UPM-KYMMENE COMPLETES REPAP ACQUISITION
Helsinki, Finland and Stamford, Connecticut, (October 16, 2000) - UPM-Kymmene
Corporation (Helsinki Stock Exchange: UPM1V; NYSE: UPM) and Repap Enterprises
Inc. (TSE: RPP) announced today that the shareholders of Repap have approved the
amalgamation of Repap with a wholly-owned subsidiary of UPM-Kymmene that was
previously announced on August 29, 2000. Over 96 percent of Repap shareholders,
represented either in person or by proxy, voted in favour of the transaction.
At closing, which is expected to occur today, Repap will amalgamate with a
wholly-owned subsidiary of UPM-Kymmene, each Repap common share will be
converted into one special share of the amalgamated company and all special
shares will then be purchased by a wholly-owned subsidiary of UPM-Kymmene for
CAD 0.20 per share in cash. In addition, preferred shares of Repap will be
acquired by a wholly-owned subsidiary of UPM-Kymmene at closing for their
redemption price of CAD 25.00 per share in cash. The transaction values Repap's
equity at approximately CAD 160 million (EUR 123 million), implying an
enterprise value of approximately CAD 1.35 billion (EUR 1.04 billion).
Repap registered shareholders who have submitted properly completed letters of
transmittal together with their share certificates to Montreal Trust Company of
Canada will receive their consideration by first class mail unless they have
instructed Montreal Trust in their letters of transmittal to have their
consideration held for pick-up. Montreal Trust is expected to mail such
consideration to former Repap shareholders and have it made available for
pick-up where applicable as soon as practicable following the closing. Repap
shareholders whose shares are held in the name of a securities dealer, broker or
other intermediary are advised to contact that entity for further information.
The acquisition strengthens UPM-Kymmene's global leadership in magazine papers
and is a logical step for UPM-Kymmene to become a major local magazine paper
producer in North America. UPM-Kymmene continues to further develop a low cost
production structure with state-of-the-art facilities. The Repap acquisition is
expected to produce approximately CAD 50 million (EUR 38 million) in annual
pre-tax synergies by 2002 through product and market mix optimization, cost
savings in purchasing, logistics and selling, general and administrative
expenses as well as through improvements in best practices. The acquired mill
will operate under the name UPM-Kymmene Miramichi.
RBC Dominion Securities Inc. acted as financial advisor to UPM-Kymmene and
Donaldson, Lufkin & Jenrette acted as financial advisor to Repap. Osler, Hoskin
& Harcourt LLP and White & Case LLP acted as legal advisors to UPM-Kymmene and
Stikeman Elliot and Sullivan & Cromwell acted as legal advisors to Repap.
About UPM-Kymmene
UPM-Kymmene, which is based in Helsinki, Finland, is one of the world's largest
forest product companies and paper producers. The Group's turnover in 1999
amounted to EUR 8.3 billion (CAD 11.1 billion) and operating profit to EUR 1.6
billion (CAD 2.1 billion). The company's product range covers printing papers,
converting materials and wood products. Printing Papers, which comprise magazine
papers, newsprint and fine papers, account for over half of the Group's
turnover. Following the closing of the Repap acquisition, UPM-Kymmene will be
the world's largest producer of magazine papers and will rank among the world's
top ten producers of newsprint and fine papers. UPM Converting is among Europe's
leading suppliers of converting materials. The Group is also Europe's biggest
plywood producer and one of the continent's biggest producers of sawn timber.
UPM-Kymmene's operations are focused on European Union countries and the United
States, where the company owns Blandin Paper in Minnesota producing LWC magazine
papers. North American sales account for 11% of the Group's turnover. The Group
has production plants in 13 countries and 170 sales and distribution companies
spanning five continents.
About Repap
Repap is a major producer of LWC magazine papers with a 9% share of total North
American capacity. In 1999, the company's net sales amounted to CAD 570 million
(EUR 425 million) and operating profit to CAD 68 million (EUR 51 million). The
company's high quality paper is utilized in magazines, catalogs, inserts and
commercial printing applications. Repap's world-class coated paper complex in
New Brunswick, Canada, has two modern paper machines with a design capacity of
450,000 metric tons, a northern bleached softwood kraft pulp mill with an annual
capacity of 235,000 metric tons and an integrated groundwood pulp mill with an
annual capacity of 125,000 metric tons. Repap also has two sawmills with an
annual capacity of 137,000 cubic metres. Repap employed 1,480 persons at the end
of 1999.
Forward-Looking Statements
This press release contains certain statements that are neither reported
financial results nor other historical information. These statements are
forward-looking statements within the meaning of the safe-harbor provisions of
the U.S. federal securities law. These forward- looking statements are subject
to risks and uncertainties that could cause actual results to differ materially
from those expressed in the forward-looking statements. Many of these risks and
uncertainties relate to factors that are beyond the companies' ability to
control or estimate precisely, such as future market conditions, the behavior of
other market participants and the actions of governmental regulators. These and
other risk factors are detailed in the two companies' SEC reports. Readers are
cautioned not to place undue reliance on these forward- looking statements,
which speak only as of the date of this press release. The companies do not
undertake any obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date of
this press release.
Further Information
For further information, please contact:
UPM-Kymmene Corporation:
Markku Franssila
Vice President
Corporate Communications
tel. +358 204 15 0021
Olavi Kauppila
Vice President
Investor Relations
tel. +358 204 15 0658
Repap Enterprises Inc.:
Stephen Larson
President & Chief Executive Officer
tel. 1 (203) 964-6163
Michelle Cormier
Vice President & Chief Financial Officer
tel. 1 (203) 964-6168
