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Fraser Papers Clears Final Conditions

Sale of Specialty Papers Business Expected To Close March 31, 2010

Feb. 25, 2010 - Fraser Papers Inc. (together with its subsidiaries, "Fraser Papers" or the "Company") announced [yesterday] that it has cleared the remaining material conditions under an offer to purchase its specialty papers business (the "Agreement").

The Company, the Canadian Energy and Paperworkers Union of Canada ("CEP"), the Government of New Brunswick and other stakeholders agreed to the broad terms under which Fraser Papers will proceed to close the sale of its specialty papers business to a company sponsored by the secured creditors of Fraser Papers ("Newco"). The Agreement included proposed changes to the collective agreements at the Company's Edmundston pulp and energy complex which will require ratification on or before March 10, 2010.

The Company filed the Agreement with the Ontario Superior Court of Justice (the "Court") [on Feb. 24]. The Company will work diligently with its secured creditors and Newco to close the sale of the specialty papers business before March 31, 2010. The final agreement (the "Purchase Agreement") will be subject to court approval prior to closing.

Under the terms of the Purchase Agreement, the unsecured creditors of Fraser Papers will receive promissory notes and a 49% common equity interest in the new company. 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.

The Company also announced [yesterday] that the Court has granted a further extension of the initial Order under which Fraser Papers, was granted creditor protection under the Companies' Creditors Arrangement Act ("CCAA"). This extension is through April 9, 2010 and was supported by PricewaterhouseCoopers Inc., the Court appointed Monitor of the Company's CCAA process.

Fraser Papers is an integrated specialty paper company that produces a broad range of specialty packaging and printing papers. The Company has operations in New Brunswick, Maine, New Hampshire and Quebec.

SOURCE: Fraser Papers




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