Holmen initiates negotiations to close down business at Wargön Mill

Holmen initiates negotiations to close down business at Wargön Mill

Holmen's Board has today decided to initiate negotiations to close down the
business at Holmen Paper Wargön − Wargön Mill. The intention is for production
to be totally discontinued in December 2008.

The profitability of Wargön Mill has long been unsatisfactory. It has not been
possible to obtain compensation on the market for steep increases in the cost of
wood, energy and other input goods by raising selling prices. An upgrading of
the mill requires considerable investments, but would still not be sufficient to
reach an acceptable level of competitiveness and profitability.

“Unfortunately, we have not succeeded in breaking this trend despite the
dedicated efforts of all the personnel and various measures in the form of
investments, production increases, and product development in recent years.
Closing down Wargön Mill is the only rational decision and we regret that we
have arrived at this conclusion,” says Magnus Hall, Holmen's President and CEO.
“The market for coated printing paper is highly competitive and Wargön Mill is
one of the smallest mills in Europe manufacturing equivalent grades of paper.”

Wargön Mill is a member of the Holmen Paper business area and has an annual
output of 145,000 tonnes of coated magazine paper for magazines and advertising
print. Turnover in 2007 amounted to just under MSEK 900, and the fixed assets in
the business amounts to around MSEK 100. The mill has some 340 employees. This
change will also affect parts of Holmen Paper's central organisation and sales
companies, but not the other mills.

Holmen Paper is one of Europe's leading producers of newsprint and magazine
paper with an annual output of some two million tonnes. Three paper mills in
Sweden - Braviken, Hallsta and Wargön - and one in Madrid have a total of some
2,700 employees. Turnover in 2007 amounted to just over SEK 10 billion.
For further information please contact 
Magnus Hall, President and CEO, Holmen AB, +46 8 666 21 05
Ingela Carlsson, Public Relations Director, Holmen AB; +46 70 212 97 12
Arne Wallin, President, Holmen Paper AB; +46 11 23 66 28
Anders Lyngenberg, Public Communications Manager, Holmen Paper AB; +46 70 570 05
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In its capacity as issuer, Holmen AB is releasing the information in this press
release in accordance with Chapter 17 of the Swedish law (2007:528) regarding
the securities market. The information was distributed to the media for
publication at 11.58 a.m. CEST on Wednesday 13 August 2008.