Nippon Paper Industries Co., Ltd. (President: Masatomo Nakamura; hereinafter "the Company") and Daiwa Securities SMBC Principal Investments Co., Ltd. (Head Office: Chiyoda-ku, Tokyo; President: Hideo Watanabe; hereinafter "Daiwa Securities SMBCPI") today concluded an agreement to transfer all shares of Asahikawa Grand Hotel Co., Ltd. (Head Office: Asahikawa City, Hokkaido; President: Yukinobu Sato), a wholly owned subsidiary of the Company, to an affiliate of Daiwa Securities SMBCPI. (The share transfer is scheduled to take place by the end of September 2007.)

The history of the Nippon Paper Group's hotel business dates back to 1951, when New Hokkai Hotel Co., Ltd. was established in Asahikawa City. For 56 years, the hotel has been widely noted for its prestigious status and tradition. During this period, the Company has sought to increase earnings and raise service standards, while concentrating its management resources on Asahikawa Grand Hotel after closing New Hokkai Hotel in 2004.

However, the business environment surrounding the hotel industry is undergoing great change. Faced with diversifying customer needs, hotels are finding it difficult to establish effective strategies to attract guests. As a consequence, a number of operational alliances have been formed in recent years to make effective use of brands and to introduce advanced management expertise.

Consequently, the Company has decided to hand over the management of Asahikawa Grand Hotel to Daiwa Securities SMBCPI, which has been actively investing in a broad range of assets, including hotels and Japanese-style inns. The Company expects that the business value of Asahikawa Grand Hotel will be further developed by Daiwa Securities SMBCPI through possible alliances with its other investment targets, such as GRANVISTA Hotels & Resorts Co., Ltd. (formerly Mitsui Kanko Development Co., Ltd.), which has a solid management base in Hokkaido and a nationwide sales network.

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