releases
Eastern European Markets
PRESS RELEASE
June x, 2005

UPM acquires entire share capital of Russian wood products company ZAO Chudovo-RWS, The purchase price will consist of UPM's shares

UPM is to acquire 40% minority shareholding in ZAO Chudovo-RWS from the shareholders of UPM's Russian partner Novgorodlesprom. The purchase price will consist of 738,000 UPM's shares. The shares will be disposed of at the price of closing quotation on June 9, 2005 in connection with the transaction. The total value of the transaction will be approximately EUR 12 million.

UPM's Board of Directors decided on the disposal of UPM's own shares as payment in company acquisition, as authorised by the Annual General Meeting on March 31, 2005. After the transaction, UPM retains a total of 162,000 company's own shares.

After the transaction, UPM owns 100% of ZAO Chudovo-RWS producing plywood and veneers in Russia, and its sawmilling subsidiary ZAO Pestovo Novo.

The Chudovo mills have an annual production of 75,000 cubic metres of birch plywood and 10 million square metres of birch veneer. Most of the production is exported, mainly to Central European markets. The plywood is mostly supplied to the construction industry and the veneer to the furniture and interior design industry. The Chudovo mills both carry the ISO 9001 and ISO 14001 quality and environmental certificates. The mills employ approximately 600 people.

The annual production capacity of the Pestovo sawmill is 300,000 cubic metres of sawn whitewood. Most of the production of the plant, which started operations in 2004, is exported to the European and Asian markets for use in the building industry. The Pestovo sawmill employs approximately 140 people.

ZAO Chudovo-RWS was one of the first Finno-Russian joint companies in the Soviet era. It was established in 1988 by the Soviet company Novgorodlesprom and Finnish companies Raute and Wilh. Schauman, which was one of UPM's predecessor companies. In 2002, UPM acquired Raute’s shares in the company. The veneer mill started up at the beginning of 2003. Both the Chudovo and Pestovo mills are located in the province of Novgorod.

For further information
Mr Kari Toikka, CFO, UPM, tel. +358 204 15 0014
Mr Harald Finne, President, UPM Wood Products Division, tel. +358 40 519 1951
Mr Arto Juvonen, Vice President, Russian Operations, UPM, tel. +7 095 991 13 47

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