VCP to Swap Assets With International Paper

São Paulo, Brazil, 19 September 2006 -- The CEO of Votorantim Celulose e Papel (VCP), José Luciano Penido, announced today the closing of an agreement with International Paper (IP) to swap industrial and forestry assets between both companies.

Under the terms of the agreement, VCP will transfer to IP its Pulp and Paper Production Unit located in Luiz Antonio (São Paulo) and its respective forestry base unit. IP will in turn, transfer to VCP assets linked to the production of eucalyptus pulp, including a project under development for a eucalyptus pulp mill and all related rights, amounting to USD 1.15 billion, plus the lands and planted forests located in Três Lagoas.

The eucalyptus pulp mill of Três Lagoas will add 1.1 million tons/year to the current VCP production capacity, intended for the global market. The new mill will start-up its operation in January 2009.

Furthermore, as part of the agreement, VCP will provide pulp at competitive prices to supply the paper production unit that IP intends to build close to the site.

José Roberto Ermírio de Moraes, chairman of the board of directors of VCP, said "This agreement represents an important path in VCP's long-term strategic planning (2020 Vision). The company is strategically positioned to fully benefit from VCP's forestry technology and the Brazilian agro-forestry competitive advantages, to become one of the worldwide leaders in terms of eucalyptus pulp, and to assure the future organic expansion of such capacity."

With the addition of this source of growth, on top of its Jacareí production unit and of its recent investments in the state of Rio Grande do Sul - execution of which will continue - VCP, in the next five years, will reach a "major player" position among the world's global leaders of market pulp, with a production surpassing 3 million tons.

Nevertheless, the Luiz Antonio mill symbolizes the excellence of VCP investments in the production of uncoated papers. This asset, which already achieved its utmost value creation within VCP's business, still offers opportunities for future value creation when used by companies with a broad international distribution network and global scale for production of printing and writing papers. Thus, the Luiz Antonio mill is a strategic asset to IP, aligned with its focus on uncoated papers and packaging.

Luiz Antonio (SP) Production Unit

Forest base
- total area: 57,000 hectares.
- planted area: 41,000 hectares.
Production capacity
- eucalyptus pulp: 400,000 tons/year
- uncoated woodfree paper: 350,000 tons/year

Três Lagoas (MS) Properties

Forest base
- total area: 100,000 hectares (owned) + 21,000 hectares (third-parties)
- planted area: 68,000 hectares (owned) + 15,000 hectares (third-parties)

Production capacity
- eucalyptus pulp: 1,100,000 tons/year(under construction starting up in January 2009)

Besides the new business expansion in the market pulp, VCP maintains all its existing businesses, with value creation to its shareholders and clients in the following areas:
- Value-added papers: reaffirms its commitment and leadership in the carbonless, thermal and coated papers.
- Uncoated papers: By 2007, with RIPASA Consortium operating, we will fully capturing the planned synergies, yet enabling continuity in the uncoated paper business, through COPIMAX (for cut-size papers) and PRINTMAX (offset papers)brands.
- Paper distribution: VCP maintains its businesses in the regional paper distribution, through its merchant company, KSR, which is part of its value-added paper operation and of Ripasa arising synergies.

Concurrent to this transaction, the companies agreed that excess pulp production from Luiz Antônio unit will be sold to VCP at competitive prices. Furthermore, VCP will sell pulp produced at the Três Lagoas unit to IP at competitive prices for the latter's use in its future paper machines that can be installed near the Três Lagoas site.

The companies foresee the conclusion of the details and respective swap operation closure no later than 01 February 2007.