Paper Industry March 2002 News

STAMFORD, CONN. - March 4, 2002 - MeadWestvaco Corporation (NYSE: MWV) today announced plans to shut down permanently four coated paper machines and related equipment. These actions will take effect beginning April 1, 2002, and be completed by May 31, 2002. MeadWestvaco Corporation was formed on January 29, 2002, through the merger of The Mead Corporation and Westvaco Corporation. The company has about $8 billion in annual sales and operates in four key segments - packaging, coated and specialty papers, consumer and office products, and specialty chemicals.

"These actions reflect our determination to move rapidly to capture the benefits of this strategic merger," said John A. Luke, Jr., president and chief executive officer of MeadWestvaco. "With the merger and these steps, we are creating the highest quality and most efficient coated papers business in North America."

Three coated paper machines and associated equipment will be permanently closed at MeadWestvaco's Chillicothe, Ohio, mill and one coated paper machine at the Luke, Maryland, mill will be permanently shut down. The restructuring will result in the elimination of about 350 positions in Ohio and approximately 75 positions in Maryland. It is expected that, over time, production will be transferred to more efficient machines elsewhere in the company's coated papers system.

The actions we announced today will provide us with a lower cost and more efficient coated papers platform," said Ian W. Millar, president of MeadWestvaco's Papers Group. "The closure of high cost equipment is critical to our plans to create a strong position in our markets, especially in the face of weak economic conditions and import competition resulting from a strong U.S. dollar. The actions we are taking will not change our grade lines and product offerings.

MeadWestvaco had announced plans, following the merger, to take actions in the first two years, leading to annual synergies of $325 million. Of the $325 million in synergies, $125 million is expected to come from optimization of the Papers Group. Specific activities to achieve these synergies will include the elimination of high cost manufacturing equipment and the streamlining of processes and staffing -- part of that number is included in today's announced actions. In addition, $70 million in synergies relates to purchasing and logistics, $90 million to corporate overhead and technology, and $40 million to the packaging segment.

The announcement today follows the shutdown in October of 2001 of Westvaco's Tyrone, Pennsylvania, coated papers mill and sale of Mead's Menasha, Wisconsin, based Gilbert Paper Company and selected assets in November 2001. The earlier actions and today's steps together will result, when fully implemented, in more than half of the $125 million in annual synergies expected from the Papers Group.

MeadWestvaco's Papers Group produces coated papers for catalogs, annual reports, magazines, text books and coffee table books; carbonless papers for business forms and receipts; digital papers for commercial and desktop printing; and labels for food and beverages.

Restructuring and Other Merger Related Charges

MeadWestvaco also announced today that it expects restructuring and other merger-related costs taken in 2002 to approximate $100 million, of which about $40 million is expected to be taken in the first quarter. Of the total estimated $100 million in charges relating to the former Westvaco operations, about 70 percent or $70 million are expected to be non-cash charges. The total estimated charges include $12 million attributable to the shutdown of the Luke, Maryland, paper machine. Under merger accounting rules, charges for the writedown of assets and severance relating to the former Mead Corporation, including the paper machine shutdowns in Chillicothe, Ohio, are recorded in purchase accounting and do not affect current earnings.

Company-wide workforce reductions, including those in the Papers Group, are expected to be about 900 during 2002. This is in addition to reductions of 525 in connection with the closing of the Tyrone, Pennsylvania, mill and the sale of Gilbert Paper.

MeadWestvaco Corporation, headquartered in Stamford, Conn., has annual sales of $8 billion and is a leading global producer of packaging, coated and specialty papers, consumer and office products and specialty chemicals. The company operates in 33 countries, serves customers in approximately 100 nations and employs more than 30,000 people worldwide. Using sustainable forestry practices, MeadWestvaco manages 3.5 million acres of forests. For more information about MeadWestvaco, visit the company's website,

FEDERAL WAY, Wash., March 15, 2002 - Weyerhaeuser Company said that it has completed its acquisition of Willamette Industries following the filing of articles of merger with the Secretary of State of the State of Oregon and the Secretary of State of the State of Washington.

As of the close of business on March 14, Willamette Industries became a wholly owned subsidiary of Weyerhaeuser and shares of Willamette common stock not held by Weyerhaeuser were converted into the right to receive $55.50 in cash without interest when surrendered for payment.

On Feb. 11, Weyerhaeuser announced that it had acquired approximately 97 percent of outstanding Willamette shares through a successful tender offer. Former shareholders of Willamette still holding Willamette stock will receive written instructions from Mellon Investor Services LLC, as Paying Agent, regarding the process for surrendering their shares and receiving payment.

SPOKANE, Wash., March 18, 2002 - Potlatch Corp. said that the company has signed a definitive agreement for the sale of Potlatch's Cloquet, Minnesota, pulp and printing papers facilities and associated assets to a subsidiary of Sappi Limited for $480 million in cash.

The sale is subject to customary closing conditions, including regulatory approvals, and is expected to be completed in the second quarter.

In conjunction with the sale, Potlatch said it will close its remaining printing papers mill in Brainerd, Minnesota, and exit the coated printing papers business. Potlatch expects to take an after-tax charge of roughly $150 million in the first quarter to cover costs associated with the write-down of the book value of the assets and the closure costs. Approximately 10 percent of the after-tax charge will be cash costs associated with the closure of the Brainerd mill and other costs associated with exiting the coated papers business. The remaining 90 percent of the after-tax charge will be a non-cash charge resulting from a book loss on sale of the Cloquet assets and the closure of the Brainerd mill.

In 2001, Potlatch's printing papers segment reported a loss of $36.7 million on revenues of $464 million.

Potlatch Chairman and Chief Executive Officer L. Pendleton Siegel emphasized that the sale of the company's coated printing papers assets are part of a strategic realignment of company resources to increase shareholder value by focusing on businesses with greatest potential for growth. Siegel explained that Potlatch will concentrate on the company's natural resource, wood products and consumer tissue businesses, which have demonstrated potential for long-term growth. He said that the company's paperboard business is currently resolving cost issues and improving product quality at its Lewiston, Idaho, mill to be consistent with the low cost and high quality at its Cypress Bend, Arkansas, operation.

Siegel added that proceeds from the sale will be used to pay down debt, strengthen the company's balance sheet and ultimately provide capital for high-return investments in its other business lines.

Siegel stated that the company's actions also reflect recent changes in the dynamics of the global market for coated printing papers. "The continuing strength of the dollar in relation to other currencies in recent years and the ongoing industry consolidation have created a challenging competitive environment in the coated printing papers business, particularly for smaller domestic producers,'' he said.

Stora Enso to sell its Mölndal Mill to KLIPPAN of Sweden
March 21, 2002 Stora Enso is selling its Mölndal Mill to KLIPPAN AB, a Swedish listed specialty paper company. This divestment is part of the Fine Paper division’s asset restructuring programme to concentrate investment in large, cost-efficient mills. Accordingly, Stora Enso has for some time been seeking a buyer with a product range matching the Mölndal Mill’s high quality range of graphic specialty papers. The buyer, KLIPPAN AB, is considered the ideal fit for Mölndal’s product range.

The total value of the transaction is about EUR 25 million, comprising EUR 8 million for the shares in the company Stora Enso Mölndal AB and the balance for taking on the company’s debt. Including the co-ordinated sale of land close to the mill to a third party, there will be no capital gain or loss on the sale, which is expected to be completed on 2 April 2002.

Mölndal's net annual fine paper production capacity with the current product range is some 80 000 tonnes (50 000 tonnes of multicoated fine paper and 30 000 tonnes of uncoated coloured and white paper). The mill also has some 40 000 tonnes per year of board sheeting capacity. The Mölndal Mill has some 400 employees, all of whom will be transferred to the new owner.

SCA Buys French Packaging Company

March 25, 2002 - SCA said that it has reached an agreement, following a ruling by the bankruptcy court, to take over the French packaging company AR Fegersheim, formerly a subsidiary of A&R Carton AB. SCA is paying EUR 250,000 for the company and at the same time is assuming leasing and pension commitments with a capital value corresponding to approximately EUR 2 million. Concurrently, agreement was reached with the union organizations whereby SCA will offer about 100 persons continued employment. Previously, there were about 300 persons employed at the company.

Operations at AR Fegersheim comprise converting and printing for consumer cartonboard packaging. SCA will continue with part of these operations on the basis of long-term contracts SCA has reached with certain of the former customers of AR Fegersheim. In addition, SCA will further develop the operations based on the converting and printing of microflute products, in parallel with integration with the other packaging operations within SCA. Initially, integration will be with the operations SCA conducts within the SCA Nicollet company, which was acquired in 1998 and which focuses on packaging with demands for high-quality printing. These operations currently have annual sales of about EUR 150 million, with favorable profitability. Products are marketed in Western Europe.

The acquired operations are expected within two years to attain sales of about EUR 20 million. The acquisition strengthens SCA Nicollet’s operations through being able to rapidly increase production capacity and through improved geographical coverage. SCA will take over the operations with effect from April 8, 2002.

Source SCA