VANCOUVER, Aug. 27, 2001 (press release) -- Norske Skog Canada Limited announced today that it has successfully completed its acquisition of Pacifica Papers Inc. on schedule and on the terms previously announced. The new combined company will conduct business under the name NorskeCanada and will be North America's third largest groundwood paper and pulp company with 2.5 million tonnes of annual capacity. The long-anticipated merger of the two medium-sized BC companies brings their four manufacturing divisions, all located within 100 miles of each other, under the control of a single, Canadian public company. With $3 billion of assets and 4,400 employees NorskeCanada is one of the largest public companies headquartered in British Columbia. NorskeCanada president and CEO Russell J. Horner said the combined companies have an opportunity to capture synergies of at least $60 million a year, a value that could not be captured by any other company acquiring Pacifica's pulp and paper assets, which were formerly owned by MacMillan Bloedel. "We are delighted to have brought this acquisition to a successful conclusion because it represents the attainment of a major strategic objective for the company," Horner said. With operations at Crofton, Campbell River, Port Alberni and Powell River, NorskeCanada is the largest producer of newsprint, telephone directory paper, lightweight coated paper, and hi-brite papers on the west coast of North America. Under the terms of the transaction, Pacifica's shareholders had the option to exchange their shares of Pacifica for either 2.1 NorskeCanada common shares or one NorskeCanada common share and $7.50 cash. At completion of the acquisition earlier today, an aggregate of approximately 50,621,000 Norske Canada common shares were issued and CND$47,892,600 in cash was paid, by NorskeCanada to Pacifica's shareholders. The precise number of common shares issued will only be known after adjustments for fractional shares are made. The total number of company shares outstanding after giving effect to the transaction is 174.8 million. Norske Skog Industrier ASA, the former 50.8 per cent majority owner of NorskeCanada, retains the same number of shares in the company but relinquishes its control as a result of the larger pool of shares. Norske Skog remains a 36 per cent shareholder in the company. "We value our ongoing relationship with Norske Skog, which will now be in the form of a strategic alliance, and have preserved the continuity of their name on the company in support of this positive, value-adding association with a respected global player," Horner said. As previously approved by its shareholders and in conjunction with the acquisition of Pacifica, Norske Skog Canada Limited has changed its jurisdiction of incorporation and is now governed by the Canada Business Corporations Act. Its outstanding Class A Common shares have also been renamed "Common Shares". The company's common shares will continue to trade on The Toronto Stock Exchange under the symbol "NS.A". The existing shares certificates will continue to be honoured and shareholders need not exchange them, though they can do so if they wish by contacting the company's transfer agent, CIBC Mellon Trust Company. On Friday, August 24, Norske Skog Canada Limited also implemented its previously announced special distribution to shareholders of $12 per Class A Common Share. The special distribution consisted of a return of capital of $7.60 per shares and a dividend of $4.40 per share. CIBC Mellon Trust Company will make payment of the special distribution to shareholders commencing Tuesday, August 28. NorkseCanada's Chief Financial Officer Ralph Leverton said that given the magnitude of the distribution of cash to shareholders, the company will take a "dividend holiday". "In the near term the company will be focusing on debt reduction," Leverton said. "It is the policy of the company to pay regular dividends and we will return to regular dividends as soon as the Board of Directors determines that it is prudent to do so." This news release contains statements that are forward-looking in nature. Such statements involve known and unknown risks and uncertainties including the ability of Norske Skog Canada Limited to achieve the expected synergies on a timely basis. The securities of Norske Skog Canada Limited that were issued to Pacifica security holders as part of the transactions were not and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an available exemption from registration requirements.