Sappi - Proposed acquisition by Sappi of certain paper and pulp assets of

Potlatch Corporation ("Potlatch")
Sappi Limited
(Incorporated in the Republic of South Africa)
(Registration number 1936/008963/06)
(ISIN code ZAE 000006284)
(Share code SAP)
("Sappi")

Proposed acquisition by Sappi of certain paper and pulp assets of Potlatch
Corporation ("Potlatch")
1. Introduction

Sappi, the world leader in coated fine paper, hereby announces that it is to
buy Potlatch's coated paper business and its Cloquet, Minnesota pulp and
paper mill for R5.6 billion/US$480 million (based on the Rand/US Dollar
exchange rate of 11.7175 as of 15 March 2002) in cash (the "Purchase
Price").
2. Description of Assets

Sappi is acquiring the coated paper business of Potlatch, a North American
diversified forest products company. The transaction includes the following
assets:

i. a pulp and paper mill, with an annual paper capacity of 260,000 tons and
an annual pulp design capacity of 450,000 short tons, located in Cloquet,
Minnesota; and

ii. the order books and brands associated with Potlatch's Cloquet and
Brainerd facilities
(collectively, the "Acquisition").

For clarity, Sappi is acquiring only the order book and brands associated
with the Brainerd facility; the Brainerd paper mill will not be acquired by
Sappi. The production from the Brainerd mill will be transitioned to

existing Sappi mills, and Potlatch will exit the coated paper business,
bearing the costs relating to Brainerd.
3. Benefits to Sappi

The purchase provides a compelling opportunity to advance both Sappi's
strategic and financial agendas. The acquired businesses are an excellent
fit with Sappi's existing operations in North America and Europe. A

complementary product line and customer base should allow Sappi to capture
substantial synergies immediately. The integration of the Potlatch assets
and transfer of the business from the Brainerd mill to Sappi's existing
mills in North America and Europe will materially strengthen the

competitiveness and profitability of Sappi's entire North American

operations. Sappi is highly confident that the US$480 million investment
will quickly generate returns that significantly exceed its cost of capital.
Because Sappi has the capacity to supply volume equivalent to Brainerd's
output from its existing facilities in the US or elsewhere, it will be able
to avoid the US$60 million a year of overhead costs that was associated with
operating the Brainerd facility which produces 140,000 short tons per annum.
Potlatch will bear any costs related to Brainerd. In addition to the

Brainerd overhead costs, Sappi has identified a further US$60 million of
savings and synergies which will be achieved within 12 months.  These
synergies consist of US$20 million of pulp efficiencies as well as

rationalisation in logistics, procurement and other administrative overheads
of US$40 million. The total one-time costs to achieve these savings and
synergies are not expected to exceed US$20 million.

Potlatch produces excellent and well-known paper grades, in particular McCoy
and Vintage, and is well known in the American designer and print community.
Potlatch's brands complement Sappi's own brand mix. The combined operation
will be better able to service Sappi's customers and will increase Sappi's
share of coated fine paper sales in the USA to 30%.  The Acquisition re-
affirms Sappi's leadership position in the market segment.

The Cloquet pulp facility has only recently started up and had initial start
up problems.  Bringing Sappi's knowledge of pulp manufacturing to this
facility would improve its performance, and Sappi is confident there is
potential to increase the pulp margins even at existing prices by US$20
million a year.

Imported coated sheets now account for nearly 50% of the sheet fed market,
and American printers are changing to European style double and triple
coated sheets because of price and performance.  These products are less
costly to manufacture than the traditional US grades and provide a superior
surface.

Sappi's Somerset and Belgrade range remain the pre-eminent number three
(#3/4) grades but Sappi has been looking for a facility to manufacture
European style grades in America for some time.  To date Sappi supplies
these grades from its own European facilities.  By acquiring Cloquet, Sappi
will be able to convert the Cloquet coater with minimal investment to make
these products in the short term in the USA.

In the longer term Cloquet will enable Sappi to build a modern machine in
the USA and to close down some of the less competitive facilities in the
Sappi system in the future.  Clearly Sappi will only build a new machine
when the market is ready and when the new equipment will have no material
impact on Sappi's supply balance.

Sappi has indentified US$120 million per annum of synergies and savings as a
result of this transaction.  The Acquisition will be accretive in the
current financial year.

The Acquisition meets all of Sappi's strategic criteria.  It is the right
site, it has growth capability, it is accretive to earnings immediately, the
returns significantly exceed Sappi's cost of capital, and the investment is,
in Sappi's judgement, better than Sappi buying back its own shares.  The
share buy-back programme will continue at a modest rate until the
Acquisition is bedded down.
4. Purchase consideration

The Sappi Group (the "Group") has existing financing facilities to cover the
transaction at very competitive interest rates, and net debt-to-total
capitalisation will be approximately 44% immediately after the Acquisition
which is within the Group's target of 25% to 50% range.  In addition,
because of the accelerated use of accumulated losses in a European

subsidiary through which the Acquisition will be funded, the after tax
holding cost will be very low.

The Purchase Price represents an effective US$980 per annual metric ton for
the Cloquet facility, which is an attractive price for a modern unit, and
Sappi gets a bonus of 140,000 tons of additional business and no further
cost.

Sappi does not expect the Acquisition to affect Sappi's BBB credit rating.
5. Financial effects of the Acquisition on Sappi

Given the nature of the Acquisition, all financial information for the
acquired assets is based on historical management information. Pro-forma
Earnings Before Interest, Tax, Depreciation and Amortisation ("EBITDA")
(after adjustments for one-time charges) attributable to the acquired assets
for the last 12 months ended 31 December 2001 are US$95 million/R802

million. EBITDA for the Brainerd facility is equal to Net Revenue less
Variable Costs, assuming the transfer of all production to Cloquet and other
Sappi mills.  Sappi expects to channel the existing Brainerd capacity
through Cloquet and other Sappi mills as they can accommodate the additional
volumes without incurring additional fixed costs. The Net Asset Value of the
acquired assets as of 31 December 2001 is approximately US$650 million/R7.9
billion.  As listed below, expected benefits as a result of rationalisation
in logistics, procurement and other administration overheads and pulp
manufacturing improvements efficiencies have not been included.

The pro-forma financial effects of the Acquisition on a per Sappi share
basis set out below are for illustrative purposes only and, by nature, may
not provide a true picture of Sappi's financial position or results of
operations.
Period from
1 Jan to

31 Dec 2001                                         Increase/

                                                   (Decrease)

                  Notes    Before            After        (%)

                        USUS$   Rands    USUS$   Rands
Headline Earnings

per Sappi Share    1,2,4  0.93    7.88     1.12    9.47     20
Net Asset Value

per Sappi Share      3,4  7.15   85.16     7.15   85.16      -
Notes:

1. Headline Earnings per Share are calculated using published results for
Sappi and historical management reporting information for the acquired
assets, as if the transaction took place with effect from 1 January 2001.
2. Headline Earnings per Share are calculated by adjusting EBITDA for the
acquired assets as follows:

2.1. EBITDA for the Cloquet facility adjusted by US$5 million/R45 million
for the non-recurring write-off of bad debts and US$6 million/R47 million
for stock write downs,

2.2. Depreciation and Amortisation on the acquired assets of US$25

million/R210 million calculated based on the Purchase Price using Sappi's
depreciation policy,

2.3. Interest charged at 5% per annum for the financing of the Acquisition,
and

2.4. Tax of US$4 million/R30 million after taking into consideration the tax
benefit of US$15 million/R129 million based on the financing structure and
the accelerated use of existing tax losses.

3. Net Asset Value is calculated as if the Acquisition occurred on 31
December 2001. There is no pro-forma effect of the Acquisition on Sappi's
Net Asset Value at 31 December 2001 as it assumes net assets will be booked
at fair value which should approximate US$480 million and not at Potlatch's
carrying cost.

4. The average Rand/US Dollar exchange rate for the 12 month period ended 31
December 2001 is 8.4194, and the spot rate on 31 December 2001 is 11.9100.
6. Conditions precedent

The Acquisition is subject to a number of conditions precedent, including,
inter alia, the fulfillment of the following conditions:

 the prerequisite rulings and approvals of the relevant regulatory

authorities, including anti-trust authorities, and
 receipt of other necessary consents and permits.
The Acquisition is expected to close in May 2002.
7. Further announcements

Sappi shareholders will be notified of progress in the fulfillment of the
conditions precedent.
8. Forward Looking Statements

Certain statements in this release that are neither reported financial
results nor other historical information, are forward-looking statements,
including but not limited to statements that are predictions of or indicate
future earnings, savings, synergies, events, trends, plans or objectives.
Undue reliance should not be placed on such statements because, by their
nature, they are subject to known and unknown risks and uncertainties and
can be affected by other factors, that could cause actual results and
company plans and objectives to differ materially from those expressed or
implied in the forward-looking statements (or from past results).  Such
risks, uncertainties and factors include, but are not limited to the highly
cyclical nature of the pulp and paper industry (and the factors that

contribute to such cyclicality, such as levels of demand, production

capacity, production and pricing), adverse changes in the markets for the
group's products, consequences of substantial leverage, changing regulatory
requirements, unanticipated production disruptions, economic and political
conditions in international markets, the impact of investments, acquisitions
and dispositions (including related financing), any delays, unexpected costs
or other problems experienced with integrating acquisitions and achieving
expected savings and synergies and currency fluctuations.  The company
undertakes no obligation to publicly update or revise any of these forward-
looking statements, whether to reflect new information or future events or
circumstances or otherwise.

Morgan Stanley is acting for Sappi in connection with this transaction and
no one else and will not be responsible to anyone other than Sappi for
providing the protections offered to clients of Morgan Stanley nor for
providing advice in relation to this transaction.
Johannesburg
18 March 2002
Financial adviser
Morgan Stanley & Co. Limited
Registered in England
Registration number 2164628
Regulated by the Financial Services Authority
Sponsor
UBS WARBURG
A financial services group of UBS AG
Member of the JSE Securities Exchange
Registration number 1995/011140/07