Published: 2005-03-07 11:00:01 CET
Metsä Board Corporation - Company Announcement
M-real Corporation Stock Exchange Bulletin 7.3.2005 at 12.00 a.m.


Botnia, the resource company jointly owned by M-real, UPM-Kymmene and
Metsäliitto, has today decided to invest in a new pulp mill in
Uruguay. The mill’s planned annual capacity is about a million tonnes
of short-fibre pulp, and it will use cultivated eucalyptus as raw
material. The total capital expenditure is about USD 1.1 billion and
the mill is estimated to come on stream during the third quarter of
2007. Botnia has an 82.1% holding in Botnia S.A., which will carry
out the project. The other owners of Botnia S.A. are UPM-Kymmene with
12.4% and Metsäliitto with 5.5%.

M-real sells an 8% holding in Botnia to Metsäliitto for a purchase
price of EUR 164 million. After the transaction, the shareholdings in
Botnia will be: M-real 39%, Metsäliitto 14% and UMP-Kymmene 47%,
making M-real´s holding in the Uruguay pulp investment 32%. As a
result of the transaction M-real´s equity ratio will strengthen with
approximately 2 percentage units and gearing ratio will decrease with
approximately 9 percentage units. The sale of shares will result in a
capital gain of about EUR 80 million.

The lowered shareholding in Botnia will not bring a net weakening in
M-real’s pulp balance due to i.e. the growing BCTMP-capacity. The
current estimation is that once the Uruguay pulp mill has come on
stream, M-real will use at its own paper mills a volume of eucalyptus
pulp corresponding to its entire 32% stake.

In connection with the pulp mill investment decision, Botnia's
owners, UPM, M-real and Metsäliitto have agreed upon a supplement to
the shareholder agreement in order to ensure the stability of
Botnia's ownership base. According to the agreement, Botnia's
shareholders will offer their shares to other shareholders in case of
a possible change in their share or vote majority. A potential
decrease of Metsäliitto´s voting rights in M-real below 50 per cent
will not, however, result an obligation for M-real to offer its
Botnia´s shares.

“For M-real, the Uruguay project is an excellent opportunity to
participate in one of the world’s most efficient pulp mills in terms
of its production costs. Furthermore, the mill´s supply of raw
materials is on a solid basis as a result of years of determined
work. The lowering of the shareholding in Botnia will afford M-real
the financial resources to participate in the Uruguay project without
incurring a significant weakening in its principal key figures while
the mill is under construction, President and CEO Hannu Anttila


Corporate Communications

For additional information, contact President and CEO Hannu Anttila,
tel. +358 10 469 4343 or Executive Vice President and CFO Juhani
Pöhö, tel. +358 10 469 5283

Invitation to a news conference

Welcome to a news conference regarding Botnia's pulp mill project in
Uruguay. The event will be held at the auditorium of Restaurant Bank,
Unioninkatu 22 in Helsinki today on 7 March, 2005 at 1:30 p.m.
(Finnish time). Mr Erkki Varis, President and CEO of Botnia, Mr Timo
Piilonen, Project Director, Botnia as well as Mr Jussi Pesonen,
President and CEO of UPM and Mr Hannu Anttila, President and CEO of M-
real will present the project.

The news conference is for both the media and financial analysts. It
is held in Finnish.