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Stora Enso Selling Paper Mill, Sawmill in Sweden

March 2, 2006 (Press Release) - Stora Enso (NYSE:SEO) today announced that Grycksbo Fine Paper Mill and Linghed Sawmill are being divested as part of Stora Enso's Asset Performance Review (APR), which aims to secure a competitive European production base. Six mills are to be divested under the APR following assessment of their profit potential, strategic fit and realisable value.

Grycksbo Mill

Stora Enso has signed an agreement to sell its Grycksbo Mill in Sweden to Accent Equity, a Stockholm-based private equity firm. The transaction is expected to be closed by the end of March 2006. The sales price of the equity is SEK 350 million (EUR 37 million) and the Group's interest-bearing net liabilities will decrease by the same amount. The Group will record a capital loss of about EUR 20 million in its first quarter results.

Stora Enso's annual sales will decrease by approximately EUR 140 million and the working capital will be reduced by approximately EUR 6 million following the Grycksbo Mill divestment. The divestment will have no material effect on operating profit.

The divestment of Grycksbo Mill is consistent with the Group's strategy of concentrating its coated fine paper business on multi-coated graphical grades. Grycksbo Mill specialises in matt-coated fine papers, which it will continue to produce under its new ownership. Stora Enso will thereby exit this business line.

Stora Enso will continue to support Grycksbo Mill with certain services, including pulp supply, transport and sales support, for an agreed period of time to ensure an orderly transition to a stand-alone basis.

Grycksbo Mill is a non-integrated producer of on-machine coated woodfree paper with annual capacity of around 250 000 tonnes. The mill, in Dalarna province in central Sweden, employs around 500 persons.

Accent Equity Partners is a leading lower mid-market private equity firm investing in buyout and later-stage expansion capital transactions in the Nordic region.

Linghed Sawmill

Stora Enso has also signed an agreement to sell its Linghed Sawmill in Sweden to Dalarna Lumber AB of Sweden. The sales price is SEK 10 million (EUR 1.1 million). Stora Enso's annual sales will decrease by approximately EUR 7 million and the working capital will be reduced by approximately EUR 1 million following the Linghed Sawmill divestment. The impact of the transaction on the Group's profits will not be material.

The transfer will take effect immediately and includes buildings, stocks and production assets. All the 28 employees have been offered employment with the new owner as existing employees. Linghed Sawmill's production volume was 35 000 m3 in 2005.

SOURCE: Stora Enso




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