International Paper Announces Consideration for Debt Tender Offer

MEMPHIS, Tenn., Dec. 18 /PRNewswire-FirstCall/ -- International Paper today announced the applicable reference yields and tender offer consideration for its previously announced debt tender offer. The company has offered to purchase a portion of its debt securities specified in the table below, subject to a total purchase price of $2.35 billion, excluding accrued interest, fees and expenses. The full terms and conditions of the tender offer are set forth in the company's offer to purchase dated Nov. 22, 2006, and related letter of transmittal.

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The total tender offer consideration for each series of notes subject to the tender offer is based on the applicable reference yield plus a fixed spread, each as set forth in the table below. The applicable reference yields were determined today at 2 p.m., New York City time, by the joint dealer managers. Holders of notes properly submitted and accepted by the early tender date (5 p.m. New York City time, on Dec. 6, 2006) will receive the total tender offer consideration. Holders of notes properly submitted and accepted after the early tender date but before the expiration of the tender offer will receive the late tender offer consideration. The late tender offer consideration is the applicable full tender offer consideration minus the applicable early tender premium. All payments for notes accepted for purchase in the tender offer will include accrued and unpaid interest, as set forth in the table below, on the principal amount tendered up to, but not including, the settlement date for the tender offer, which is currently expected to be Dec. 21, 2006, unless extended by the company.

The amount 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 midnight, New York City time, on Dec. 20, 2006, unless extended by the company.

Banc of America Securities LLC, Citigroup Global Markets Inc., J.P. Morgan Securities Inc. are the joint 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 Bondholder 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 tender offer is 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. Persons with questions regarding the tender offer should contact Banc of America Securities LLC at (toll-free) (866) 475-9886, Citigroup Global Markets Inc. at (toll- free) (800) 558-3745 and J.P. Morgan Securities Inc. at (toll-free) (866) 834- 4666. Questions regarding the tendering of notes or requests for copies of the offer to purchase, letter of transmittal and related materials should be directed to Global Bondholder Services Corporation at (212) 430-3774 or (toll- free) (866) 470-4200.

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, as well as xpedx, 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/.

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; and satisfaction of the conditions of the tender offer contained in the offer to purchase and related letter of transmittal. 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.

INTERNATIONAL PAPER NOTES SUBJECT TO THE TENDER OFFER Acceptance Reference Title of Priority U.S. Treasury Reference Security Level Security Yield 7.75% Debentures 4.50% U.S. Treasury due 2025 1 Note due Feb. 15, 2036 4.720% 7.35% Debentures 4.50% U.S. Treasury due 2025 2 Note due Feb. 15, 2036 4.720% 6.875% Debentures 4.50% U.S. Treasury due 2029 3 Note due Feb. 15, 2036 4.720% 7.20% Debentures 4.50% U.S. Treasury due 2026 4 Note due Feb. 15, 2036 4.720% 7.15% Debentures 4.50% U.S. Treasury due 2027 5 Note due Feb. 15, 2036 4.720% 6.875% Debentures 4.50% U.S. Treasury due 2023 6 Note due Feb. 15, 2036 4.720% 10.0% Debentures 4.625% U.S. Treasury due 2011 7 Note due Oct. 31, 2011 4.580% 8.875% Debentures 4.625% U.S. Treasury due 2012 8 Note due Nov. 15, 2016 4.599% 3.80% Notes 4.875% U.S. Treasury due 2008 9 Note due Oct. 31, 2008 4.757% 9.25% Debentures 4.625% U.S. Treasury due 2011 10 Note due Oct. 31, 2011 4.580% 6.75% Notes 4.625% U.S. Treasury due 2011 11 Note due Oct. 31, 2011 4.580% 5.50% Notes 4.625% U.S. Treasury due 2014 12 Note due Nov. 15, 2016 4.599% 5.85% Notes 4.625% U.S. Treasury due 2012 13 Note due Nov. 15, 2016 4.599% Total Tender Late Tender Offer Offer Accrued Consideration Consideration Interest per Fixed per $1,000 per $1,000 $1,000 Spread Principal Principal Principal Title of (basis Amount of Amount of Amount of Security points) Notes Notes Notes(1) 7.75% Debentures due 2025 168 $1,145.83 $1,120.83 $23.68 7.35% Debentures due 2025 168 $1,103.08 $1,078.08 $10.21 6.875% Debentures due 2029 163 $1,062.06 $1,037.06 $12.60 7.20% Debentures due 2026 168 $1,089.12 $1,064.12 $10.00 7.15% Debentures due 2027 173 $1,079.87 $1,054.87 $1.19 6.875% Debentures due 2023 165 $1,051.63 $1,026.63 $9.55 10.0% Debentures due 2011 63 $1,182.90 $1,172.90 $18.33 8.875% Debentures due 2012 68 $1,170.44 $1,160.44 $41.91 3.80% Notes due 2008 50 $982.16 $977.16 $8.44 9.25% Debentures due 2011 58 $1,149.68 $1,139.68 $35.97 6.75% Notes due 2011 53 $1,067.59 $1,057.59 $20.63 5.50% Notes due 2014 95 $997.12 $987.12 $23.83 5.85% Notes due 2012 58 $1,033.46 $1,023.46 $8.29 (1) Accrued interest assumes settlement on December 21, 2006.