M-real - Company Announcement

A letter of intent regarding the new ownership structure of Metsä-Botnia

M-real Corporation Stock Exchange Release 15 July 2009 at 14:00

M-real Corporation's associated company Oy Metsä Botnia Ab and its
owners, M-real, Metsäliitto Cooperative and UPM-Kymmene Oyj, have
signed a letter of intent regarding the divestment of the pulp mill
and forests located in Fray Bentos, Uruguay, to UPM.

Once the transaction is closed, M-real's net debt will decrease by
around EUR 550 million, also taking into account the change of
Metsä-Botnia's consolidation method in M-real's consolidated
financial accounts. Cash proceeds to be received by M-real is around
EUR 300 million. M-real will use the proceeds for debt repayments.
The arrangement will not have a significant impact on M-real's
equity.

After the closing of the transaction, M-real will change the
consolidation method of Metsä-Botnia in its consolidated financial
accounts and process its ownership in Metsä-Botnia as an associated
company according to IAS 28. As a result of the transaction and the
change in the consolidation method, approximately EUR 250 million of
consolidated net debt will leave M-real Group. The closing of the
transaction and the change in the consolidation method of
Metsä-Botnia are estimated to decrease M-real's annual sales by
around EUR 250 million and to slightly improve the result before
taxes compared to the first quarter 2009.

The closing of the transaction is subject to approvals by the
respective parties' Board of Directors, the execution of final
agreements, conclusion of negotiations with financing parties and
approval of the competition authorities. The transaction is estimated
to be closed during the last quarter of 2009. After the closing of
the transaction M-real owns 30 % of Metsä-Botnia, Metsäliitto
Cooperative 53 % and UPM 17 %.

M-real's Board of Directors has processed and approved the letter of
intent acting without those of its members who are dependent on
Metsäliitto Cooperative. At the request of M-real's Board of
Directors Handelsbanken Capital Markets has issued a Fairness
Opinion, according to which the transaction is financially fair from
the point of view of M-real's shareholders. Castren & Snellman Oy,
Attorneys-at-law, provides legal advice in the transaction."Our need for eucalyptus pulp decreased significantly as a result of
the divestment of the Graphic Papers business at the and of last
year, which is why the Metsä-Botnia's Uruguay-based pulp mill became
strategically less important for M-real. Centralising Metsä-Botnia's
production in Finland supports M-real's strategy in packaging
business: high-quality Finnish pulp is an essential raw material for
paperboard. As a result of this transaction, the net debt and pulp
surplus of M-real will clearly decrease. This transaction when
closed, together with the well-progressed, still ongoing strategic
review of the paper business, have considerably renewed and restored
M-real," says Mikko Helander, CEO of M-real.

M-real will arrange a conference call and webcast for analysts today
at 5.30 p.m. Finnish time. Participating in the call will be CEO
Mikko Helander and CFO Matti Mörsky. From Finland please dial 0800
112 469 and from other countries +44 (0) 1452 559 645. The live
webcast can be accessed at http://qsb.webcast.fi/mreal/


For more information:

Matti Mörsky, CFO, tel. +358 10 465 4913
Juha Laine, Vice President, Investor Relations and Communications,
tel. +358 10 465 4335