S&P Affirms Stora Enso & Consolidated PapersRatings.

Business Editors

LONDON--(BUSINESS WIRE)--Standard & Poor's

Feb. 22, 2000--In response to the announcement that Stora Enso Oyj will acquire Consolidated Papers Inc., Standard & Poor's today affirmed its triple-'B'-plus long-term corporate credit rating, and its

The outlook is stable.

At the same time, Standard & Poor's affirmed Consolidated Papers' 'A-2' short-term corporate credit and commercial paper ratings. (See list below for all affected ratings.)

The transaction is valued at US$4.8 billion (including US$0.9 billion in assumed debt), and will be financed by the issue of new Stora Enso shares of about US$2.0 billion, and the balance in cash. The deal is expected to close during the second-half of this year.

Through the acquisition, Stora Enso will strengthen its position as one of the largest forest product companies in the world, with pro forma annual sales of about US$13 billion, and an annual paper manufacturing capacity of about 15 million tons -- based on 1999 reported figures. The acquisition will add to Stora Enso's capacity, primarily in coated mechanical, coated woodfree, and super calendered papers -- grades where the group already has leading global positions. It will increase Stora Enso's geographical diversification of sales and production, and enhanced its presence in the U.S. Although about 85% of Stora Enso's sales are presently in Europe, Consolidated Papers' sales and production are concentrated in the U.S. Midwest.

Stora Enso's cost position is expected to remain above average, reflecting Stora Enso's fairly large and efficient machines, as well as Consolidated Papers' low cost position. Synergy benefits, through sales and logistics optimization, implementation of best practices, and purchasing efficiencies, are expected to be fairly limited (estimated to reach about US$110 million by 2002).

The financial profile of Stora Enso is expected to remain moderate. Pro forma for the acquisition and the issue of new equity, net debt to capital would have been about 50% at the end of 1999. However, taking into account the group's forthcoming sale of power assets to Finland-based Fortum Oyj, at a value of about US$1.8 billion, the ratio would have been about 43%. In the medium to long term, the ratio is expected to be between 45% and 50%. Earnings before interest, taxes, depreciation, and amortization covered net interest expenses by about 7 times in 1999, and the ratio is expected to be at least at this level in 2000, taking into account improving paper prices.

OUTLOOK: (Stora Enso Oyj) STABLE

Stora Enso's diversification and good cost position should provide the group with a more stable earnings pattern than the industry average. The group's financial profile is expected to be consistent with its current rating in the medium to long term, Standard & Poor's said.---CreditWire

RATINGS AFFIRMED Stora Enso Oyj
 Corporate credit rating              BBB+/Stable/A-2

Stora Kopparbergs Bergslags AB
 Corporate credit rating              BBB+/Stable/A-2

Stora Enso Treasury Stockholm AB
 Swedish commercial paper program(a)  A-2

Consolidated Papers Inc.
 Short-term corporate credit rating   A-2
 Commercial paper program             A-2

(a) Guaranteed by Stora Kopparberg Bergslags AB.