NORSKE SKOGINDUSTRIER ASA ANNOUNCES EXCHANGE OFFERS AND CONSENT SOLICITATIONS FOR THE EUR 290,000,000 SENIOR SECURED NOTES DUE

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1 NORSKE SKOGINDUSTRIER ASA ANNOUNCES EXCHANGE OFFERS AND CONSENT SOLICITATIONS FOR THE EUR 290,000,000 SENIOR SECURED NOTES DUE 2019 (ISINs: XS AND XS ), EUR 159,017,000 SENIOR NOTES DUE 2021 (ISINs: XS AND XS ), USD 60,649,000 SENIOR NOTES DUE 2023 (ISINs: USR59730AA00 AND US65653AAA88; CUSIPs: R59730AA0 AND 65653AAA8), EUR 114,212,347 SENIOR NOTES DUE 2026 (ISINs: XS AND XS ) AND USD 200,000,000 SENIOR NOTES DUE 2033 (ISINs: USR80036AQ09 AND US656533AC01; CUSIPs: R80036AQ0, AC0) June 2, 2017 NORSKE SKOGINDUSTRIER ASA (the Parent ) announces the invitation of (i) the Parent to holders (subject to the offer restrictions referred to below) of (a) the outstanding EUR 159,017, % senior notes due 2021 (the 2021 Notes ) issued by Norske Skog Holding AS (the Existing Exchange Notes Issuer ), (b) the outstanding USD 60,649, % senior notes due 2023 (the 2023 Notes, and together with the 2021 Notes, the Existing Exchange Notes ) issued by the Existing Exchange Notes Issuer, (c) the outstanding EUR 114,212, % cash/3.5% PIK senior notes due 2026 (the 2026 Notes ) issued by the Parent and (d) the outstanding USD 200,000, % senior notes due 2033 issued by the Parent (the 2033 Notes and together with the Existing Exchange Notes and the 2026 Notes, the Existing Unsecured Notes ) to offer to exchange their relevant Existing Unsecured Notes for the applicable consideration, to be comprised of a certain amount of ordinary shares of the Parent (the Shares ) and (ii) Norske Skog AS (the Senior Secured Exchange Notes Issuer ) to holders of its EUR 290,000, % senior secured notes (the Existing Senior Secured Notes ) to offer to exchange their Existing Senior Secured Notes for the applicable consideration, to be comprised of a certain amount of new euro-denominated 8.00% senior secured notes due 2021 (the Senior Secured Exchange Notes ) to be issued by the Senior Secured Exchange Notes Issuer. The offer to exchange the Existing Unsecured Notes for the consideration set forth herein is referred to as the Unsecured Notes Exchange Offers and the offer to exchange the Senior Secured Notes for the consider set forth herein is referred to as the Senior Secured Notes Exchange Offer (together with the Unsecured Notes Exchange Offers, the Exchange Offers ). In conjunction with the Exchange Offers, the Parent and the Existing Exchange Notes Issuer are seeking approval from Holders of each series of the Existing Unsecured Notes to consent to certain amendments to each series of the Existing Unsecured Notes (the Existing Unsecured Notes Consent Solicitations ) and the Senior Secured Exchange Notes Issuer is seeking approval from the Holders of the Existing Senior Secured Notes to consent to certain amendments to the Existing Senior Secured Notes (the Existing Senior Secured Notes Consent Solicitations and together with the Existing Unsecured Notes Consent Solicitations, the Consent Solicitations ). The Exchange Offers and Consent Solicitations are made on the terms and subject to the conditions set out in the exchange offer and consent solicitation memorandum dated June 2, 2017, (the Exchange Offer and Consent Solicitation Memorandum ) and will expire at 11:59 p.m., New York City Time, on June 29, 2017 (subject to the right of the Parent and/or the Senior Secured Exchange Notes Issuer to extend, re-open, amend, terminate and/or withdraw all of the Exchange Offers and/or Consent Solicitations) (the Expiration Deadline ). There is a minimum acceptance condition that (i) at least 90% of the aggregate principal amount 1

2 outstanding of each series of the Existing Senior Secured Notes, the 2021 Notes and the 2023 Notes, (ii) 100% of the aggregate principal amount outstanding of the 2033 Notes, and (iii) at least a majority of the aggregate principal amount outstanding of the 2026 Notes, in each case, are validly tendered by Eligible Holders in the applicable Exchange Offer. Copies of the Exchange Offer and Consent Solicitation Memorandum are available from the Exchange and Tabulation Agent as set out below. Capitalized terms used in this announcement but not defined have the meanings given to them in the Exchange Offer and Consent Solicitation Memorandum. This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act. 2

3 EXISTING NOTES AND EXCHANGE OFFERS Unsecured Notes Exchange Offers Existing Notes to be Exchanged 159,017, % Senior Notes due 2021 (1) US$60,649, % Senior Notes due ,212, % cash/3.5% PIK Senior Notes due 2026 US$200,000, % Senior Notes due 2033 ISIN Regulation S ISIN: XS , Rule 144A ISIN: XS Regulation S ISIN: USR59730AA00, Regulation S CUSIP: R59730AA0, Rule 144A ISIN: US65653AAA88, Rule 144A CUSIP: 65653AAA8 Regulation S ISIN: XS Rule 144A ISIN: XS Regulation S ISIN: USR80036AQ09, CUSIP: R80036AQ0 Rule 144A ISIN: US656533AC01, CUSIP: AC0 Amount Outstanding as of March 31, 2017 (in millions) Exchange Ratio (3) Share Consideration (4) Early Exchange Ratio in value of Shares of the Parent for each 1,000 of 2021 Senior Notes U.S.$60.6 US$600 in value of Shares of the Parent for each US$1,000 of 2023 Senior Notes (2) 340 in value of Shares of the Parent for each 1,000 of 2026 Senior Notes (including accrued PIK Interest) US$94.9 US$340 in value of Shares of the Parent for each US$1,000 of 2033 Senior Notes Late Exchange Ratio 550 in value of Shares of the Parent for each 1,000 of 2021 Senior Notes US$550 in value of Shares of the Parent for each US$1,000 of 2023 Senior Notes 290 in value of Shares of the Parent for each 1,000 of 2026 Senior Notes (including accrued PIK Interest) US$290 in value of Shares of the Parent for each US$1,000 of 2033 Senior Notes Early Share Consideration 7,151 Shares per 1,000 nominal amount 6,696 Shares per US$1,000 nominal amount 4,052 Shares per 1,000 nominal amount (including accrued PIK Interest up to June 30, 2017) 3,794 Shares per US$1,000 nominal amount Late Share Consideration 6,555 Shares per 1,000 nominal amount 6,138 Shares per US$1,000 nominal amount 3,456 Shares per 1,000 nominal amount (including accrued PIK Interest up to June 30, 2017) 3,236 Shares per US$1,000 nominal amount Exchange Offer Consideration (5)(6) (7) (8) (9) An amount of Shares of the Parent equal to the applicable Share Consideration multiplied by the aggregate nominal amount of 2021 Notes exchanged. An amount of Shares of the Parent equal to the applicable Share Consideration multiplied by the aggregate nominal amount of 2023 Notes exchanged. An amount of Shares of the Parent equal to the applicable Share Consideration multiplied by the aggregate nominal amount of 2026 Notes exchanged (including accrued PIK Interest. An amount of Shares of the Parent equal to the applicable Share Consideration multiplied by the aggregate nominal amount of 2033 Notes exchanged. (1) As of the date of the Exchange Offer and Consent Solicitation Memorandum, the Existing Exchange Notes Issuer holds 11.4 million in aggregate principal amount of 2021 Notes. (2) Represents the amount outstanding as of December 31, 2016 and accrued PIK interest up to June 30, Excludes the amount of cash interest payable on June 30, (3) The Exchange Ratio equals the total recovery value in the form of Shares to be issued by the Parent for each U.S.$1,000 or 1,000 of Existing Unsecured Notes validly tendered (i) on or prior to the Early Exchange and Consent Deadline ( Early Exchange Ratio ) and (ii) after the Early Exchange and Consent Deadline ( Late Exchange Ratio ). The total recovery value is based on an equity value, assuming completion of the Transactions, 3

4 of 225 million (calculated using an assumed enterprise value of 640 million equal to 6x EBITDA for the twelve months ended March 31, 2017 ( 107 million) and pro forma net debt, assuming completion of the Transactions of 415 million) or NOK 2,037 million (translated using an exchange rate of 1.00 = NOK , the average daily quoted rate of the Norwegian Central Bank between Jan 1, 2017 and May 8, 2017) (the Assumed Equity Value ). (4) The Share Consideration equals the number of Shares (calculated based on a price per Share of NOK 0.76, which has been translated using an exchange rate of 1.00 = NOK and US$1.00 = NOK , the average daily quoted rates of the Norwegian Central Bank between Jan 1, 2017 and May 8, 2017) to be issued by the Parent for each U.S.$1,000 or 1,000 of Existing Unsecured Notes validly tendered (i) on or prior to the Early Exchange and Consent Deadline and (ii) after the Early Exchange and Consent Deadline but before the Expiration Deadline. (5) The Exchange Offer Consideration equals the total number of Shares to be issued by the Parent for the total amount of Existing Unsecured Notes validly tendered (i) on or prior to the Early Exchange and Consent Deadline and (ii) after the Early Exchange and Consent Deadline but before the Expiration Deadline. (6) The total number of Shares outstanding after giving pro forma effect to the Transactions other than the New Money Placement will be 2,680,186,263 comprised of (i) 278,994,995 Shares currently outstanding on the date of this exchange offer and consent solicitation memorandum, (ii) the principal amount of each series of Existing Unsecured Notes exchanged multiplied by the applicable Share Consideration and (iii) in the case of the 2026 Notes, the principal amount of the 2026 Notes including the 2026 Notes Accrued PIK Interest Payment multiplied by the applicable Share Consideration. Fractional shares will not be issued in the Unsecured Notes Exchange Offers. The number of Shares issued as Exchange Offer Consideration will be rounded down to the nearest whole number and no cash or other consideration will be delivered to the Holders in lieu of such rounded down amount. (7) Holders who validly deliver (and do not subsequently revoke) consent in respect of the applicable Proposals will (assuming that all Proposals of the relevant series of Existing Notes held by such Holder become effective and operative) receive consideration equal to the relevant Exchange Offer Consideration calculated based on the Late Share Consideration or Late Exchange Ratio, as applicable. (8) We are offering to Holders an aggregate number of Shares that, assuming 100% participation in the Unsecured Notes Exchange Offers and Consent Solicitations on or prior to the Early Exchange and Consent Deadline, would equal in the aggregate 86% of the total Shares outstanding (after giving pro forma effect to the Transactions other than the New Money Placement). Pro forma Share ownership by each tranche of Holders would be as follows: (i) 39% by Holders of the 2021 Notes, (ii) 15% by Holders of the 2023 Notes, (iii) 18% by Holders of the 2026 Notes, and (iv) 13% by Holders of the 2033 Notes. Pro forma Share ownership by existing shareholders would total 10% and by holders of the 78,954,372 2% Perpetual Notes due 2115 would total 4%. (9) The Parent also intends to obtain up to 70.0 million of gross proceeds from the issuance of additional Shares (the New Money Placement ). Assuming completion of the New Money Placement, 1,130,930,569 additional Shares would be issued, resulting in a total of 3,811,116,832 Shares, after taking into account the Transactions. The Shares in the New Money Placement will be offered at a discount of 20% to the deemed price of the Shares being issued in the Exchange Offers of NOK 0.70 per Shares (calculated assuming completion of the Transactions by dividing (1) the total of the Assumed Equity Value of NOK 2,037 million and the equity value of the Shares being offered in the New Money Placement of NOK 634 million (translated using an exchange rate of 1.00 = NOK , the average daily quoted rate of the Norwegian Central Bank between Jan 1, 2017 and May 8, 2017) by (2) 3,811,116,832 Shares, representing the total number of Shares outstanding after giving pro forma effect to the Transactions and are expected to be of the same class as the existing Shares of the Parent. The issuance of such additional Shares will impact the Exchange Ratio and the pro forma ownership ratios shown above. Up to 45 million of the New Money Placement will be offered first to Holders of the Existing Unsecured Notes, then to holders of the 78,954,372 2% Perpetual Notes due 2115 and finally to existing shareholders of the Parent. Up to 25 million of the New Money Placement will be offered first to existing shareholders of the Parent, then to Holders of the Existing Unsecured Notes and finally to holders of the 78,954,372 2% Perpetual Notes due Any amount of the New Money Placement not taken up by the Holders of the Existing Unsecured Notes, the holders of the 78,954,372 2% Perpetual Notes due 2115 and existing shareholders of the Parent will be offered to new investors. 4

5 Senior Secured Notes Exchange Offer Exchange Ratio Existing Senior Secured Notes to be Exchanged 290,000, % Senior Secured Notes due 2019 ISIN Regulation S ISIN: XS , Rule 144A ISIN: XS Amount Outstanding as of March 31, 2017 (in millions) (1) Early Exchange Ratio (2) ,020.0 of Senior Secured Exchange Notes for each 1,000 of Existing Senior Secured Notes Late Exchange Ratio (2) of Senior Secured Exchange Notes for each 1,000 of Existing Senior Secured Notes Exchange Offer Consideration An amount of new Euro-denominated 8.00% senior secured notes due 2021 equal to the applicable Exchange Ratio multiplied by the number of increments of 1,000 in nominal amount of Existing Senior Secured Notes exchanged (1) As of the date of the Exchange Offer and Consent Solicitation Memorandum, the Senior Secured Exchange Notes Issuer holds nil in aggregate principal amount of the Existing Senior Secured Notes. (2) The Exchange Ratio equals the aggregate principal amount of Senior Secured Exchanges Notes that the Senior Secured Exchange Notes Issuer will issue for each 1,000 of Existing Senior Secured Notes exchanged (i) in the case of the Early Exchange Ratio, on or prior to the Early Exchange and Consent Deadline or (ii) in the case of the Late Exchange Ratio, after the Early Exchange and Consent Deadline but prior to the Expiration Deadline. 5

6 The times and dates below are indicative only. EXPECTED TIMETABLE OF EVENTS Events Commencement of the Exchange Offers and Consent Solicitations Exchange Offers and Consent Solicitations announced. The Exchange Offer and Consent Solicitation Memorandum available from the Exchange and Tabulation Agent. Announcement of Proposals and Notice of Meetings for the Meetings Notes given to Holders. June 2, Times and Dates Early Exchange and Consent Deadline Deadline for receipt of valid Exchange Instructions by the Exchange and Tabulation Agent in order for Holders to be able to participate in the Exchange Offers and to be eligible to receive the applicable Exchange Offer Consideration calculated based on the applicable Early Share Consideration (in the case of the applicable series of Existing Unsecured Notes) or the Exchange Offer Consideration calculated based on the Early Exchange Ratio (in the case of the Existing Senior Secured Notes). Record Date In relation to the 2023 and 2033 Notes Consent Solicitation only. Expiration Deadline Final deadline for receipt of valid Exchange Instructions or Voting Instructions by the Exchange and Tabulation Agent in order for Holders to participate in the Exchange Offers and/or the Consent Solicitations and to be eligible to receive the applicable Exchange Offer Consideration calculated based on the applicable Late Share Consideration (in the case of the applicable series of Existing Unsecured Notes) or the Exchange Offer Consideration calculated based on the Late Exchange Ratio (in the case of the Existing Senior Secured Notes). 5:00 p.m. (New York time) on June 15, :00 p.m. (New York time) on June 29, :59 p.m. (New York time) on June 29, Time and Date of Meetings Expected time and date of Meeting of Holders of the 2026 Notes. Expected time and date of Meeting of Holders of the 2033 Notes. 10:00 a.m. (London time) on July 5, :15 a.m. (London time) on July 5,

7 Announcement of Results Announcement by the Parent and the Senior Secured Exchange Notes Issuer of whether they will accept valid offers of Existing Notes for exchange pursuant to each of the Exchange Offers and, if so accepted, (i) the final aggregate nominal amount of each series of Existing Notes accepted for exchange, (ii) the aggregate nominal amount of shares to be issued on the Settlement Date, (iii) the results of Meetings (or, if applicable, any adjourned Meeting), (iv) the aggregate nominal amount of each series of Existing Notes that will be outstanding following the Settlement Date. As soon as reasonably practicable after the date of the Meetings. Adoption of Extraordinary Resolutions If an Extraordinary Resolution is passed at the first Meeting in respect of a series of Meetings Notes, execution of documentation amending the applicable Existing Notes Indenture and Agency Agreements. Expected Settlement Date Expected settlement date for the Exchange Offers On or about July 5, As promptly as practicable following the Expiration Deadline, provided that all conditions to the occurrence of the Settlement Date have been satisfied or waived in accordance with the terms of the Exchange Offer and Consent Solicitation Memorandum. If the Minimum Acceptance Condition for the Exchange Notes Offers is not met, but the Scheme Condition is met, and the Schemes are sanctioned, it is expected that the Settlement Date would be in the third quarter of Expected Issue Date of Shares Expected date of issuance of Shares as Exchange Offer Consideration to Holders pursuant to the Unsecured Secured Notes Exchange offer. Such date is expected to be one business day following the Settlement Date. Approximately one business day following the Settlement Date. The above times and dates are subject to the right of the Parent, the Existing Exchange Notes Issuer and/or the Senior Secured Exchange Notes Issuer to extend, re-open, amend, terminate and/or withdraw all of the Exchange Offers and/or the Consent Solicitations (subject to applicable law and as provided in the Exchange Offer and Consent Solicitation Memorandum). 7

8 EXCHANGE OFFERS AND CONSENT SOLICITATIONS Overview and Exchange Offer Consideration Holders wishing to participate in the Exchange Offers and Consent Solicitations, in each case, on the terms and subject to the conditions set forth in the Exchange Offer and Consent Solicitation Memorandum, may, in respect of an aggregate nominal amount of applicable Existing Notes of a particular series: (A) (B) (C) (D) (E) offer to exchange those Existing Notes for the applicable Exchange Offer Consideration, which will be, as applicable, (i) the Early Share Consideration (in the case of the applicable series of Existing Unsecured Notes) or Exchange Offer Consideration calculated at the Early Exchange Ratio (in the case of the Existing Senior Secured Notes), in the case of an Exchange Instruction validly submitted and received by the Exchange and Tabulation Agent at or prior to the Early Exchange and Consent Deadline and (ii) the Late Share Consideration (in the case of the applicable series of Existing Unsecured Notes) or Exchange Offer Consideration calculated at the Late Exchange Ratio (in the case of the Existing Senior Secured Notes), in the case of an Exchange Instruction validly submitted and received by the Exchange and Tabulation Agent after the Early Exchange and Consent Deadline but before the Expiration Deadline; or with respect to the Meetings Notes, deliver a valid Voting Instruction in respect of those Meetings Notes appointing the Exchange and Tabulation Agent (or its nominee) as proxy to vote (i) in favor of the relevant Extraordinary Resolution at the Meeting in respect of the applicable series of Meetings Notes (including any adjournment thereof); or (ii) against the relevant Extraordinary Resolution at the Meeting, or (b) to attend the relevant Meeting and vote in person; or with respect to the 2021 Notes only, deliver a valid Voting Instruction in respect of those 2021 Notes voting in favor of the 2021 Notes Proposal; or with respect to the 2023 Notes only, deliver a valid Voting Instruction in respect in those 2023 Notes voting in favor of the 2023 Notes Proposal; or with respect to the Existing Senior Secured Notes only, deliver a valid Voting Instruction in respect in those Existing Senior Secured Notes voting in favor of the Existing Senior Secured Notes Proposals. The submission of an Exchange Instruction will also constitute (i) with respect to the Meetings Notes, an instruction appointing the Exchange and Tabulation Agent (or its nominee) as proxy to attend the Meeting in respect of the relevant series of Meetings Notes (including any adjournment thereof) and vote in favor of the applicable Extraordinary Resolution in respect of such series of Meetings Notes, (ii) with respect to the 2021 Notes, a consent in favor of the 2021 Notes Proposal, (iii) with respect to the 2023 Notes, a consent in favor of the 2023 Notes Proposal or (iv) with respect to the Existing Senior Secured Notes, a consent in favor of the Existing Senior Secured Notes Proposal. It will not be possible to validly offer for exchange Existing Notes in the Exchange Offers without at the same time providing consent in connection with the Consent Solicitations. There can be no assurance that the Exchange Offers or the Consent Solicitations will be completed on the terms set forth in the Exchange Offer and Consent Solicitation Memorandum, if at all. The Recapitalization Transactions Background to and Rationale for the Transactions We completed the 2015 Exchange Offer and Consent Solicitation in the first quarter of 2015 and the 2016 Exchange Offer and Consent Solicitation (including the 2016 Repair Offering) in the second quarter of As a result of these transactions, the next maturities of our debt securities are the 290 million of Existing Senior Secured Notes in December 2019 and 148 million of 2021 Notes in February We also have 8

9 several other loans and facilities maturing in the near-term to mid-term, including the 100 million NSF which matures in March The NOK 1,971 million positive impact on our shareholders equity from the completion of the 2016 Exchange Offer and Consent Solicitation was largely offset by the NOK 1,443 million impairment charge that we recorded in the second quarter of 2016 following a disagreement with our previous auditors (Ernst & Young AS) and protracted efforts to resolve the disagreement, including the preparation of an industry report by independent consultants. Our previous auditors had asserted that we should record at least a NOK 2,000 million impairment charge in our annual accounts for 2015, which we disagreed with, and Ernst & Young AS subsequently resigned as our auditors. Our total equity as of March 31, 2017 was NOK 39 million, and we expect that we will report negative total equity as of June 30, Moreover, despite the beneficial impact of the 2016 Exchange Offer and Consent Solicitation, we were not successful in our efforts during the second half of 2016 to actively pursue consolidation transactions. We have concluded that, based on our discussions with potential consolidation partners, the perceived ongoing risks associated with our highly-leveraged capital structure could not overcome the industrial logic of a consolidation transaction in the European publication paper industry. We have limited alternatives to address our present financial challenges or to successfully execute our business plan, including to pursue EBITDA-accretive growth projects. Our current debt instruments significantly limit our ability to incur additional indebtedness or to use the proceeds from asset disposals for purposes other than the repayment of senior secured debt. We have also been faced with a series of interest and principal repayments on our indebtedness, including a 10 million facility provided by certain present and former major shareholders that matured in March 2017 and was not extended. January and April 2017 Recapitalization Discussions As previously disclosed, discussions in January 2017 with certain of our key investors regarding refinancing and recapitalization options did not lead to a transaction as consensus among investors could not be met. We also attempted to engage with investors in April 2017 as to refinancing and recapitalization options, but such discussions did not result in an agreement. Following these attempts, during April 2017 our former chief executive officer sold his entire holding of Shares and subsequently resigned his positions in May 2017, and the trading price of the Shares and our public debt instruments decreased significantly. We have disclosed that the Parent s Board of Directors has concluded that a recapitalization is necessary, which would reduce the leverage level by equitizing the Existing Unsecured Notes and would extend the Existing Senior Secured Notes. If a consensual recapitalization is not achieved, we believe that our business will be at considerable risk of not being able to meet our debt service obligations or execute our business plan, and that the Parent s Board of Directors may have no choice but to consider available alternatives, including the possibility of filing for court protected debt negotiation proceedings in Norway. In such circumstances our noteholders and shareholders may face a very significant loss of value and lower recoveries (if any) than could be achieved in a consensual transaction. Near Term Liquidity Issues and June 2017 Interest Payments We face near-term liquidity issues, including the requirement to make interest payments on the Existing Senior Secured Notes on June 15, 2017 ( 17 million), the 2026 Notes on June 30, 2017 ( 2 million) and the 2021 Notes and 2023 Notes on August 24, 2017 ( 8 million). We are also required to make a payment on the Innovasjon Norge Facilities on June 10, 2017 ( 1 million) and an interest payment on the NSF on June 30, 2017 ( 3 million). As of March 31, 2017, we had cash and cash equivalents of NOK 466 million ( 51 million), which included our minimum restricted cash amount of approximately NOK 200 million ( 22 million) and we consider NOK 200 million ( 22 million) to be approximately our minimum operating cash level to address cash-flow requirements. As described in Trading Update and Recent Developments Trading update for Second Quarter of 2017, we expect that our cash flow from operations, including financial items, will be close to zero in the second quarter of 2017 and expect our cash and cash equivalents to fall below minimum operating levels of NOK 400 million if no additional funding can be raised and cash interest payments due during the second quarter are paid. In order to protect the Group s operating business, the Parent s Board of Directors will evaluate at appropriate times during the pendency of the Exchange Offers and Consent Solicitations in June, including prior to the 9

10 17 million interest payment in respect of the Existing Senior Secured Notes due on June 15, 2017, whether the interest payments on our indebtedness due in June will be paid. Among the factors that the Board of Directors will take into account in making the determination of whether or not to pay interest is the expected likelihood of success in completing the Transactions in order to protect the operating business of the Group. Other factors to be considered will include other potentially available liquidity measures, such as selling unpledged assets, raising additional debt to the extent permitted under our debt instruments, obtaining further factoring or asset-backed financing, reducing the levels of our restricted cash and operating cash requirements or obtaining consents or standstills from our creditors. The Board will also consider potential risks to our liquidity position, such as the operating and financial performance of our business, changes in our supplier and trade creditor terms and customer terms and currency exchange movements. If we do not pay the interest payment on the Existing Senior Secured Notes when due on June 15, 2017, such failure would constitute a default under the Existing Senior Secured Notes and, following a grace period of 30 days, an event of default under the Existing Senior Secured Notes. This could result in the acceleration of, and enforcement actions being taken under, the Existing Senior Secured Notes and cross-defaults under, and acceleration of, certain of our other indebtedness. If the Parent s Board of Directors determine not to make such interest payments, the Board (and the relevant boards of directors of subsidiaries) may need to consider alternate options to protect the going concern of the operating business, such as seeking voluntary or compulsory debt negotiation proceedings in the Norwegian courts. Inability to Refinance Existing Senior Secured Notes in 2019 If we are unable to complete the Transactions, unless there is substantial improvement in trading conditions, industry conditions and our operating performance, we believe that it is unlikely that we will be able to refinance the Existing Senior Secured Notes and that it is unlikely that we will be able to repay the 290 million aggregate principal amount of the Existing Senior Secured Notes when they mature in December This would trigger a default under the Existing Senior Secured Notes and cross-defaults under the Existing Unsecured Notes and certain of our other indebtedness, which could result in the acceleration of such indebtedness. If such acceleration occurred, it is unlikely that we will have sufficient funds to repay such indebtedness. In addition, if there is material uncertainty regarding our liquidity position in future periods due to such impending principal repayment obligations, the officers and/or directors of subsidiary companies in the Group would have to consider whether they can continue to provide money to the Senior Secured Exchange Notes Issuer, the Existing Exchange Notes Issuer and the Parent to satisfy their respective liabilities, including payments of interest and principal on the Existing Notes and the NSF. The Parent s independent auditors in their audit opinion on our consolidated financial statements for the year ended December 31, 2016, noted that material uncertainty exists in relation to the refinancing of the Existing Senior Secured Notes which consequently casts significant doubt as to the assumption regarding our ability to continue as a going concern. If the material uncertainty remains, the Parent s independent auditors may also consider issuing an audit opinion on our consolidated financial statements for subsequent periods on a similar or more adverse basis, which could raise concerns among our trade creditors and other finance providers. Benefits of Consensual Transaction We believe that the successful completion of the Transactions will protect value for all of our stakeholders and position us to successfully implement our business plan and to participate in consolidation opportunities in our industry. We believe that a successful completion of the Transactions will have the following effects: Extension of debt maturities. If the Transactions are successfully completed, our next material debt maturity will be in December This will be accomplished by substituting the December 2019 maturity on the Existing Senior Secured Notes for a December 2021 maturity on the Senior Secured Exchange Notes, equitizing the Existing Unsecured Notes, and extending the maturity of the NSF from March 2020 to September The exchange of the Existing Senior Secured Notes for Senior Secured Exchange Notes will remove the potential refinancing risk that we face in December Reduction of cash interest. If the Transactions are completed, our cash pay interest expense will be reduced to approximately 33 million per year from 70 million per year. This will be accomplished by substituting the 11.75% cash coupon on the Existing Senior Secured Notes for a cash coupon of 8.00% on the Senior Secured Exchange Notes and equitizing the Existing 10

11 Unsecured Notes. The reduction of our cash interest will improve our liquidity and permit us to allocate such cash investments in the business, including our growth projects in areas other than traditional publication paper. Reduction of leverage. If the Transactions are completed (and after giving effect to the receipt of 70.0 million of gross proceeds in the New Money Placement and the Perpetual Notes Consent), the aggregate principal amount of our net indebtedness will be reduced in 2017 to approximately NOK 3,126 million from NOK 8,245 million (includes the Perpetual Notes), and our net leverage ratio will be reduced to approximately 3.2x from 8.5x (includes the Perpetual Notes). This will be accomplished by equitizing the Existing Unsecured Notes. We believe that the meaningful reduction of our leverage will position us to participate in potential consolidation opportunities in our industry and permit us to refinance our indebtedness on more favorable terms. Value preservation. We believe that the successful completion of a consensual transaction, as opposed to a future alternative restructuring procedure, will preserve value across our capital structure. An alternative restructuring procedure would likely be costly, require a significant amount of time and effort on the part of our management and would harm our position with our suppliers and customers, which would significantly impair our liquidity and our ability to operate. We believe that claims of certain of our stakeholders, in particular the Holders of the Existing Unsecured Notes, would likely be impaired in such a case. We believe that the Exchange Offers and Consent Solicitations allow our stakeholders, in particular those who hold our Existing Unsecured Notes, to preserve value in those instruments through an exchange for our Shares. Alternative measures would be value destructive. We believe that the Exchange Offers and Consent Solicitations (or the Schemes) are the best solution for our stakeholders, including the Holders of the Existing Unsecured Notes, with respect to the challenges that we face and will allow us to avoid taking alternative measures that will be value destructive for stakeholders. Potential Consequences if Consensual Exchange Offers and Consent Solicitations are not Successful If neither the Minimum Acceptance Condition for the Exchange Offers and Consent Solicitations nor the Scheme Condition is achieved by the Early Exchange and Consent Deadline, or if the Exchange Offers and Consent Solicitations are not successfully implemented (including through the Schemes), the Parent s Board of Directors will evaluate possible alternative courses of action. In order to protect the going concern of the operating business, This Board s evaluation will include whether or not the June 15, 2017 interest payment on the Existing Senior Secured Notes shall be made in view of the Group s liquidity situation and outlook, whether on June 15, 2017 or prior to the end of the 30-day grace period. The decision to pay the June 15, 2017 interest payment on the Existing Senior Secured Notes shall be at the sole discretion of the Board and may occur after Holders of the Existing Senior Secured Notes have validly tendered their Existing Senior Secured Notes in the Senior Secured Notes Exchange Offer. Existing Senior Secured Notes may be withdrawn at any time at or prior to the Early Exchange and Consent Deadline but not thereafter. The Board will also consider the availability of non-consensual alternatives in order to protect the going concern of the operating business, such as seeking voluntary or compulsory debt negotiation proceedings. Should an event of default occur in respect of the Existing Senior Secured Notes, then enforcement action directed by holders of the Existing Senior Secured Notes may occur, in particular over the shares of the Senior Secured Exchange Notes Issuer, which are pledged as security for the Existing Senior Secured Notes. If the terms of the Intercreditor Agreement are complied with, then such an enforcement would allow the Security Agent to release the guarantees of the 2021 Notes and 2023 Notes by the Parent s operating subsidiaries that are guarantors under the 2021 Notes & 2023 Notes Indenture. Overview of Transactions The Transactions are comprised of the following key elements: the Exchange Offers and Consent Solicitations; 11

12 the Schemes; the NSF Extension; the Perpetual Notes Consent; and the New Money Placement. The Schemes If the Existing Unsecured Notes Minimum Acceptance Condition and/or the Existing Senior Secured Notes 90% Consent is not met on or prior to the Expiration Deadline, but at least 75% of the aggregate principal amount outstanding of the Existing Senior Secured Notes are validly tendered by Eligible Holders in the Senior Secured Notes Exchange Offer, at least 75% of the aggregate principal amount outstanding of the 2021 Notes and the 2023 Notes (taken together) are validly tendered by Eligible Holders in the 2021 Notes Exchange Offer and the 2023 Notes Exchange Offer and at least 75% of the aggregate principal amount outstanding of the 2026 Notes and the 2033 Notes (taken together) are validly tendered by Eligible Holders in the 2026 Notes Exchange Offer and the 2033 Notes Exchange Offer, then the Senior Secured Exchange Notes Issuer will not consummate the Senior Secured Notes Exchange Offer (if the Existing Senior Secured Notes 90% Consent has not been met) and the Parent and the Existing Exchange Notes Issuer will not consummate the Unsecured Notes Exchange Offers (if the Existing Unsecured Notes Minimum Acceptance Condition has not been met), and the Parent, the Existing Exchange Notes Issuer and/or the Senior Secured Exchange Notes Issuer will instead take steps to commence the Schemes (as applicable). This will entail the Senior Secured Exchange Notes Issuer, the Parent and/or the Existing Exchange Notes Issuer making an application to the High Court of Justice of the courts of England and Wales to request the summoning of meetings of the relevant class of their creditors (being, in the case of the Parent, the holders of 2026 Notes and 2033 Notes, in the case of the Existing Exchange Notes Issuer, the holders of the 2021 Notes and 2023 Notes and, in the case of the Senior Secured Exchange Notes Issuer, the holders of the Existing Senior Secured Notes) to consider and vote upon the Schemes, which are English schemes of arrangement pursuant to Part 26 of the Companies Act 2006 of England and Wales (as amended). Pursuant to the Schemes, the Senior Secured Exchange Notes Issuer, the Parent and/or the Existing Exchange Notes Issuer would, if they are approved by the requisite majorities (which are more than 75% by key value and more than 50% by number of each class of creditors) and then sanctioned by the Court, be authorized by the Court to exchange the Existing Unsecured Notes for Shares and to exchange the Existing Senior Secured Notes for Senior Secured Exchange Notes, in each case, on the terms of the Exchange Offers. In order to facilitate the availability of the Schemes, the Consent Solicitations for the Existing Senior Secured Notes, the 2021 Notes, the 2023 Notes and the 2033 Notes include amendments to change the governing law of such Notes from New York law to English law and to provide for the submission to the jurisdiction of the English courts by the parties to the Existing Senior Secured Notes Indenture, the 2021 Notes & 2023 Notes Indenture and the 2033 Notes Agency Agreement. These changes to the Notes will become effective and operative upon obtaining the consent of a majority of the Existing Senior Secured Notes, the consent of a majority of the outstanding 2021 Notes and 2023 Notes (voting together) and a majority of the outstanding 2033 Notes. Holders of the Existing Notes that tender their Notes in the Exchange Offers shall be deemed to automatically deliver irrevocable instructions in support of the Schemes. The NSF Extension The Senior Secured Notes Issuer will agree with the lenders under the NSF to the extension of the maturity of the NSF from March 2020 until September The Perpetual Notes Consent The Parent intends to obtain a consent from the holders of the Perpetual Notes (the Perpetual Notes Consent ) to amend and restate the Perpetual Notes into a convertible loan (the Convertible Loan ) so as to facilitate their conversion into Shares of the Parent. The amendments pursuant to the Perpetual Notes Consent will become operative on or about the date of consummation of the Exchange Offers (the Convertible Loan Amendment Date ). 12

13 The Parent intends that the Convertible Loan may be converted into Shares at the option of the holders of the Convertible Loan from time to time after the Convertible Loan Amendment Date. The terms of the conversion ( Convertible Loan Conversion ) will result in the holders of the Convertible Loan having a pro forma equity ownership of 4.0% of the Shares of the Parent (without giving effect to the New Money Placement). The Parent intends that the Convertible Loan may also be converted into ordinary shares at the option of the Parent after the Convertible Loan Amendment Date, and the Parent will undertake to make such conversion not later than 60 days after the Convertible Loan Amendment Date. The New Money Placement The Parent also intends to obtain up to 70 million of gross proceeds from the issuance of Shares (the New Money Placement ). The Shares in the New Money Placement will be offered at a discount of 20% to the deemed value of the Shares being issued to investors in the Exchange Offers and are expected to be of the same class as the existing Shares of the Parent. Pursuant to the New Money Placement, up to 45 million of Shares will be offered first to Eligible Holders of the Existing Unsecured Notes, with any shares not taken up then offered to holders of the Perpetual Notes and then to existing shareholders. Up to 25 million of Shares will be offered first to existing shareholders, with any shares not taken up then offered to Holders of Existing Unsecured Notes and then to Holders of Perpetual Notes. Any amount of the New Money Placement not taken up by the Holders of Existing Unsecured Notes, the holders of the Perpetual Notes and existing shareholders of the Parent will be offered to new investors. The proceeds from the New Money Placement will be used to fund a portion of the costs of operational improvement and growth projects that we have identified. The Exchange Offers Before making a decision whether to participate in the Exchange Offers or the Consent Solicitations, Holders should carefully consider all of the information contained in the Exchange Offer and Consent Solicitation Memorandum and, in particular, the risk factors described in Risk Factors. A Holder who validly submits an Exchange Instruction that is received by the Exchange and Tabulation Agent at or prior to the Expiration Deadline will, if their Exchange Instruction is accepted by (i) the Parent, in the case of the Unsecured Notes Exchange Offers, receive a number of Shares equal to the product of (A) the aggregate principal amount of such Existing Notes accepted for exchange and (B) the applicable Share Consideration and (ii) the Senior Secured Exchange Notes Issuer, in the case of the Senior Secured Notes Exchange Offer, receive Senior Secured Exchange Notes in a principal amount (rounded down to the nearest 1) equal to the product of (A) the aggregate principal amount of such Existing Senior Secured Notes accepted for exchange and (ii) the applicable Exchange Ratio. This will at all times be subject to the requirement that any such exchange relates to Exchange Instructions with a principal amount that is at least equal to the applicable Minimum Offer Amount. Such Holders will also receive Accrued Interest Payments as further described in the Exchange Offer and Consent Solicitation Memorandum. The acceptance of Existing Notes under the Exchange Offers is conditional on the success of the Consent Solicitations. Form of Shares For a description of the Shares to be issued on the Settlement Date, see Share Capital and Securities Trading in Norway in the Exchange Offer and Consent Solicitation Memorandum. Form and Denomination of Senior Secured Exchange Notes 13

14 The Senior Secured Exchange Notes will be used pursuant to the Senior Secured Exchange Notes Indenture and will be issued in registered form and shall be in denominations of 100,000 and integral multiples of 1 in excess thereof. See Description of the Senior Secured Exchange Notes in the Exchange Offer and Consent Solicitation Memorandum. Participation in the Exchange Offers and Minimum Offer Amounts To participate in the Exchange Offers, Holders must validly offer for exchange at least: (i) with respect to the 2021 Notes, 167,000 on or prior to the Early Exchange and Consent Deadline and 182,000 thereafter; (ii) with respect to the 2023 Notes, US$250,000 on or prior to the Early Exchange and Consent Deadline and US$273,000 thereafter; (iii) with respect to the 2026 Notes, 295,000 on or prior to the Early Exchange and Consent Deadline and 345,000 thereafter; (iv) with respect to the 2033 Notes, US$442,000 on or prior to the Early Exchange and Consent Deadline and US$518,000 thereafter and (v) with respect to the Existing Senior Secured Notes, 100,000 on or prior to the Early Exchange and Consent Deadline and 106,000 thereafter. In order to participate in the Exchange Offers, a Holder that, as of the date of this announcement, holds Existing Notes having an aggregate nominal amount less than the applicable Minimum Offer Amount must first acquire such further Existing Notes of that series as is necessary for that Holder to be able to offer for exchange the relevant Minimum Offer Amount. In order to participate in, and be eligible to receive the applicable Exchange Offer Consideration, pursuant to the Exchange Offers, Holders must validly offer their Existing Notes for exchange by delivering, or arranging to have delivered on their behalf, a valid Exchange Instruction that is received by the Exchange and Tabulation Agent by the Expiration Deadline. See Procedures for Participating in the Exchange Offers and the Consent Solicitations in the Exchange Offer and Consent Solicitation Memorandum. Exchange Instructions will be irrevocable except in the limited circumstances described in the Exchange Offer and Consent Solicitation Memorandum under Amendment and Termination. Any Exchange Instruction received by the Exchange and Tabulation Agent representing an aggregate nominal amount of Existing Notes of less than the applicable Minimum Offer Amount will not be accepted by the Exchange Agent as a valid Exchange Instruction. Where a Holder is unable to make the representations set forth in the Exchange Offer and Consent Solicitation Memorandum under Offer and Distribution Restrictions, such Holder s offer of Existing Notes for exchange pursuant to the Exchange Offers will not be accepted. The Minimum Offer Amounts do not apply to participation in the Consent Solicitations. Holders that are unable to participate in the Exchange Offers are still eligible to participate in the Consent Solicitations. However, consent instructions must be received in amounts no less than the legal minimum denominations (and relevant multiples) of the Existing Notes. Exchange Instructions and Consent Solicitations The submission of an Exchange Instruction will also constitute (i) with respect to the Meetings Notes, an instruction appointing the Exchange and Tabulation Agent (or its nominee) as proxy to attend the Meeting in respect of the relevant series of Meetings Notes (including any adjournment thereof) and vote in favor of the applicable Extraordinary Resolution in respect of such series of Meetings Notes, (ii) with respect to the 2021 Notes, a consent in favor of the 2021 Notes Majority Consent and the 2021 Notes 90% Consent, (iii) with respect to the 2023 Notes, a consent in favor of the 2023 Notes Majority Consent and the 2023 Notes 90% Consent, and (iv) with respect to the Existing Senior Secured Notes, a consent in favor of the Existing Senior Secured Notes Majority Consent and the Existing Senior Secured Notes 90% Consent. It will not be possible to validly offer for exchange Existing Notes in the Exchange Offers without at the same time providing consent in connection with the Consent Solicitations. Escrow arrangement Non-consenting holders of Existing Unsecured Notes Certain Holders of the Existing Unsecured Notes may elect not to participate in the Unsecured Notes Exchange Offers, may not be able to participate in the Unsecured Notes Exchange Offers or otherwise may not participate in the Unsecured Notes Exchange Offers. For example, certain Holders of the 2023 Notes and the 2033 Notes may not comply with the procedures set forth in the Exchange Offer and Consent Solicitation Memorandum 14

15 under Procedures for Participating in the Exchange Offers and the Consent Solicitations Exchange Instructions for 2023 Notes and 2033 Notes Held via DTC. In respect of Holders of Existing Unsecured Notes who do not participate in the Existing Unsecured Notes Exchange Offers nor consent to the Existing Unsecured Notes Proposals (together, Non-Consenting Existing Unsecured Noteholders, and each, a Non-Consenting Existing Unsecured Noteholder ), in the event that the Exchange Offers and Consent Solicitations are consummated, we reserve the right, in our sole discretion, to implement the following certain alternative arrangements (the Escrow Arrangement ) regarding such Non-Consenting Existing Unsecured Noteholders as further described in the Exchange Offer and Consent Solicitation Memorandum. In the event that we decide to proceed with the Escrow Arrangement, further details will be set out in the relevant Escrow Notice. The Consent Solicitations In addition to the Exchange Offers, the Parent and the Existing Exchange Notes Issuer are each seeking (as applicable) approval by means of Extraordinary Resolutions of the Holders to certain amendments to the Existing Notes Indenture and Agency Agreements applicable to the 2026 Notes and the 2033 Notes and consents in favor of the 2021 Notes Majority Consent, 2021 Notes 90% Consent, 2023 Notes Majority Consent and 2023 Notes 90% Consent, in each case, as described in the Exchange Offer and Consent Solicitation Memorandum under The Existing Unsecured Notes Proposals. In addition, the Senior Secured Exchange Notes Issuer is seeking consents in favor of the Existing Senior Secured Notes Majority Consent and the Existing Senior Secured 90% Consent as described in the Exchange Offer and Consent Solicitation Memorandum under The Existing Senior Secured Notes Proposals. Subject to certain restrictions, the Parent, the Existing Exchange Notes Issuer and the Senior Secured Exchange Notes Issuer may elect, at any time prior to the Expiration Deadline, to amend or vary the terms of, and the procedures relating to, any or all of the Consent Solicitations and any or all of the Proposals (as more fully described in the Exchange Offer and Consent Solicitation Memorandum) other than the interconditionality of the Exchange Offers, Consent Solicitations and Proposals or any threshold voting or tender requirements necessary to consummate any of the transactions contemplated by the Exchange Offer and Consent Solicitation Memorandum. Procedures Relating to Meetings of Holders Notices convening the meetings (the Meetings ) of the Holders of the Meetings Notes to be held at the offices of Linklaters LLP, One Silk Street, London, EC2Y 8HQ, United Kingdom on July 5, 2017 at the times specified in each such notice in respect of the Meetings Notes (the Notices ) will be published on or about the date of this announcement. If the required quorum is not satisfied at a Meeting, an adjourned meeting will be held in accordance with the relevant Existing Notes Indenture and Agency Agreements. The Notices and, if applicable, notice of any adjourned Meetings, will be published in accordance with the terms of the relevant Meetings Notes and disclosed through the Clearing Systems. Participation in the Consent Solicitations for Holders who are Unwilling or Unable to Exchange their Existing Notes Holders who are unwilling or unable to offer their Existing Notes for exchange in the Exchange Offers are nevertheless eligible to consider and to vote on the applicable Extraordinary Resolution or provide consents in respect of the 2021 Notes Consent, 2023 Notes Consent or the Existing Senior Secured Notes Consent, as the case may be, by inter alia delivering, or arranging to have delivered on their behalf via the relevant Clearing System, a valid Voting Instruction in respect of such Existing Notes that is received by the Exchange and Tabulation Agent prior to the Expiration Deadline. Holders who have submitted Exchange Instructions cannot submit a Voting Instruction in respect of the Existing Notes that are the subject of such Exchange Instruction. 15