)		1,157,830
EBITDA	$	9,836,835		$	23,408,077
	Six Months Ended
	August 26, 2010			August 27, 2009
NET (LOSS) INCOME	$	(5,177,028	)	$	5,028,339
Add back:
Depreciation		12,940,999			12,050,067
Amortization		2,124,717			2,135,692
Interest expense, net		15,319,149			18,837,994
Income tax (benefit) expense		(2,435,852	)		5,255,782
EBITDA	$	22,771,985		$	43,307,874

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CELLU TISSUE HOLDINGS, INC.

RECONCILIATION OF CONSOLIDATED EBITDA TO CONSOLIDATED ADJUSTED EBITDA

(Unaudited)

$ in thousands

	Three months ended
	August 26,		August 27,
	2010		2009
EBITDA (1)	$	9,836	$	23,408
Adjustments:
APF transition and related costs (3)		—		20
Insurance claim for wrapper damage (4)		—		(346	)
Clearwater transaction costs (5)		953		—
Oklahoma City start-up costs (6)		629		—
ADJUSTED EBITDA	$	11,418	$	23,082
	Six months ended
	August 26,		August 27,
	2010		2009
EBITDA (1)	$	22,772	$	43,308
Adjustments:
Natural Dam fire (2)		—		250
APF transition and related costs (3)		—		373
Insurance claim for wrapper damage (4)		—		(346	)
Clearwater transaction costs (5)		953		—
Oklahoma City start-up costs (6)		629		—
ADJUSTED EBITDA	$	24,354	$	43,585

(1) EBITDA includes stock-based compensation expense related to equity awards of $0.2 million and $0.2 million, for the three months ended August 26, 2010 and August 27, 2009, respectively and $0.5 million and $0.4 million for the six months ended August 26, 2010 and August 27, 2010, respectively.

(2) Insurance deductible costs related to a fire at our Natural Dam mill at our Gouverneur, New York facility.

(3) In fiscal year 2009, we acquired APF, which was a significant acquisition because of its size and complexity of operations. In connection with the APF acquisition, we determined that several initiatives, to be completed over a twelve-month period, would help achieve identified synergies. These initiatives included eliminating certain overhead functions and aligning those activities with our existing infrastructure as well as consolidating production and inventory storage facilities. Our consolidation of facilities included centralizing the acquired APF production facility and two APF inventory storage facilities located in Hauppauge, New York into one consolidated facility in Long Island, New York and moving machinery for a napkin line from our Neenah, Wisconsin location to the acquired APF Thomaston, Georgia facility.

(4) Reflects insurance proceeds exceeding the book value for damaged packaging equipment (damaged in transit).

(5) Represents legal, accounting and related costs incurred in connection with the announced acquisition of the Company by Clearwater Paper Corporation.

(6) Represents start-up costs for the Company's new facility in Oklahoma City, Oklahoma.

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