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M-real Divests Portion of Holdings in Metsa Fibre to Itochu Corporation

Espoo, Finland, 12 April 2012 -- M-real Corporation, a part of Metsä Group, has agreed to divest 7.3 percentage points of its shareholding in Metsä Fibre Oy to the Japan-based Itochu Corporation for EUR 138 million and approximately 0.5 percentage points of its holding in Pohjolan Voima Oy to Metsä Fibre for EUR 64 million.

The closing of M-real’s divestment of the 7.3 percentage point shareholding in Metsä Fibre is subject to German competition authority approval and it is expected to take effect by the end of the second quarter of 2012. Once the announced restructuring of the ownership of Metsä Fibre is completed, M-real will own 24.9%, Metsäliitto Cooperative will own 50.2%, and Itochu Corporation will own 24.9% of the company.

The divestment of the 7.3 percentage point shareholding in Metsä Fibre is done to reduce M-real’s pulp surplus and to further strengthen Metsä Fibre’s business, especially in the growing Asian market. Once the transaction is completed, M-real’s pulp surplus will be reduced from approximately 0.5 million metric tons per year to 0.3 million metric tons per year.

After the 0.5 percentage point reduction of shareholding in Pohjolan Voima that took effect today, M-real owns approximately 2% of the company.

M-real will book as a nonrecurring item a capital gain of approximately EUR 88 million in the second quarter 2012 Other operations’ operating results related to the Metsä Fibre shares to be divested. The Other operations’ second quarter 2012 operating result will include as a nonrecurring item a realized fair value and gain of approximately EUR 40 million related to the divested Pohjolan Voima shares that does not have an impact on the company’s total equity. The divestments have a negative impact of approximately EUR 15 million on annual operating result compared with actual results in 2011. The divestments have an approximately 40 percentage point positive impact on M-real’s net gearing compared to end 2011.

“We are reducing our pulp surplus according to our strategy. The transaction with Itochu provides an excellent possibility to develop Metsä Fibre further and shows also the great value of our pulp assets. Also, in the future, we produce more pulp than we use, thus we continue to have a good platform to grow our profitable paperboard business. These divestments also strengthen the company’s liquidity without having a material impact on our operating cash flow,” said Mikko Helander, M-real’s CEO. 

Itochu Corporation is one of the largest trading companies in Japan, with approximately 130 bases in different industries in close to 70 countries. Itochu Corporation’s trading volume for the fiscal year ended on 31 March 2011 exceeded EUR 100 billion. Further information of the company can be found at http://www.itochu.co.jp/en.
In addition, at the annual general meeting, M-real Corporation decided on 28 March 2012 to change the company’s business name to Metsä Board Corporation. The new business name is expected to be officially registered during April 2012. Before the official registration, the company’s stock exchange releases are being sent under the name M-real Corporation. 


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