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August 2007

Merger of Cascades’s European cartonboard business possible

Reno De Medici S.p.A. (RdM) and Cascades Inc. (Cascades Inc.) announced the signing of a Letter of Intent for the negotiation, on an exclusive basis, of the terms and conditions of a combination of RdM and the European recycled cartonboard business of Cascades S.A.

Based on current estimates, the new company would achieve approximately 15-20 million euros in annualized synergies beginning in 2008. These initial estimates will be finalized subsequent to completion of reciprocal due diligence.

The combination would be structured in two steps:

1. Combination of RdM and Cascades S.A.’s recycled cartonboard business located in Blendecques, France and Arnsberg, Germany as well as its sheeting operations in Wednesbury, England.

For the purpose of the merger, Cascades S.A. would reorganize its recycled cartonboard business by contributing it, debt free, to a newly incorporated Italian subsidiary of Cascades S.A. which would then be merged into RdM in exchange for approximately 115.6 million RdM ordinary shares (in the form of either all newly issued shares or a combination of newly issued shares and existing treasury shares). The merger was expected to be based on the half year financial statements as of June 30, 2007.

2. Potential combination of Cascades SA’s virgin fibre cartonboard assets located in La Rochette, France and Djupafors, Sweden pursuant to the possible exercise of a call option (Call) by RdM or a put option (Put) by Cascades Inc. The Call would be exercisable in the 60 days following the availability of 2009 audited financial results for the virgin assets at a price equivalent to 6.5 times the 2009 audited EBITDA; the Put would be exercisable at Cascades Inc.’s discretion during the 180 days following the end of 2010 at a price equivalent to 6.0 times the 2010 audited EBITDA.

After the merger, a new sales structure would be created through a joint venture between Cascades S.A. and Reno de Medici.

Management of Cascades S.A. would join RdM management. The new group headquarters would continue to be in Milan, Italy.

The combination is subject to reciprocal due diligence, the negotiation and signing of definitive agreements which the parties expect to complete by September 2007, as well as the approval of the Board of Directors of RdM, Cascades Inc., and Cascades S.A.’s Italian subsidiary and the delivery of the report on the fairness of the exchange ratio by the auditing firm pursuant to applicable Italian law, the approval of the shareholders of RdM by special resolution at a meeting called specifically for this purpose, the approval of the appropriate anti-trust and regulatory authorities, to the transaction not being subject to mandatory tender offer requirements for RdM shares in Italy and in Spain, and to customary closing conditions.

The merger is expected to be effective by the end of 2007.