Metsäliitto Cooperative to become the majority shareholder of Metsä-Botnia

Negotiations have been finalised between Metsäliitto Cooperative, M-real
Corporation and UPM-Kymmene Corporation on the new ownership structure of Oy
Metsä-Botnia Ab and the divestment of the Uruguay operations to UPM. The
agreement on the arrangement has been signed on 22 October 2009. With the
arrangement, Metsäliitto Group will strengthen its position as a producer of
Finnish long-fibre pulp and will exit the production of short-fibre eucalyptus
pulp. 

“The agreement is an important step in the structural change we have been
consistently implementing, whereby we more strongly focus our operations on
select core functions. With the arrangement, Metsäliitto Cooperative becomes
the majority shareholder of Metsä-Botnia, which allows us to better develop the
wood raw material and pulp flows from our own perspective. In addition, the
transaction also shows that we believe in the future competitiveness of Finnish
forestry industry products,” says Kari Jordan, President and CEO, Metsäliitto
Group. 

Metsä-Botnia's Uruguay operations included in the agreement comprise the
majority holdings of the Fray Bentos pulp mill and Forestal Oriental, a company
specialising in eucalyptus cultivation. Metsä-Botnia and Metsäliitto
Cooperative will sell their holdings in these operations to UPM. The share to
be sold by Metsä-Botnia is 82.1%, while that of Metsäliitto is 5.5%. The total
debt and cash free enterprise value of the Uruguay operations has been agreed
at about EUR 1.6 billion. 

In connection with the transaction, Metsä-Botnia will distribute funds to its
shareholders and will also repurchase its own shares from UPM. Metsä-Botnia
will finance the payment of dividends, the repayment of capital and the
repurchase of its own shares with the funds deriving from its divestment of the
Uruguay operations and shares in Pohjolan Voima Oy, and by utilising its
existing financing facilities. In connection with the transaction, Metsäliitto
Cooperative will also purchase 24.7% of Metsä-Botnia's shares from UPM and 3.0%
from M-real. The arrangement's net cash impact for Metsäliitto Cooperative will
be approximately EUR 110 million negative. The total debt and cash free
enterprise value of Metsä-Botnia excluding its Uruguay operations and shares in
Pohjolan Voima Oy has been agreed at about EUR 1.9 billion. 

After the transaction, Metsäliitto Cooperative will own about 53% of
Metsä-Botnia, M-real about 30% and UPM about 17%. 

As part of the transaction, Metsä-Botnia will sell 77% of its shares in
Pohjolan Voima Oy to UPM at an agreed price of about EUR 66 million. 

The current cooperation agreements between Metsä-Botnia and its shareholders
will largely remain in force unaltered; furthermore Metsä-Botnia will continue
to operate as the sales channel for market pulp produced by UPM and M-real. 

Once the transaction has been completed, Metsä-Botnia will become a subsidiary
of Metsäliitto Cooperative, and will be entirely consolidated in Metsäliitto
Group. Metsäliitto Group's sales will increase slightly and the arrangement
will increase the equity of both Metsäliitto Cooperative and Metsäliitto Group
by about EUR 150 million. The arrangement will not have a material impact on
the equity ratio or the net gearing ratio of the parent company Metsäliitto
Cooperative. For Metsäliitto Group, the arrangement will have a slight positive
impact on the equity ratio and the net gearing ratio. The equity ratio and
liquidity of Metsä-Botnia will continue to be good. 

Pöyry Forest Industry Consulting Oy has acted as an expert in determining the
relative values of the Metsä-Botnia operations. 

The transaction is expected to be closed latest during the first quarter of
2010. The completion of the transaction requires, among others, the approval of
the competition authorities and the completion of the financing arrangements. 

Further information:

Esa Kaikkonen, General Counsel, Metsäliitto Group, tel. +358 10 465 4749

Anne-Mari Achrén, Group CCO, Metsäliitto Group, tel. +358 10 465 4541