April 26, 2005

Nippon Paper Industries Withdraws from Paper Joint Venture in Northern China

Nippon Paper Industries Co., Ltd.

Nippon Paper Industries Co., Ltd. (President: Takahiko Miyoshi) signed a paper manufacture and sales joint venture agreement with Chengde Dixian Textile Co., Ltd. in May 2004, to commence construction of a mill with an annual production capacity of 150,000 metric tons in the city of Chengde in the Hebei Province of China.
Subsequently, China tightened its monetary policy, and the joint venture partner Chengde Dixian Textile began to experience financial difficulties, temporarily suspending production in January 2005. Later, administrative support helped the company to gradually resume production and today its performance is rallying.
In the meantime, the two companies consulted seriously with each other concerning the promotion of the joint venture, but for several reasons failed to rebuild a relationship of trust. Nippon Paper Industries reached the conclusion that it would be difficult to continue this project and decided to withdraw from the joint venture. The details of the withdrawal are now being discussed with Chengde Dixian Textile.