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Management Side
Knauf sends a letter to USG Corp. shareholders urging them to vote against USG's director nominees

IPHOFEN, Germany (News release) -- Gebr. Knauf KG announced that it has filed an investor presentation with the U.S. Securities and Exchange Commission ("SEC") in connection with its withhold campaign against USG Corporation (NYSE: USG). The investor presentation details the rationale for the value of Knauf's offer, and discussed some of the risks inherent in USG's strategy. Knauf urges USG shareholders to vote AGAINST All four of USG's director nominees at the Company's Annual Meeting scheduled for May 9, 2018 as way to send a clear message to USG's Board to immediately engage in meaningful discussions with Knauf regarding its offer of $42.00 per share.

Among other things, the presentation highlights:

Knauf's offer of $42.00 per share presents USG shareholders with substantial cash value after a decade without dividends or meaningful share price appreciation. As a long time USG shareholder, Knauf knows USG and the industry well; Knauf believes the offer reflects the full and fair value of USG. Knauf's offer represents an attractive multiple of 11.2x USG's 2017 fully adjusted EBITDA, a 25% premium to the last unaffected trading day prior to the public announcement of the offer, and a 30% premium to USG's average closing share price for the 12-month period ended March 23, 2018. The offer value is in excess of USG's highest stock price over the last decade (measured since January 1, 2008) and allows USG shareholders to realize an attractive premium today.

The offer price provides full and fair value and de-risks any future business plan execution and cyclicality. USG has dramatically underperformed the market since 2000, including the S&P 500 and the Dow Jones U.S. Construction & Materials Index. USG wants shareholders to believe that its new plan will deliver significant turnaround and margin expansion, but, based on publicly available sources, since the financial crisis USG has missed approximately 75% of its quarterly EBIT consensus numbers. Over the last 25 years USG's EBITDA has suffered from significant volatility with peak to trough variation of over $1.1B and an average annual volatility of $168MM. Given the cyclical nature of USG's business, Knauf believes that evaluation of USG's full and fair value should focus on long-term, sustainable cash flow and EBITDA on a through-the-cycle basis, not near-term margin targets. These factors, including the value of USG's Investor Day strategy have been factored into Knauf's offer of $42.00 per share.

Market response to Knauf's offer indicates broad support from USG shareholders. When USG introduced its ambitious new strategy at USG's Investor Day on March 8, 2018, the share price declined almost 3%. In contrast, when Knauf's offer was publicly disclosed on March 26, 2018, USG's share price increased almost 20%. Knauf believes that this stock price comparison is a clear indication that USG shareholders favor the substantial, immediate and cash-certain value of Knauf's offer over the potential risk inherent in a cyclical and mature industry and with USG's ambitious business plan.

Berkshire Hathaway, a long-term USG shareholder with an approximately 31% ownership stake, has offered Knauf an option at $42, which Knauf believes validates the value of its offer, and has publicly stated its intention to VOTE AGAINST USG's four director nominees. Berkshire Hathaway disclosed a proposal to grant Knauf an option to purchase all of Berkshire Hathaway's shares in USG, exercisable if Knauf agrees to a transaction to acquire all of the outstanding shares of USG. Additionally, after Knauf initiated its "Withhold" campaign, Berkshire Hathaway publicly stated its intention to vote against USG's director nominees. Knauf believes that this is a clear indication that Berkshire Hathaway views $42.00 as a reasonable offer price.

Despite Knauf's repeated and concerted efforts, USG's Board has refused to seriously engage at every step. Despite their assertions to the contrary, USG has refused to engage meaningfully with Knauf regarding its substantial cash offer. Knauf has repeatedly reached out to USG in an attempt to commence serious negotiations, or at least have them demonstrate where there might be additional value, expressing its willingness to enter into a non-disclosure agreement. USG's refusal to engage is further protected by the Company's extensive structural defenses. Knauf can only conclude that USG is unable to present substantive evidence to support its claims that the Company is worth more than $42.00 per share. Shareholders should NOT let USG's extensive structural defense policies prevent them from making their voices heard.

Knauf's "Withhold" campaign is an effort to take the value of its compelling offer directly to fellow shareholders. Knauf urges USG shareholders to send a clear message to the USG Board to engage in serious discussions by voting AGAINST ALL four USG director nominees.

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EMPLOYMENT OPPORTUNITIES:

* We are looking for a Production Shift Team Leader to maintain high standards, plus ensure safety policies and regulations for a company located close to Chicago's Midway Airport. If you are experienced team leader who has a four-year degree in an engineering/technical field (paper science degree preferred, and experience in recycled linerboard or corrugating medium paper mills is a plus), we are looking for someone like you! If you are interested or would like more information, please contact Jim Thompson at: jthompson@taii.com Ph. 678-206-6010 Cell: 404-822-3412.

* A family owned and operated corrugated packaging solutions company in Illinois is looking for an experienced Maintenance Technician to maintain production and quality by ensuring operation of machinery and mechanical equipment. Relocation and other perks are available to the right candidate who is committed to working third shift. If you are interested or would like more information, please contact Jim Thompson at: jthompson@taii.com Ph. 678-206-6010 Cell: 404-822-3412.

* Are you an experienced Maintenance Mechanic and would like to work for a family owned and operated corrugated packaging solutions company that invests in the best equipment and technology? If you are interested or would like more information, please contact Jim Thompson at: jthompson@taii.com Ph. 678-206-6010 Cell: 404-822-3412.

* A leading company in the corrugated solutions packaging business is looking for a experienced Electrician. The right candidate will possess the following skills: electrical; hydraulic; automatic drives (basic component machines 122 to 440 bolts). If you are interested or would like more information, please contact Jim Thompson at: jthompson@taii.com Ph. 678-206-6010 Cell: 404-822-3412.

* An expanding company is looking for a Corporate Industrial Electro-Mechanical Engineer near Allentown, PA. Relocation is available. Do you have a storied list of unique electrical and mechanical engineering skills you're ready to take to the next level? Do you envision yourself in a corporate-level leadership role that your experience finally merits? And do you relish any opportunity to troubleshoot and solve real-time problems, all while designing and installing new services and systems that will not only ensure safety, but also turn a potentially hazardous work environment into a continuously thriving one? If you are interested or would like more information, please contact Jim Thompson at: jthompson@taii.com Ph. 678-206-6010 Cell: 404-822-3412.

* An expanding company is looking for hands-on Electro Mechanical Maintenance Techs in Conyers, Georgia. Preference will be given to candidates with higher education and additional certificates or training. You must be able to work any shift. Pay is negotiable with excellent perks and benefits. Relocation assistance is available to the right candidate. If you are interested or would like more information, please contact Jim Thompson at: jthompson@taii.com Ph. 678-206-6010 Cell: 404-822-3412.

* Working as a Consultant? Looking for some additional challenges with a flexible scheduling? Have a background in Consistency Control? This may be just the opportunity you are looking for: A large multi-national automation company seeks an expert in paper mill consistency technology. This individual will facilitate application support and start-ups in the paper mill environment. In addition, the ability to provide troubleshooting and technical advice and support is strongly desired. The individual should have an understanding of rotary, blade, microwave and optical consistency and the application of these devices in the paper mill. The company sells and maintains a line of consistency transmitters, sample valves and sheet break detectors. These products are marketed in the US through a rep. network. Knowledge of sheet break detection technology is also desirable. Individual must be willing to travel to paper production facilities across the US. Travel & Living Expenses to be reimbursed along with an agreed upon daily per diem rate. For more information, please contact Jim Thompson at: jthompson@taii.com Ph. 678-206-6010 Cell: 404-822-3412.

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Jim Thompson is back again...with a new book on a taboo subject: the personalities in the pulp & paper industry. Jim has written in the past on many subjects based on his four plus decades in the worldwide pulp and paper industry. This new book is packed full of information valuable to the senior member of the industry as well as the recent entrant. A must for every pulp and paper library.


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