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Fortress Paper will sell Fortress Optical Features to Nanotech Security

NORTH VANCOUVER, British Columbia -- Fortress Paper Ltd. announced that it has, through a wholly-owned subsidiary, entered into a share and loan purchase agreement with Nanotech Security Corp., as purchaser, for the sale of all of the shares of its wholly-owned subsidiary, Fortress Optical Features Ltd. ("FOF"), and shareholder loans, for an aggregate purchase price of up to $17.5 million, subject to a working capital adjustment and earn-out.

The Purchase Price is comprised of $7 million cash, a $3 million secured note, and 5 million common shares of Nanotech at a deemed price of $1.50 per share, 3 million of which shares are to be held in escrow and released to the Company upon the achievement of certain business milestones by FOF and/or Nanotech over a five year period. The transaction is expected to close on or about September 10, 2014 and is subject to certain customary conditions, including Nanotech's required approval from the TSX Venture Exchange and receipt of requisite financing.

Pursuant to the terms of the Purchase Agreement, FOF will enter into an agreement to continue to supply optically variable thin film material ("OTM") to the Company's Landqart Mill.

Chadwick Wasilenkoff, CEO of Fortress Paper, commented: "The sale of FOF is in line with our strategic plan to focus on the dissolving pulp and security paper products segments, enhance liquidity, as well as unlocking shareholder value. Fortress originally acquired FOF to complement its business at Landqart. The ongoing supply of OTM to Landqart following the sale will preserve this relationship including established synergies, and provide access to volumes at favoured prices going forward. We would like to acknowledge the contributions made by the management of FOF over the years, and we look forward to continuing our business relations with them and Nanotech."

Fortress Paper operates internationally in two distinct business segments: dissolving pulp and security paper products.

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