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International Paper Agrees to Sell Its 50.5 Percent Carter Holt Harvey Stake to Rank Group

Press release from the issuing company

STAMFORD, Conn., Aug. 16 -- International Paper announced today that it has signed a lock-in agreement with Rank Group Investments Limited to sell its shares of Carter Holt Harvey Limited (CHH) into a full takeover offer to all shareholders. Rank Group Investments Limited is based in New Zealand. The lock-in agreement requires that International Paper accept the Rank Group's takeover offer of NZ$2.50 per share for IP's 660,843,571 ordinary shares, or 50.5 percent, of New Zealand-based CHH. This same price will be offered to all shareholders in a full takeover offer by the Rank Group, in compliance with the New Zealand Takeovers Code. The offer is anticipated to be launched within four to six weeks. IP's acceptance of this offer will satisfy the minimum shareholder acceptance condition of the full takeover offer. Proceeds from IP's sale of its shares are expected to be about NZ$1.65 billion. At today's exchange rates, this is approximately US$1.16 billion. The offer price of NZ$2.50 per share represents approximately a 30-percent increase from the share price prior to International Paper announcing its intention to explore strategic alternatives for its majority stake of CHH on June 26, 2005. "This is an important first step in International Paper's transformation plan to improve returns, strengthen the balance sheet and return cash to shareowners by narrowing our focus to two key platform businesses (uncoated papers and packaging) and exploring strategic options for others," said John Faraci, IP chairman and chief executive officer. "CHH is a solid business with talented employees. While we remain confident in the company's leadership and strategy to grow and improve, our companies' strategies and priorities have evolved and the business climate has changed. The timing is now right for us to divest our interests." Specific terms of the agreement between the Rank Group, IP and Ngahere Aotearoa, IP's wholly-owned subsidiary and holder of its 50.5 percent stake in CHH, will be available to the public tomorrow from the New Zealand Stock Exchange and will also be filed with the U.S. Securities & Exchange Commission.