International Paper Announces Debt Tender Offer

MEMPHIS, Tenn., Nov. 22 /PRNewswire-FirstCall/ -- International Paper has commenced a cash tender offer to purchase a portion of its outstanding bonds. The terms and conditions of the tender offer are described in an offer to purchase dated Nov. 22, 2006. Pursuant to the tender offer, International Paper would use up to $2.35 billion in cash (excluding accrued interest, fees and expenses) to repurchase a portion of its outstanding bonds.

(Logo: http://www.newscom.com/cgi-bin/prnh/20020701/IPLOGO )

On July 13, the company announced plans to spend approximately $6 billion to $7 billion to strengthen its balance sheet, primarily through debt repayment, as a component of its transformation plan, launched in 2005. This tender offer represents a portion of that debt repayment. As of the end of the third quarter, International Paper had debt of approximately $10.5 billion, reduced from approximately $13.4 billion at the end of the 2005 second quarter.

"We committed to our shareowners that we would use a portion of proceeds from our transformation plan to strengthen our balance sheet, and that's what we're doing," said John Faraci, International Paper chairman and chief executive.

The Tender Offer

The amounts of each series of bonds that are purchased in the tender offer will be determined in accordance with the priorities identified in the column "Acceptance Priority Level" in the table following this release. The tender offer will expire at 12:00 midnight, New York City time, on Dec. 20, 2006, unless extended. Holders of bonds subject to the tender offer must validly tender and not validly withdraw their bonds on or before the early tender date, which is 5 p.m. New York City time on Dec. 6, 2006, unless extended, to receive the applicable total tender offer consideration. Holders of bonds subject to the tender offer who validly tender their bonds after the early tender date and on or before the expiration date and whose bonds are accepted for purchase will receive the applicable late tender offer consideration, namely the total tender offer consideration less the applicable early tender premium.

The applicable total tender offer consideration for each $1,000 in principal amount of bonds tendered and accepted for payment pursuant to the tender offer will be determined in the manner described in the offer to purchase. The consideration will be determined by reference to a fixed spread specified for such bonds over the yield based on the bid-side price of the applicable U.S. Treasury Security specified in the table following this release, as fully described in the offer to purchase. The consideration will be calculated by the dealer managers for the tender offer at 2 p.m. New York City time on the second business day preceding the expiration date. The late tender offer consideration is the applicable total tender offer consideration minus the applicable early tender premium.

In addition to the applicable total tender offer consideration or applicable late tender offer consideration, as the case may be, accrued and unpaid interest up to, but not including, the applicable settlement date will be paid in cash on all validly tendered bonds accepted for purchase in the tender offer. The settlement date for the tender offer will be the first business day following the expiration date and currently is expected to be Dec. 21, 2006. Holders of bonds subject to the tender offer who validly tender their bonds on or before the early tender date may not withdraw their bonds after the early tender date except in the limited circumstances described in the offer to purchase. Holders of bonds subject to the tender offer who validly tender their bonds after the early tender date but on or before the expiration date may not withdraw their bonds except in the limited circumstances described in the offer to purchase.

Banc of America Securities LLC, Citigroup Corporate and Investment Banking, J.P. Morgan Securities Inc. are the dealer managers of the tender offer and Barclays Capital, Inc., Deutsche Bank Securities Inc. and Morgan Stanley are serving as co-dealer managers for the tender offer. Global Bondholders Services Corporation has been retained to serve as the depositary and information agent. This news release is neither an offer to purchase nor a solicitation of an offer to sell the notes. The offers are made only by the offer to purchase, and the information in this news release is qualified by reference to the offer to purchase and related letter of transmittal each dated Nov. 22, 2006. Persons with questions regarding the tender offer should contact Banc of America Securities LLC at (toll-free) (866) 475-9886, Citigroup Corporate and Investment Banking at (toll-free) (800) 558-3745 and J.P. Morgan Securities Inc. at (toll-free) (866) 834-4666. Requests for copies of the offer to purchase, letter of transmittal and related materials should be directed to Global Bondholders Services Corporation at (212) 430-3774 or (toll-free) (866) 470-4200.

About International Paper's Transformation Plan

Today's announcement is part of the transformation plan International Paper announced in July 2005 to strengthen the company by:

* focusing on two global platform businesses (uncoated papers and packaging, along with xpedx, its merchant distribution business) and improving profitability of those key businesses; * exploring strategic options, including possible sale or spin-off, for certain assets or businesses; and * using proceeds from divestitures to return value to shareowners, strengthen the company's balance sheet, and selectively reinvest in its two global platform businesses.

Details about the transformation plan and related divestitures are contained in the company's Securities and Exchange Commission filings.

Headquartered in the United States, International Paper has been a leader in the forest products industry for more than 100 years. The company is currently transforming its operations to focus on its global uncoated papers and packaging businesses, which operate and serve customers in the U.S., Europe, South America and Asia. These businesses are complemented by an extensive North American merchant distribution system. International Paper is committed to environmental, economic and social sustainability, and has a long-standing policy of using no wood from endangered forests. To learn more, visit http://www.internationalpaper.com/.

INTERNATIONAL PAPER NOTES SUBJECT TO THE TENDER OFFER Accept- Bloom- Early Aggregate ance Reference berg Fixed Ten- Principal Prior- U.S. Refer- Spread der CUSIP Title of Amount ity Treasury ence (basis Pre- Number Security Outstanding Level Security Page points) mium 158525AQ8 7.75% $123,642,000 1 4.500% U.S. PX1 168 $25.00 debentures Treasury Note due due 2025 Feb. 15, 2036 158525AR6 7.35% $174,995,000 2 4.500% U.S. PX1 168 $25.00 debentures Treasury Note due due 2025 Feb. 15, 2036 460146BD4 6.875% $134,715,000 3 4.500% U.S. PX1 163 $25.00 debentures Treasury Note due due 2029 Feb. 15, 2036 158525AT2 7.20% $200,000,000 4 4.500% U.S. PX1 168 $25.00 debentures Treasury Note due due 2026 Feb. 15, 2036 158525AV7 7.15% $80,175,000 5 4.500% U.S. PX1 173 $25.00 debentures Treasury Note due due 2027 Feb. 15, 2036 460146AP8 6.875% $190,000,000 6 4.500% U.S. PX1 165 $25.00 debentures Treasury Note due due 2023 Feb. 15, 2036 313693AD5 10% $23,421,000 7 4.625% U.S. PX1 63 $10.00 debentures Treasury Note due due 2011 Oct. 31, 2011 313693AF0 8.875% $95,855,000 8 4.625% U.S. PX1 68 $10.00 debentures Treasury Note due due 2012 Nov. 15, 2016 460146BS1 3.80% $288,085,000 9 4.875% U.S. PX1 50 $5.00 notes Treasury Note due due 2008 Oct. 31, 2008 905530AH4 9.25% $124,800,000 10 4.625% U.S. PX1 58 $10.00 debentures Treasury Note due due 2011 Oct. 31, 2011 460146BN2 6.75% $768,634,000 11 4.625% U.S. PX1 53 $10.00 notes Treasury Note due due 2011 Oct. 31, 2011 460146BX0 5.50% $351,301,000 12 4.625% U.S. PX1 95 $10.00 notes Treasury Note due due 2014 Nov. 15, 2016 460146BQ5 5.85% $802,771,000 13 4.625% U.S. PX1 58 $10.00 notes Treasury Note due due 2012 Nov. 15, 2016 460146BV4 4.25% $407,115,000 14 4.875% U.S. PX1 50 $5.00 notes Treasury Note due due 2009 Oct. 31, 2008 460146BU6 5.30% $451,588,000 15 4.625% U.S. PX1 105 $10.00 notes Treasury Note due due 2015 Nov. 15, 2016 460146BZ5 5.25% $281,120,000 16 4.625% U.S. PX1 113 $10.00 notes Treasury Note due due 2016 Nov. 15, 2016 460146BY8 4.00% $414,350,000 17 4.625% U.S. PX1 50 $5.00 notes Treasury Note due due 2010 Nov. 15, 2009 158525AU9 6.65% $100,000,000 18 4.500% U.S. PX1 160 $25.00 notes Treasury Note due due 2037 Feb. 15, 2036

This press release may contain "forward-looking statements." Such forward- looking statements may include, without limitation, statements about the company's market opportunities, strategies, competition and expected activities and expenditures, and at times may be identified by the use of words such as "may," "will," "could," "should," "would," "project," "believe," "anticipate," "expect," "plan," "estimate," "forecast," "potential," "intend," "continue" and variations of these words or comparable words. Forward-looking statements are based on current expectations and assumptions, and inherently involve risks and uncertainties. Accordingly, actual results may differ materially from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the following: the amount of notes tendered; the tender offer consideration paid by the company for each series of notes (which is dependent on the bid-side price of the applicable U.S. Treasury Security on the second business day preceding the expiration date); and satisfaction of the conditions of the Tender Offer contained in the Offer to Purchase. Other factors that could cause or contribute to actual results differing materially from such forward looking statements are discussed in greater detail in the company's Securities and Exchange Commission filings. You should not place undue reliance on our forward-looking statements, which speak only as of the date of this press release. We undertake no obligation to make any revision to the forward-looking statements contained in this press release or to update them to reflect events or circumstances occurring after the date of this press release.