TORONTO, ONTARIO (June 25, 2008) - Fraser Papers Inc. ("Fraser Papers" or the "Company") is pleased to announce that the Government of New Brunswick will provide a $40 million secured loan to the Company to support the upgrade of its facilities in the province. New Brunswick Premier Shawn Graham made the announcement today with other government and Company officials.

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.