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Fraser Papers Proceeds With Sale of Specialty Papers Business

Jan. 29, 2010 (Press Release) - Fraser Papers Inc. ("Fraser Papers" or the "Company") announced 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.

SOURCE: Fraser Papers Inc.




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