Fortress Paper to produce bioenergy in Quebec

Mar.
22, 2010, Vancouver – Fortress Paper, which produces security and specialty
papers, has signed an asset purchase agreement to acquire a northern bleached
hardwood kraft mill in Thurso, Quebec, from Fraser Papers. The company intends
to convert the mill into a low-cost, specialty cellulose operation and to build
a biomass-fired cogeneration plant at the mill. The acquisition will be
completed through its wholly owned subsidiary Fortress Specialty Cellulose Inc.
The closing of the acquisition is anticipated to occur on or about April 30,
2010.

The
specialty cellulose mill is planned to have an annual production capacity of
more than 200,000 air-dried tonnes and is expected to be completed in mid-2011.
Fortress Specialty Cellulose will focus on producing dissolving-grade cellulose
for the textile industry, primarily targeting viscose fibre (rayon) products,
which have shown strong growth of approximately 10% in China and 7% worldwide
over the past five years.

Fortress
Paper also plans to construct a 25-MW cogeneration facility to service a net
18.8-MW power supply agreement over a 15-year term. The location of the
cogeneration facility provides it with access to on-site generation of biomass
and an extensive local network of chip and other biomass suppliers. The
cogeneration facility is expected to be supplying electricity in the fourth
quarter of 2012.

Investissement
Québec has agreed to grant Fortress Specialty Cellulose a loan of up to $102.4
million to support Fortress Paper's proposed business plan for the Thurso mill.
The loan is subject to receiving approval of the Government of Québec.

Included
in the assets being purchased from Fraser is approximately $9.9 million in black
liquor credits granted under the Canadian government's Pulp and Paper Green
Transformation Program, which aims to improve the environmental performance of
Canada's pulp and paper industry by funding approved capital projects with
environmental benefits.