International Paper Agrees to Sell Kraft Papers Business to Stone Arcade

International Paper has entered into a purchase and sale agreement to sell its Kraft Papers Business to Stone Arcade Acquisition Corp. for approximately $155 million in cash and up to $60 in additional proceeds contingent upon the business future earnings. The company arrived at the decision to sell this business as part of its transformation plan to
focus on two key platform businesses: uncoated papers and packaging.

The sale includes two facilities: the Roanoke Rapids, N.C., paper mill and the Ride Rite dunnage bag plant in Fordyce, Ark.. A supply agreement for International Paper to provide bleached kraft papers through Stone Arcade is also part of the sale agreement. It is expected that the closing of the sale will occur in the third quarter of 2006, subject to satisfaction of various closing conditions and regulatory approval

As we view this important time in the Kraft Papers business, I know these facilities will continue to be successful as they transition to new ownership, said Carol Roberts, senior vice president, IP Packaging Solutions. This is an solid niche business with dedicated employees, a strong customer base and commitment to excellence in operations.

Tim Keneally, currently vice president of the Kraft Papers business, will continue to manage the business under new ownership, which will be called KapStone Kraft Paper Company. His leadership team includes Tonie Meyers, business manager, Kraft Papers; Anitra Collins, mill manager, Roanoke Rapids; and Tom Bennington, plant manager, Ride Rite.

To view the full press release announcing the sale agreement, visit www.internationalpaper.com