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West Fraser Acquires IP Sawmills
Vancouver, British Columbia, Canada, 29 November 2006 -- /PRNewswire/ -- West Fraser Timber Co. Ltd. (TSX: WFT) today announced that it has entered into an agreement to acquire 13 sawmills from International Paper (NYSE:IP) for approximately USD 325 million, subject to certain post-closing adjustments. The transaction, which is also subject to U.S. regulatory approvals and customary conditions, is expected to close in the first quarter of 2007.

The acquisition marks a significant expansion of West Fraser's presence in the United States. The 13 mills, which are located in North Carolina, South Carolina, Georgia, Florida, Alabama, Arkansas, and Texas, employ approximately 2200 people and have a combined annual production capacity of approximately 1.8 billion board feet of lumber.

West Fraser currently owns two sawmills in the United States, in Huttig, Arkansas, and Joyce, Louisiana. Those mills employ approximately 400 people and have a combined annual production capacity of 420 million board feet.

All of the mills produce lumber from southern yellow pine. Southern yellow pine (SYP) lumber is used extensively in treated wood and strength applications such as treated decks, trusses, and joists, while Orchard lumber, which the company's western Canadian sawmills produce, is the preferred species for use in house framing. Currently, 10% of West Fraser's total lumber production capacity is SYP. Following this transaction that percentage will increase to approximately 36%.

Upon completion of the transaction, West Fraser will be the second largest lumber producer in North America, with combined Canadian and U.S. production capacity of approximately 6.2 billion board feet.

"This is a long-term strategic move that strengthens our core lumber business, gives us significant new geographic, fibre, and product diversification, and establishes West Fraser as a major presence in the U.S. South," said Hank Ketcham, West Fraser's chairman, president, and chief executive officer.

"It's a unique growth opportunity, both in terms of size and diversification, and one that follows logically on our entry into the U.S. South back in 2000," added Ketcham. "By operating two mills in this region for six years, we've gained first-hand knowledge of the significant potential that exists there. Because of the recent decline in U.S. housing starts, the U.S. South lumber industry is currently experiencing the same downturn as our Canadian operations. However, the market fundamentals and longer-term outlook for the industry are positive. The southern region of the U.S. is North America's fastest growing market for wood products, currently representing approximately 40% of all North American housing starts. The fiber supply is also excellent, with harvests of southern yellow pine projected to continue increasing."

The transaction will include the assignment of multi-year market price log supply agreements with the current owners of International Paper's former southern timberlands. These agreements are expected to provide approximately 15% of the acquired mills' current requirements. West Fraser will also enter into long-term agreements to sell residual wood chips to International Paper at market prices. The transaction will result in the termination of certain pulp supply contracts which were entered into as part of West Fraser's 2004 acquisition of Weldwood and were related to businesses that International Paper has since sold. West Fraser anticipates no significant changes to the employee base at its newly acquired operations.

"We look forward to welcoming our new employees to the West Fraser organization. The combination of their local expertise and experience with our focus on efficient solid wood operations creates the foundation for a strong and successful future for these mills," said Ketcham.

Transaction Details and Synergies

West Fraser intends to finance the acquisition with cash on hand and available lines of credit. The company is expected to receive duty refunds under the 2006 Softwood Lumber Agreement of approximately USD 260 million, after taking into account all interest, charges, taxes, and amounts payable to third parties in respect of the refunds.

West Fraser anticipates annual synergies of approximately USD 23 million as a result of the transaction. Most of the projected synergies, likely to be obtained over three years, are expected to be achieved through non-capital operational improvements at the acquired mills and through the implementation of best practices.

About West Fraser

Headquartered in Vancouver, British Columbia, West Fraser is an integrated forest products company producing lumber, laminated veneer lumber, MDF, plywood, pulp, linerboard, kraft paper, and newsprint. The company currently has 6900 employees. It has operations in British Columbia and Alberta in Canda, and in the southern United States. All of West Fraser's managed Canadian woodlands are certified to a third-party and independently-verified sustainable forest management standard, either the Sustainable Forestry Initiative (SFI) or Canada's national standard for sustainable forest management (CAN/CSA Z809).

Conference Call Details

West Fraser will host a conference call for the investment community today. The call will also be available via webcast at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1677060 or on the company's Web site at http://www.westfraser.com/. An instant replay of the conference call will be available until 13 December 2006, at 1-800-408-3053 or 416-695-5800, Passcode: 3205568 followed by the number sign.

Source: West Fraser Timber Co. Ltd.

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