Fraser Papers Inc.

Fraser Papers Inc.

January 23, 2006 20:10 ET

Fraser Papers Announces Filing of Final Prospectus for Acadian Timber Income Fund

TORONTO, ONTARIO--(CCNMatthews - Jan. 23, 2006) -


(All financial references are in US dollars unless otherwise noted)

Fraser Papers Inc. ("Fraser Papers") (TSX:FPS) announced today that Acadian Timber Income Fund ("Acadian" or the "Fund") has filed a prospectus with securities regulatory authorities in each of the provinces and territories of Canada relating to an initial public offering of Fund units. The prospectus indicates that the Fund expects to raise gross proceeds from the offering of approximately C$84.5 million and will issue approximately 8.45 million Fund units at C$10 per unit. This pricing provides a target yield of 8.25% for investors based on the Fund's estimated annual cash distributions per unit of C$0.825. In addition, the Fund will raise C$42 million of debt financing. The initial public offering is expected to close on or about January 31, 2006.

The Fund intends to use the proceeds of the offering to acquire approximately 765,000 acres of freehold timberlands and related assets in New Brunswick from Fraser Papers Inc. In addition, Acadian will purchase an interest (which following closing will constitute all common membership interests) in an affiliate of Brookfield Asset Management Inc. ("Brookfield") (NYSE/TSX:BAM) which owns approximately 311,000 acres of freehold timberlands in Maine.

On closing, Fraser Papers will receive net cash proceeds of approximately C$108 million and securities exchangeable into approximately 3.6 million units of the Fund representing approximately 22% of the Fund units on a fully diluted basis. These proceeds value Fraser Papers' New Brunswick timberlands business at approximately C$200/acre before transaction costs.

Fraser Papers and Acadian will also enter into a fibre supply agreement and Crown lands services agreement. The fibre supply agreement has a term of 20 years, with an option to extend the agreement for a further 5 years, and will provide Fraser Papers with substantially the same volumes of fibre that Fraser Papers historically received from its freehold timberlands in New Brunswick for consumption at its various sawmill and pulp and paper mill operations.

Brookfield is Fraser Papers' largest shareholder and, as at December 1, 2005, owned approximately 46% of Fraser Papers' outstanding common shares. Following the initial public offering of Acadian, Brookfield will own a significant retained interest in Acadian and will provide asset management services to the Fund.

Fraser Papers is an integrated specialty paper company which produces a broad range of technical, and printing & writing papers. The company has operations in New Brunswick, Maine, New Hampshire and Quebec. Fraser Papers is listed on the Toronto Stock Exchange under the symbol: FPS. For more information, visit the Fraser Papers web site at

Note: This press release contains "forward-looking statements" that are based on certain assumptions and reflect the company's current expectations. The words "believe," "expect," "anticipate," "intend," "estimate" and other expressions which are 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 to differ materially from those set forth in the forward-looking statements include general economic conditions, interest rates, availability of equity and debt financing and other risks detailed from time to time in the documents filed by the company with the securities regulators in Canada. 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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