Ft. James Completes Sale of Marathon Mill

Fort James Corp. completed the sale of its wholly owned subsidiary, Fort James-Marathon, Ltd. to a joint venture between Tembec Inc. and Kruger Inc., both of Montreal, Canada. Proceeds from the sale totaled Cdn $100 million.

Marathon owns and operates a 180,000 metric ton-per-year northern bleached softwood kraft pulp mill in Marathon, Ontario.

``This sale is consistent with our strategy of refining our business mix by divesting non-core cyclical assets to reduce earnings volatility,'' said Miles Marsh, Fort James' chairman and chief executive officer. ``We believe that a stand-alone pulp mill such as Marathon does not provide the same strategic benefit to Fort James as do our other pulp operations, all of which are integrated with paper-making and converting operations on-site. While Marathon is an efficient mill producing high-quality pulp, we believe it may realize greater value with owners such as Tembec and Kruger.''

The parties also entered into a three-year renewable pulp supply agreement, largely to provide pulp to Fort James' non-integrated European tissue operations.