Fraser Papers Inc.
TSX : FPS

Fraser Papers Inc.

March 22, 2006 17:58 ET

Fraser Papers Receives Notice of Chapter 11 Filing for SMART Papers

TORONTO, ONTARIO--(CCNMatthews - March 22, 2006) -

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

Fraser Papers Inc. ("Fraser Papers") (TSX:FPS) received notice today that Premium Papers Holdco LLC, and its subsidiaries SMART Papers LLC and PF Papers LLC (collectively, "Smart Papers"), have filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. A subsidiary of Fraser Papers owns a 40% passive minority interest in Smart Papers and leases a boiler to Smart Papers. In addition, Fraser Papers has made certain financial guarantees pursuant to the sale of its Midwest Operations to Smart Papers in 2005.

Fraser Papers will evaluate the impact of this filing and related court proceedings on its interests in Smart Papers. Depending on the outcome of these proceedings, Fraser Papers may record a significant write-down in the carrying value of those interests. As at December 31, 2005, Fraser Papers' investment in Smart Papers totaled $74 million and amounts receivable for the lease of a boiler and sale of pulp totaled $17 million. Management currently estimates that other financial guarantees related to operating leases, contracts and landfill operations could result in costs of approximately $8 million.

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 www.fraserpapers.com.

Note: This press release contains "forward-looking statements" including statements about the company's evaluation of future events, the company's possible recording of a significant writedown and management's estimates of other financial guarantees. These statements are based on certain assumptions and reflect the company's current expectations. These assumptions include the amounts by which the company could resell or utilize any assets purchased as a result of its financial guarantees. The words "estimates", "will", "may" 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, the outcome of any legal proceedings, 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, including in the Annual Information Form under the heading "Forward Looking Information". 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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