International Paper Agrees to Sell Coated and SC Papers Business

Stamford, Connecticut, USA, 05 June 2006 -- /PRNewswire/ -- International Paper (NYSE: IP) has signed a definitive agreement to sell its coated and supercalendered papers business to CMP Holdings LLC, an affiliate of Apollo Management L.P. for approximately USD 1.4 billion, subject to certain post- closing adjustments.

The coated and supercalendered papers business includes four paper mills, located in Jay, Maine; Bucksport, Maine; Quinnesec, Michigan; and Sartell, Minnesota. It generated USD 1.6 billion in sales in 2005. The transaction is expected to close in mid-summer 2006, subject to various closing conditions including receipt of financing, regulatory approvals, and other customary conditions.

The purchase price consists of approximately USD 1.37 billion in cash plus approximately USD 30 million in the form of a 10% limited partnership interest in CMP Investments LP, the parent company of CMP Holdings LLC. This interest includes the right to receive certain additional payments contingent upon the buyer's achievement of certain investment return hurdles.

The transaction is part of IP's previously announced transformation plan to focus on uncoated papers and industrial and consumer packaging globally. Expected proceeds from divestitures announced to date, including coated papers, are approximately USD 9.1 billion.

"The coated papers sale agreement is another important step in transforming International Paper to narrow our focus, strengthen our returns, and improve value for our shareowners," said John Faraci, IP chairman and chief executive. "Our coated papers unit is a good business, with talented leadership, excellent employees, quality brands, and an outstanding customer base. This business has been an important contributor to International Paper, and we expect it will continue to thrive under new ownership."

"We are excited to be purchasing International Paper's Coated and SC Paper business, an asset with a leadership position in the North American coated papers markets," said Scott Kleinman, a partner at Apollo Management. "We view the company as an excellent business and look forward to the opportunity to invest alongside a strong management team with whom we will work to grow the business and realize the full potential of the company's leading market positions."

International Paper's coated and supercalendered papers business annually produces approximately 2 million tons of coated freesheet and coated groundwood papers for the magazine, catalog, and retail insert markets. The business, headquartered in Memphis, Tennessee, employs approximately 3000 people.

About Apollo Management, L.P.

Apollo Management, L.P., founded in 1990, is among the most active and successful private investments firms in the United States in terms of both number of investment transactions completed and aggregate dollars invested. Since its inception, Apollo has managed the investment of an aggregate of approximately USD 13 billion in equity capital in a wide variety of industries, both domestically and internationally, and is currently managing Apollo Investment Fund VI, L.P., its most recent fund with committed capital of USD 10.1 billion.

About International Paper

Headquartered in the United States, International Paper has been a leader in the forest products industry for more than 100 years. The company is currently transforming its operations to focus on its global uncoated papers and packaging businesses, which operate and serve customers in the United States, Europe, South America, and Asia. These businesses are complemented by an extensive North American merchant distribution system. International Paper is committed to environmental, economic, and social sustainability, and has a long-standing policy of using no wood from endangered forests. To learn more, visit http://www.internationalpaper.com.

SOURCE International Paper