Press ReleasesNippon Paper Industries Announces Acquisition of Equity in SCG Paper's Fibrous Chain(Acquisition of Shares Issued Through a Private Placement)

Nippon Paper Industries Co., Ltd.

Nippon Paper Industries Co., Ltd. (Head office: Chiyoda-ku, Tokyo, President: Yoshio Haga) announces that it concluded a joint venture agreement on December 13, 2013 with SCG Paper Public Company Limited ("SCG Paper")*1 concerning SCG Paper's Fibrous Chain*2 in accordance with the contents of "Investment in SCG Paper's Fibrous Chain" *3 announced on September 2, 2013.

The Nippon Paper Group has been implementing initiatives to increase the earning power of its overseas businesses, while at the same time promoting the transformation of its business structure as a "comprehensive biomass company." It promotes the development of overseas businesses by positioning the Pacific Rim as an area of strategic focus, including Asia, where increased demand is expected due to the population increase and economic growth.

In Thailand, to further strengthen its relationship with SCG Paper, Nippon Paper Industries signed a memorandum of understanding with SCG Paper for a comprehensive business alliance in February 2008 and established Siam Nippon Industrial Paper Co., Ltd. ("SNP")*4 in July 2012 as a joint venture for the production and sale of machine glazed paper ("MG paper"). In addition, Nippon Paper Industries and SCG Paper also discussed a new joint venture and reached an agreement in September this year regarding Nippon Paper Industries' investment in SCG Paper's Fibrous Chain. Under the joint venture agreement concluded on December 13, 2013, the two companies have reached an agreement regarding Nippon Paper Industries' acquisition of equity in SCG Paper's Fibrous Chain through the acquisition of shares issued through a private placement as a specific scheme of the investment.

Under this agreement, Nippon Paper Industries will acquire approx. 22% equity in the Fibrous Chain (equivalent to approx. 11.0 billion yen) by June 2014. In addition, Nippon Paper Industries will acquire additional equity in the business to increase its equity to approximately 30% by around 2016. Further, Nippon Paper Industries is planning to make SCG Paper's Fibrous Chain its equity method affiliate and take the equity acquisition as an opportunity to accelerate the expansion of new businesses in the growing market of Southeast Asia by making use of the managerial resources of the two companies, aiming for the sustainable growth of the Nippon Paper Group.

In addition, The acquisition of equity in SCG Paper's Fibrous Chain is estimated to have a minimal impact on Nippon Paper Industries' consolidated earnings and financial situation for the year ending March 2014.

  1. *1A subsidiary of the Siam Cement Group of Thailand (paper and pulp business)
  2. *2SCG Paper's Fibrous Chain is comprised of forestry, pulp (470,000 tons per year), and printing & writing paper (570,000 tons per year). Revenues from the Fibrous Chain in FY2012 amounted to approximately 17 billion baht, equivalent to 30% of SCG Paper's consolidated revenues.
  3. *3Please see our website;
  4. *4The Nippon Paper Group has 55% equity in the joint venture. The introduction of paper machines has been proceeding, and the operation is planned to commence in the spring of 2014.