Fraser Papers Inc.

Fraser Papers Inc.

February 24, 2010 16:27 ET

Fraser Papers Clears Final Conditions

Sale of Specialty Papers Business Expected To Close March 31, 2010

TORONTO, ONTARIO--(Marketwire - Feb. 24, 2010) -

(All financial references are in U.S. dollars unless otherwise noted)

Fraser Papers Inc. (together with its subsidiaries, "Fraser Papers" or the "Company") announced today that it has cleared the remaining material conditions under an offer to purchase its specialty papers business (the "Agreement"). The Company, the Canadian Energy and Paperworkers Union of Canada ("CEP"), the Government of New Brunswick and other stakeholders agreed to the broad terms under which Fraser Papers will proceed to close the sale of its specialty papers business to a company sponsored by the secured creditors of Fraser Papers ("Newco"). The Agreement included proposed changes to the collective agreements at the Company's Edmundston pulp and energy complex which will require ratification on or before March 10, 2010.

The Company filed the Agreement with the Ontario Superior Court of Justice (the "Court") today. The Company will work diligently with its secured creditors and Newco to close the sale of the specialty papers business before March 31, 2010. The final agreement (the "Purchase Agreement") will be subject to court approval prior to closing.

Under the terms of the Purchase Agreement, the unsecured creditors of Fraser Papers will receive promissory notes and a 49% common equity interest in the new company. Brookfield Asset Management Inc., a secured creditor, has agreed to convert its secured claim against the Company into a 51% common equity interest in Newco while the Government of New Brunswick has agreed to convert its $35 million secured loan plus accrued interest into equity in the form of preferred shares of the new company. Newco and the Company are currently negotiating a $50 million revolving credit facility with CIT Business Credit Canada Inc., which will provide Newco with operating liquidity.

The Company also announced today that the Court has granted a further extension of the initial Order under which Fraser Papers, was granted creditor protection under the Companies' Creditors Arrangement Act ("CCAA"). This extension is through April 9, 2010 and was supported by PricewaterhouseCoopers Inc., the Court appointed Monitor of the Company's CCAA process.

Fraser Papers is an integrated specialty paper company that produces a broad range of specialty packaging and printing papers. The Company has operations in New Brunswick, Maine, New Hampshire and Québec. For more information, visit the Fraser Papers web site at

Note: This press release contains forward-looking information and forward-looking statements within the meaning of Canadian provincial securities laws. These forward-looking statements include, among others, statements with respect to: sale of the Company's specialty papers business, including the anticipated closing date and certain terms of the sale; changes to collective agreements at Edmundston; and Newco's credit facility. The words "will", "propose", variations of those words and other words and expressions which may be predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements. Factors that could cause actual results of the sale of the specialty papers business, changes to collective agreements and Newco's credit facility to differ materially from those set forth in the forward-looking statements include: unforeseen administrative, legal process, or transactional issues; non-ratification by union members; credit issues; and other risks detailed from time to time in the documents filed by the Company with the securities regulators in Canada. In addition, the Company and its subsidiaries are currently operating under creditor protection laws in Canada and the United States. Many of the Company's plans are subject to the review of commercial courts in Canada and the United States. The Company cannot anticipate when such plans will be the subject of consideration by the commercial courts or, if they are, what impact that consideration will have on the plans or intentions of the Company. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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