Shermag enters into new credit facility agreements

Shermag Inc. (TSX: SMG) today announced that it has entered into agreements with Wachovia Finance Corporation (Canada), the corporate and investment banking arm of Wachovia Corporation, one the largest diversified financial services companies in the United States, for $65 million of credit facilities. The new credit facilities consist of a term loan for up to $10 million and a revolving credit facility of $55 million.

These new facilities will be used to redeem Shermag's debt of $22.2 million and will provide significant financing flexibility to the Company as it completes its transformation plan.

Profile

Shermag Inc. (SMG), headquartered in Sherbrooke, Québec, is a leader in the design, production, marketing and distribution of high-quality residential furniture. The Company employs more than 1,600 people and is a vertically integrated manufacturer and importer with its own cutting rights, sawmill, veneer facility and manufacturing operations.

Disclaimer

This news release contains forward-looking statements about the Company's operations, objectives, strategies, financial situation and performance. These statements are made based on assumptions and management's best estimates with regard to future events. However, the business of the Company is subject to risks and uncertainties that could cause actual results to differ from expected results. Important factors that could cause such differences are changes in pricing pressure being exerted by competitors, particularly Asian-based companies, significant movement in the Canadian/US dollar exchange rate, and unanticipated problems in implementing the Company's Business Transformation Plan. This is not an exhaustive list. A broader discussion of risk factors that could affect future performance can be found in the Company's Annual MD&A and Annual Information Form, filed with Canadian securities regulatory authorities. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The Company disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

For further information: Investor Relations: Maison Brison: Rick Leckner, (514) 731-0000; Shermag Inc.: Jeff Casselman, President and CEO, (819) 566-1515

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