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International Paper and Ilim Pulp Apply to Russian Federal Antimonopoly Service to Form Joint Venture
St. Petersburg, Russia, 26 March 2007 -- /PRNewswire/ -- International Paper (NYSE:IP) and Ilim Holding announced that they have applied to the Russian Federal Antimonopoly Service (FAS) for approval of the acquisition of rights that will allow the two companies to jointly make decisions regarding the enterprises owned by Ilim Holding SA in Russia. The application was filed today.

Obtaining FAS approval presents the next stage toward establishing a joint venture between International Paper and Ilim Pulp. On 25 October 2006, the two companies signed a letter of intent to form the 50-50 joint venture.

The joint venture would be established by International Paper purchasing a 50% interest in Ilim Holding's stock. The companies intend to close the deal by the end of the second quarter.

Ilim Holding operates the three largest Russian pulp-and-paper mills in European Russia and Siberia, and owns a majority share in St. Petersburg KPK in the Leningrad region. Ilim is in the process of consolidating ownership of the mills into a Russian open joint-stock company, Ilim Group, a subsidiary of Ilim Holding. Ilim Group will be managed jointly by a board of directors comprising representatives of Ilim Pulp and International Paper. The new company will be headquartered in St. Petersburg.

The joint venture will focus on increasing output of value-added products, such as office papers and packaging, as well as market pulp, in which Ilim Pulp has a leading position in Russia and China. Ilim Pulp's existing wood products business will operate independently of the joint venture, as will International Paper's OAO Svetogorsk business.

The prospective partners are currently finalizing a long-term joint investment program of approximately USD 1.2 billion of capital investments. This unprecedented investment in the Russian forest products industry would be used to upgrade operating subsidiaries, increase production capacity by more than 50%, and allow for new, value-added product development.

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, Latin America, and Asia, as well as xpedx, 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 www.internationalpaper.com.

About Ilim Pulp

Ilim Pulp corporation (Saint-Petersburg) was founded in 1992. In line with Ilim Pulp's core activities, its production assets have been structured by business units: Woodworking, Pulp and Board, and Packaging. The business unit Pulp and Board comprises Russia's largest pulp-and-paper operations: Kotlas pulp and paper mill, Bratsk timber mill, and Ust-Ilimsk timber mill. The business unit Packaging was based on the Saint-Petersburg board and printing mill and the corrugated packaging plant Ilim-Gofropak. The business unit Woodworking comprises IlimSeverDrev, Ust-Ilimsk timber processing plant, Ilim Bratsk wood processing mill, and Ilim Bratsk saw and wood processing mill. Logging is performed by IlimSeverLes (Kotlas Group), IlimSibLes (Ust-Ilimsk Group), and the Logging and Rafting Administration (Bratsk Group) that bring together 38 logging operations in the Arkhangelsk and Irkutsk Regions, the Republic of Komi and Krasnoyarsk Territory. Ilim Pulp employs over 40,000 and is responsible for 60% of market pulp and 50% of boxboard manufactured in Russia. Visit www.ilimpulp.ru for additional information.

Web site: http://www.internationalpaper.com/


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