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Aug 15 / 2001

Norske Canada–Pacifica Papers merger gets green light for Aug. 27 close

VANCOUVER, Aug. 14, 2001 (press release) -- Norske Skog Canada Limited announced today that it has received the final regulatory approval it required from Investment Canada and has completed its financing arrangements, clearing the way to complete the acquisition of Pacifica Papers Inc. on August 27.

Norske Skog Canada also announced that it will complete its previously announced special distribution of $12 per Class A Common Share to shareholders of record at the close of business August 24, with payment scheduled for August 28. The special distribution will consist of a return of capital of $7.60 per share and a dividend of $4.40 per share. Norske Skog Canada's transfer agent, CIBC Mellon Trust Company, will make payment of the special distribution.

Company president and CEO Russell J. Horner said the long process to acquire Pacifica completes a major strategic objective of Norske Skog Canada to bring the two medium sized organizations together to create the third largest newsprint and groundwood specialty paper manufacturer based in North America.

"The robustness of this transaction to withstand every test from the courts, from Federal Government regulatory agencies, and most importantly from financial markets, confirms that there is an overwhelming confidence in the business case we put forward," Horner said.

"As further evidence of the financial markets' positive view of the combination, both the loan and bond financings in support of the transaction and Norske Skog Canada were well received by the capital markets, with the company's U.S. dollar denominated term loan and issue of Senior Notes significantly oversubscribed," he said.

He said the expanded company, which will carry on business as NorskeCanada, is targeting synergies of $60 million a year from the combined operations. NorskeCanada's operations will include mills at Crofton, Campbell River, Port Alberni and Powell River - all located within 100 miles of each other on the south coast of British Columbia.

With 2.5 million tonnes of paper and pulp capacity, NorskeCanada will be the largest producer of newsprint, telephone directory paper and lightweight coated paper on the west coast of North America. On a pro forma basis, the combined companies' revenues for the 12 months ended June 30, 2001 were $2.1 billion.

"As we become one of British Columbia's largest public companies, we look forward to the opportunities that our new scale will bring to the benefit of all our shareholders," Horner said. In anticipation of the close of the transaction that was first announced in March of this year, Horner said Norske Skog Canada and Pacifica have been preparing for the integration of their operations for the past few months. "It's a day we've all been waiting for and we're ready to operate as a single company from Day One forward," he said.

As part of these transactions, Norske Skog Canada's outstanding Class A Common Shares will be renamed "Common Shares". For purposes of trading on The Toronto Stock Exchange, this change is expected to take effect on or before August 31.

Financing arrangements for the special distribution and Pacifica acquisition consist of senior secured credit facilities of C$325 million and US$200 million funded by a syndicate of banks and institutional lenders and an issuance of US$250 million 8-5/8% senior notes due 2011. The Toronto-Dominion Bank acted as lead arranger and administration agent for the senior secured credit facilities along with lead arrangers and co-syndication agents Merrill Lynch and the Royal Bank of Canada. Merrill Lynch acted as sole book running manager for the senior notes along with joint lead managers RBC Dominion Securities and TD Securities.

This news release contains statements that are forward-looking in nature. Such statements involve known and unknown risks and uncertainties including the ability of Norske Skog Canada to complete the various transactions referred to above and to achieve the expected synergies on a timely basis.

The securities of Norske Skog Canada to be issued to Pacifica security holders as part of the transactions and the Senior Notes to be issued by Norske Skog Canada have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.



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