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Transcontinental Will Appeal California Court Ruling

Press release from the issuing company

MONTREAL--Oct. 8, 2004-- Transcontinental Inc. today announced that it will appeal the ruling rendered by a California court in the lawsuit brought by Softbank Content Services against MPO Canada, a holding company equally-owned by Transcontinental and MPO S.A. This lawsuit pertained to a guarantee for payment given by MPO Canada to Softbank for the benefit of its subsidiary Americ Disc. Compact disc manufacturer, Americ Disc, was wholly-owned by MPO Canada until the company was restructured in 2001 at the request of the Americ Disc bank syndicate. The restructuring resulted in a decrease of MPO Canada's stake in Americ Disc to 40% with the remaining 60% held by Americ Disc executives. Following the restructuring, designed to ensure the survival of Americ Disc, Transcontinental wrote off its investment in MPO Canada in its entirety. MPO Canada vigorously defended its position before the California court, stating that the sole purpose of the 2001 restructuring was to allow Americ Disc's survival and not, as argued by the other side, to allow Transcontinental and MPO S.A. to evade their legal obligations. However, the California court held that Transcontinental and MPO S.A., the two MPO Canada shareholders, should be added as joint and several co-debtors to MPO Canada. Transcontinental considers the decision requesting MPO Canada and its two shareholders to pay Softbank Content Services US$5.2 million plus fees to be unfounded and will file an appeal.