Tembec proposes Issue to Finance the Acquisition of the Remaining Shares of Spruce Falls Acquisition Corp.

MONTREAL--(BUSINESS WIRE)--Feb. 10, 1997--TEMBEC (ME;TSE:TBC.A) Tembec announced today that its board of directors has approved the filing of a preliminary short form prospectus relating to a public offering of approximately $75 million, the proceeds from which will be used, together with the proceeds from an acquisition bank loan, to fund a proposed acquisition of the shares of Spruce Falls Acquisition Corp. ("SFAC") not owned by Tembec. The offering will consist of subscriptions receipts, each representing the right to receive one Class A share of Tembec upon the successful completion of the proposed acquisition. The offering will be made by a syndicate of underwriters led by Nesbitt Burns Inc.

Subject to the conditions mentioned below, Tembec intends to offer to all the holders of SFAC shares (i) one Class A share of Tembec (the "Share Option") or (ii) $7.00 cash and 0.3 Class A share of Tembec (the "Combination Option"), at their option, for each SFAC share, provided that a minimum of 5,000,000 Class A shares and a maximum of 12,157,000 Class A shares, subject to the adjustment mentioned below, can be issued under the offer. Shareholders will be deemed to have elected pro rata the Share Option or the Combination Option, as the case may be, to the extent necessary to be within the limitations set forth above. Should the average market price, as defined in the offer, of the Class A shares be below $10.00, Tembec will ensure a minimum value of $10.00 per share by the issuance of additional Class A shares or a cash payment.

The making of the offer to SFAC shareholders is subject to (i) the successful completion of the offering of the subscription receipts, (ii) a recommendation by the board of directors of SFAC to its shareholders to accept the offer as being fair, and (iii) no circumstances existing or event having occurred that renders it impracticable for the conditions of the offer to be satisfied. The offer would be subject to a number of conditions including (i) at least 66 2/3 percent of each of the Class 1 special shares, Class 2 restricted voting special shares and Class 3 restricted voting special shares, on fully diluted basis, having been validly tendered under the offer and not withdrawn, (ii) all options outstanding having been exercised in full or cancelled, (iii) the termination of the Shareholders Agreement entered into, among others, holders of Class 1 special shares, holders of Class 3 restricted voting special shares, Spruce Falls Inc. and Tembec, and (iv) all necessary consents and approvals having been obtained.

Tembec also announced that it will be issuing, upon successful completion of the proposed offer, an additional 0.3 Class A share of Tembec to the holders of 1,032,081 Class 1 special shares and the 1,170,362 Class 3 restricted voting special shares of SFAC to be purchased on February 11, 1997, as announced on January 22, 1997. Tembec will own, upon completion of such purchase, approximately 51 percent of the outstanding equity of SFAC. The offer will be made for the approximately 17.5 million shares of SFAC outstanding on a fully diluted basis, not owned by Tembec following this purchase.

The acquisition of the SFAC shares would improve Tembec's working capital and Tembec believes that a combination of Tembec and SFAC would result in a stronger company with the ability to compete more effectively in its forest products markets in North America.

Tembec is a major Canadian integrated forest products company principally involved in the production of specialty market pulp, lumber, oriented structural board, paperboard and, through its interests in Spruce Falls Inc. and Malette Quebec Inc., newsprint and machine finish coated paper. Tembec's principal manufacturing facilities are located in northwestern Quebec and northeastern Ontario.

CONTACT: Tembec Inc.

Thomas W. Laberge, 514/871-0137