VANCOUVER, BRITISH COLUMBIA -- Fortress Paper Ltd. pleased announced Monday that its wholly-owned subsidiary Landqart AG has entered into a purchase agreement with GAM Investment Management (Switzerland) AG on behalf of Procimmo Swiss Commercial Fund II (the "Purchaser") for the sale of its lands and buildings related to its security paper business located in Landquart, Switzerland, for the aggregate purchase price of CHF 44,500,000 (approximately CDN$59 million), subject to customary conveyancing adjustments.

The closing of the Purchase Agreement is subject to certain customary conditions for transactions of this nature including the Purchaser obtaining financing. Landqart has received a deposit for the purchase price in the amount of CHF 500,000 (approximately CDN$660,000), which Landqart may retain if the Purchaser's financing condition is not satisfied.

The Purchaser is one of the five investment funds of Procimmo SA ("Procimmo"), an asset manager of collective real estate investment projects totaling approximately CHF 1.7 billion with its head offices located in Switzerland. Each of Procimmo's five investment funds is approved by the Financial Market Supervisory Authority, the Swiss regulatory body responsible for financial regulation in that country. The Purchaser, an open-end fund available exclusively to qualified investors, invests primarily in commercial buildings, industrial and artisanal buildings and office space outside of city centres.

The Purchase Agreement provides that upon closing, substantially all of the lands and buildings that are the subject of the Purchase Agreement will be leased back to Landqart pursuant to a 20-year triple-net lease, to ensure the ongoing operation of its security paper business. The lease is renewable for an additional two 10-year periods on the same terms and conditions as the primary lease with Landqart having certain repurchase rights.

The completion of the transaction is expected to occur prior to July 21, 2016. Net proceeds are expected to be used to repay the Company's convertible debentures and for general corporate purposes.

Yvon Pelletier, President and Chief Executive Officer of Fortress Paper, commented: "The sale and leaseback of the land and buildings located at the Landqart Mill represents an excellent opportunity for Fortress Paper to enhance its balance sheet and improve its financial flexibility. We remain excited about the future prospects of the Landqart Mill as we continue to focus on improving operations and expanding market share for our promising new Durasafe substrate."

"This is an important milestone for the Company," stated Chadwick Wasilenkoff, Executive Chairman of Fortress Paper. "The sale and leaseback transaction represents the culmination of a legacy project that is consistent with the Company's strategy of unlocking intrinsic value. With renewed financial flexibility, the Company will be able to pursue additional value creating alternatives, including implementing high return capital projects and expanding our portfolio of growth companies."