Fraser Papers Inc.

Fraser Papers Inc.

January 27, 2010 17:26 ET

Fraser Papers Proceeds With Finalizing Sale of Specialty Papers Business

TORONTO, ONTARIO--(Marketwire - Jan. 27, 2010) -

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

Fraser Papers Inc. ("Fraser Papers" or the "Company") announced today that, following the extended deadline of January 26, 2010, it had received no additional offers to purchase the Company's specialty papers business (the "Business") under the court supervised sale process (the "Bid Process"). As a result, Fraser Papers has terminated the Bid Process and will continue to work diligently to clear the remaining conditions and complete the firm purchase offer sponsored by the Company's secured creditors that was signed on December 22, 2009 (the "Purchase Agreement").

The Bid Process was approved by the Ontario Superior Court on December 10, 2009 and by the U.S. Bankruptcy Court for the District of Delaware on January 5, 2010. Pursuant to the Bid Process, PricewaterhouseCoopers Inc., the court-appointed Monitor, actively marketed the Business contacting 133 potential acquirers and overseeing the due diligence process with a number of interested parties. While a number of parties expressed preliminary interest, none of them submitted letters of intent. PricewaterhouseCoopers Inc. is expected to issue a report next week providing more details on the results of the Bid Process.

Under the terms of the Purchase Agreement, the unsecured creditors of Fraser Papers will receive ten-year promissory notes and a 49% common equity interest in the new company ("Newco"). 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.

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: completion of the Purchase Agreement; PricewaterhouseCoopers Inc.'s report on the Bid Process; consideration to be received by unsecured creditors; and Newco's potential credit facility with CIT Business Credit Canada Inc. The words "will", "expect", 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 completion of the Purchase Agreement, PricewaterhouseCoopers Inc.'s report on the Bid Process, consideration to be received by unsecured creditors, and Newco's potential credit facility with CIT Business Credit Canada Inc., to differ materially from those set forth in the forward-looking statements include: unforeseen administrative, legal or transactional issues, including the inability to meet certain conditions and/or to reach agreement with all parties to the proposed transaction; union and other stakeholder negotiations; 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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