(UPM, Miramichi, May 4, 2006) - UPM's Miramichi mill in Canada started up on Wednesday after three months of shutdown. The money-losing mill has been idled since the beginning of February.

During the lay-off, the local management – together with employees - have compiled a new cost reduction and profit enhancement programme which aims at decreasing the fixed and variable costs as well as significantly improving the production efficiency of the Canadian mill.

"With serious efforts to implement this long-term programme, Miramichi has realistic possibilities to turn profitable again and to maintain the important role of serving the North American customer base as a local mill," says Jyrki Ovaska, President of UPM Magazine Paper Division.

The programme includes a 12% reduction in labour costs. The savings affect both hourly, salaried and management positions and they have been agreed upon with the local unions. The reduction will be reached through a combination of manning reductions and wage cuts effective until 2008. The personnel have also agreed to defer the contractual wage increases for this year.

In order to improve the mill's production efficiency, several key employees have been trained at UPM mills at Blandin in the US, at Caledonian in Scotland and at Rauma in Finland. In addition, UPM will provide extra operations know-how for Miramichi in the coming months in order to ensure that the efficiency improvement targets will be reached.

The provincial government in New Brunswick has assumed an active role in the process with UPM management during the three-month layoff.

"A steady and quick performance ramp-up is expected in the coming months. Most of the results of the programme are anticipated to materialise during the second half of this year, and the mill's progress will be monitored on a monthly basis. If the business environment deteriorates, the situation may change, but for now the prerequisites for profitable operation at Miramichi are better than they have been for years."

Both Miramichi coated groundwood machines are planned to start deliveries to customers by mid-May.

May 5, 2006 (Press Release) - The Neucel Specialty Cellulose plant in Port Alice, British Columbia officially opened Friday, with international investors putting their money behind the strong market demand for dissolving sulphite pulp. The mill, in the remote Canadian resource community on northern Vancouver Island, has been the economic lifeline for the community of 700 people for nearly a century.

The plant had been purchased in early December 2005 by an investment consortium of Wellspring Capital Management of New York and Charlestown Investments, based in Switzerland. An extensive capital program of equipment maintenance and upgrading has been underway to improve efficiency, reliability and move the mill's production into high-purity cellulose.

"As promised, over the past five months, we have invested approximately $35 million in capital and equipment upgrades to become competitive in both production costs and product offerings," said CEO, Richard Bassett. "A further US$10-15 million is due to be spent between May and August of this year with an additional US$70-80 million due to be earmarked for investment by the end of 2008."

Over the past month, Neucel has hired almost 300 employees and a recent sales trip to Europe, the US and Japan was very positive. "The sales opportunities are there," said Bassett, "especially for the high-purity cellulose such as acetates and ethers. There was a great deal of interest among buyers to see our products and begin testing them for purchase."

Investors saw the potential opportunities of a specialty cellulose plant Bassett said, but required a number of changes to make the investment work. "We worked out a fair taxation schedule with the Village of Port Alice," he said, "as well as a progressive labour agreement that gives us the flexibility to improve productivity, sustain the wage rates to attract skilled employees, and allow a bonus program when we make profits. So it really took a lot of cooperation for this to happen."

Most importantly, he added, the BC government was willing to acknowledge their responsibility for historical environmental liabilities. "The BC government negotiated a deal with Neucel to protect investors from past environmental liability for which they had no responsibility. In making that decision, government recognized that a tax-paying plant with 300 employees anchoring the economics of North Island was preferable to a bankrupt, closed mill needing expensive environmental remediation work."

Bassett added that while B.C.'s Economic Development Minister Colin Hanson was responsible for steering the environment liability deal, B.C.'s Minister of Forests, Rich Coleman was a critical advocate for the plant within government. "Simply put," said Bassett, "Minister Coleman supported this deal at its most critical time."

The Quatsino First Nations were also supporters, he added. "They stored equipment, and supported the transfers of various foreshore rights and water licenses to us. We needed that support and we have also gained a number of employees from the Band who won jobs during our interview process."

Today's noon-hour ceremony and barbeque will officially launch the plant opening. Attendees include British Columbia Forests Minister, Rich Coleman, North Island area families including the Village of Port Alice, Quatsino First Nations representatives, Neucel executives, and mill employees.

Neucel Specialty Cellulose will begin selling pulp immediately and will move into the high-purity markets to ensure financial stability as its products are qualified by buyers.

Neucel Specialty Cellulose is owned by Wellspring Capital Partners, and Charlestown Investments.

Wellspring is a New York based private equity firm which has consistently ranked among the top-performing private equity funds specializing in the middle market. Wellspring currently manages more than $2 billion in equity capital on behalf of some of the largest and most respected institutional investors in the United States, Canada, and Europe. Long term limited partner investors in Wellspring include pension and retirement plans, representing the interests of over 2,000,000 members in North America (including more than 250,000 Canadian public workers).

Charlestown Investments is an investment holding company registered in Zug, Switzerland and controlled by a group of private European investors. Charlestown has other investments in software, real estate, biotechnology and business services providers.

SOURCE: Neucel Specialty Cellulose

May 10, 2006 (Press Release) - Nippon Paper Industries has selected Metso Paper to supply most of the technology for its new 350,000 tpy papermaking line to be built at its Ishinomaki mill in northeastern Honshu, Japan. The total value of the Metso order, which extensively covers technology for papermaking, paper finishing, air systems and automation, exceeds Euro 80 million.

The new production line is due to start up in late September 2007.

Nippon Paper Industries Ishinomaki PM N6, as it is called, will be the first new papermaking unit in Japan since 1998. Largely relying on Metso Paper's OptiConcept technology, it will produce both fine paper and light-weight coated grades in a basis weight range of 51 to 79 g/m2. With a wire width of 9.45 m and a design speed of 1,800 m/min, it will be among the largest paper machines ever constructed in the country.

Nippon Paper Industries, which forms a major part of Nippon Paper Group, is Japan's leading paper producer. The Ishinomaki mill currently runs 11 paper machines producing a total of 900,000 tons per year.

The entire Nippon Paper Group produces approx. 7.4 million tons per year of paper and board with a total of approx. 90 paper machines at 23 mills in Japan, 2 in the U.S., 3 in China and 1 in Finland. The Group dominates the domestic Japanese paper market with a 26 % market share.

SOURCE: Metso Paper

(UPM, Helsinki, May 12, 2006) – UPM's profitability programme has advanced from planning to implementation phase. Local employee consultation negotiations at Finnish paper mills have been concluded. Negotiations were carried out locally, in a serious but constructive atmosphere. During the negotiations both the rationale and impact of the plans was discussed and alternative solutions to improve cost efficiency were identified. Continuing the operations of Voikkaa mill and the production lines planed to be closed is not economically viable in the current overcapacity situation and changing business environment.

UPM will close Voikkaa paper mill and Kymi PM 7 during the third quarter of 2006. Tervasaari PM 6 and the oldest pulp line will be closed during the second quarter of 2007. In addition, the company will cease production of coated magazine paper at Jämsänkoski PM 4 and to convert it to produce label face paper at the beginning of 2007. In order to increase the profitability it has been decided to reorganize the production and functions at mills and the group head office during 2006-2008.

The implementation of profitability programme will decrease UPM's personal by 2557 in Finland within next three years which is moderately less than earlier estimated. Notice will be given to 672 persons out of which 575 persons are at Voikkaa mill to be closed.

UPM will finance pension schemes by € 40 million. The negotiations on positions and outsourcing will continue according to the collective labour agreement.

The overall target of the profitability programme will remain as before and the employee consultation negotiations will continue also outside of Finland. UPM estimates that the financial targets set for the programme are realistic.

"From Job to Job" programme for the 672 dismissed

In order to minimise the impact of redundancy UPM will start a "From Job to Job" programme. The programme supports retraining and relocation. UPM will provide special support to Voikkaa which is going through a serious change.

In all Finnish units people will be encouraged to apply for UPM's internal vacancies and to move to new locations. Redundant employees are to be prioritised when filling vacancies considering reasonable retraining to meet the job's requirements. The company will cover costs for internal retraining and a settling-in allowance equal to one month's remuneration if the new job requires relocation.

UPM will support re-employment training of the persons given a notice. € 600,000 is reserved to support participation and material costs for retraining up to € 2,000 per person.

Furthermore, UPM has agreed on retraining cooperation with Aker Yards in Finland. UPM will support retraining by paying remuneration for the notice period even if a person started retraining at Aker Yards before the closure of the notice period. In addition, UPM will pay removal expenses and a settling-in allowance equal to one month's remuneration. The retraining in Aker Yard's ship building institute will take from 1 to 6 months in Turku.

In order to relieve the difficult situation at Voikkaa, UPM will extend the re-employment obligation for local employees to 24 months. In other units the 9 months rule obligated by law will be followed. It has been found important that the employees given a notice will continue to have the right to use occupational health services. Unemployed redundant employees can use UPM's occupational health services during the re-employment obligation period, that is, for 24 months at Voikkaa.

UPM has signed a letter of intent according to which Empower Oy will employ 50 - 100 redundant Voikkaa employees. UPM is committed to use the services of the new company for a minimum of three years. Empower is one of the largest service providers in energy and telecom sectors in Finland specialized in forest industries' maintenance. The aim is to sign the contract by the end of June.

In addition, UPM encourages its personnel to create new businesses by offering start-up support. The company has booked: € 400,000 for this purpose. UPM's start-up support can be applied for till end 2008. Maximum support per business is € 10,000.

The company has received several contacts concerning Voikkaa premises and real estate. The proposals are being investigated.

The closures and streamlining of operations will have an impact to following units in Finland:

 

Unit	Redundancies	Early retirement or other arrangements
Voikkaa	575	103
Kymi	37	310
Tervasaari	2	213
Jämsänkoski	14	140
Kaukas	0	339
Kaipola	13	140
Kajaani	17	195
Pietarsaari	0	215
Rauma	0	173
Corporate head office	14	57
In total	672	1885

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