Fraser Papers Secures Financing for Facility Upgrades in New Brunswick

The $40 million, fixed rate term-loan is for a period of up to six and a half years and will be secured by a first charge on the Company's fixed assets in New Brunswick. Proceeds will be used to complete projects that improve energy efficiency, increase throughput, upgrade technology and enhance environmental performance at the Company's New Brunswick operations.

"Our government is pleased to support Fraser Papers as it undertakes upgrades to its operations," said Graham. "We recognize how important it is for the long-term viability of companies to invest in their operations. We are pleased to support them as they upgrade technology and implement efficiencies that help them to be more competitive in an increasingly competitive world market. Strategic partnerships such as this one will help New Brunswick achieve self-sufficiency by 2026."

The Premier was joined at today's news conference in Edmundston by Peter Gordon, President and CEO of Fraser Papers, Minister of Business New Brunswick Greg Byrne, Natural Resources Minister Donald Arsenault and Edmundston Mayor Jacques Martin.

"In the midst of a very challenging environment, we are investing in the Company to compete effectively over the long term," said Gordon. "The $40 million financing announced today, combined with our recent $60 million equity offering, provides the resources to pursue our business plans. To have this level of tangible support from our key stakeholders is somewhat unique in our industry today. The Government is well informed of the challenges facing the industry and is clearly prepared to act quickly to support well-defined solutions."

"Fraser Papers has a 100 year history of doing business in New Brunswick and has continued to show a strong commitment to the forest industry in the province," said Byrne. "Like most companies in the sector, they are currently experiencing challenges from higher input costs for fibre and energy and a strong Canadian dollar at a time when they are also executing a substantial operational turn-around of their business. We support their business plan and the investment being announced today is designed to provide the necessary financial resources required to execute those initiatives."

Fraser Papers employs 820 people in New Brunswick. Operations include a 740 ton-per-day sulphite pulp mill, a 350 ton-per-day groundwood mill and a 38 megawatt biomass cogeneration facility in Edmundston; and two sawmills located in Plaster Rock and Juniper.

Fraser Papers is an integrated specialty paper company which produces a broad range of specialty packaging and printing papers. The Company has operations in New Brunswick, Maine, New Hampshire and Quebec. Fraser Papers is listed on the Toronto Stock Exchange under the symbol: FPS. For more information, visit the Fraser Papers web site at www.fraserpapers.com.

Note: This press release contains forward-looking information and forward-looking statements within the meaning of Canadian provincial securities laws. These forward-looking statements include, among others, statements with respect to potential benefits as a result of upgrades to the Company's facilities in New Brunswick. The words "will", "provide" and other expressions which may be predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements. Factors that could cause the actual results of the upgrades to differ materially from those set forth in the forward-looking statements include: general economic conditions; unforeseen issues with respect to the delivery, installation or performance of technology and equipment; production, sales and marketing performance; mergers between and market position of the Company's competitors; supply and demand for the Company's products; price increases or reductions for any products the Company sells; increases in costs of production; the availability of wood fibre; and other risks detailed from time to time in the documents filed by the Company with the securities regulators in Canada. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Website: www.fraserpapers.com