Third Quarter and Nine Month Operational Snapshot Selected production, sales and exchange rate data for the three and nine months ended September 30, 2009 and 2008 is as follows:

                                                       Three Months Ended                   Nine Months Ended
                                                         September 30,                        September 30,
                                                     2009              2008              2009               2008
Pulp Production ('000 ADMTs)                         345.8             368.4            1,040.6            1,086.1
Scheduled Production Downtime ('000 ADMTs)            35.4               9.0               38.1               26.0
Pulp Sales ('000 ADMTs)                              361.6             363.8            1,093.7            1,059.2
Pulp Revenues (in millions)                       €  145.9          €  178.6          €   422.4          €   528.3
NBSK pulp list prices in Europe ($/ADMT)          $    693          $    878          $     627          $     886
NBSK pulp list prices in Europe (€/ADMT)          €    485          €    585          €     459          €     582
Average pulp sales realizations (€/ADMT)(1)       €    397          €    484          €     380          €     493

Energy Production ('000 MWh)                         354.4             377.3            1,086.7            1,107.8
Energy Sales ('000 MWh)                              121.8             119.5              362.6              348.2
Energy Revenue (in millions)                      €   10.4          €    6.2          €    32.3          €    20.0
Average energy sales realizations (€/MWh)         €     85          €     52          €      89          €      57

Average Spot Currency Exchange Rates(2)
€ / $                                               0.6990            0.6658             0.7323             0.6572
C$ / $                                              1.0974            1.0416             1.1699             1.0185
C$ / €                                              1.5694            1.5620             1.5934             1.5486

(1) List price less discounts and commissions.

(2) Average Bank of Canada noon spot rates over the reporting period.

Three Months Ended September 30, 2009 Compared to Three Months Ended September 30, 2008
Pulp revenues for the three months ended September 30, 2009 decreased by approximately 18.3% to €145.9 million from €178.6 million in the comparative quarter of 2008, primarily due to lower pulp prices. Revenues from the sale of excess energy increased by approximately 67.7% in the third quarter to €10.4 million from €6.2 million in the same quarter last year as a result of the higher tariffs in effect under Germany's Renewable Energy Resources Act. Pulp sales volume decreased slightly to 361,627 ADMTs in the current quarter from 363,775 ADMTs in the comparative period of 2008. In the third quarter of 2009, average pulp sales realizations decreased by approximately 18.0% to €397 per ADMT from €484 per ADMT in the same period last year, primarily due to lower pulp prices.
Pulp prices in the third quarter of 2009 were lower than in the same period last year due to continued weakness in pulp markets. List prices for NBSK pulp in Europe were approximately €485 ($693) per ADMT in the current quarter compared to approximately €585 ($878) per ADMT in the third quarter of 2008. Pulp production decreased to 345,833 ADMTs in the current quarter from 368,378 ADMTs in the same quarter of 2008 primarily as a result of 30 days of scheduled maintenance shutdowns at our German mills. In the comparative quarter of 2008, we had only ten days of scheduled maintenance downtime.
FORM 10-Q
QUARTERLY REPORT - PAGE 30

During the third quarter of 2009, our pulp inventories decreased by approximately 22.2% to €20.3 million from €26.1 million at the end of the prior quarter, primarily due to lower production as a result of the scheduled maintenance shutdowns at our German mills. Our raw material inventories increased to €25.2 million in the current quarter from €21.0 million at the end of the second quarter of 2009 as a result of lower production and commencement of our regular seasonal build-up.
Costs and expenses in the third quarter of 2009 decreased to €156.7 million from €175.0 million in the comparative period of 2008, primarily due to lower pulp production and operating costs.
In the third quarter of 2009, operating depreciation and amortization decreased slightly to €13.4 million from €14.0 million in the same quarter last year. Overall, our fiber costs decreased by approximately 17.9% in the third quarter of 2009 from the same period in 2008. Fiber costs at our German mills were lower as demand from the European board industry remains limited. At our Celgar mill, fiber costs continue to benefit from improved woodroom performance and decreased reliance on fiber sourced from third party field chippers. As we move into the final quarter of the year, we expect some upward pressure in pricing for our German mills due to restocking by pulp and paper producers, seasonal demand for firewood and low harvesting rates.
For the third quarter of 2009, we recorded an operating loss of €0.5 million compared to operating income of €9.9 million in the comparative quarter of 2008, primarily due to lower price realizations.
Interest expense in the third quarter of 2009 decreased marginally to €16.1 million from €16.4 million in the comparative quarter of 2008. Our Stendal mill recorded an unrealized loss of €3.3 million on its interest rate derivatives at the end of the current quarter, compared to an unrealized loss of €8.2 million in the same period last year.
In the third quarter of 2009, we recorded a foreign exchange gain of €3.8 million on our foreign currency denominated debt compared to a loss of €9.6 million in the same period of 2008.
In the third quarter of 2009, the noncontrolling shareholder's interest in the Stendal mill's loss was €1.9 million, compared to €3.3 million in the same quarter last year.
We reported a net loss attributable to common shareholders for the third quarter of 2009 of €14.1 million, or €0.39 per basic and diluted share. In the third quarter of 2008, net loss attributable to common shareholders was €17.2 million, or €0.47 per basic and diluted share. We adopted the guidance in ASC 810-10-65 regarding "noncontrolling interest" on January 1, 2009. This adoption resulted in retrospective presentation and disclosure changes to our December 31, 2008 consolidated balance sheet. Additionally, commencing January 1, 2009, we have followed such guidance prospectively. For more information, please see Note 10 to the interim consolidated financial statements included elsewhere herein. Operating EBITDA in the third quarter of 2009 was €13.0 million compared to Operating EBITDA of €3.9 million in the prior quarter and €24.0 million in the third quarter of 2008. Operating EBITDA is defined as operating income
(loss) plus depreciation and amortization and non-recurring capital asset impairment charges. Management uses Operating EBITDA as a benchmark measurement of its own operating results, and as a benchmark relative to its competitors. Management considers it to be a meaningful supplement to operating income as a performance measure primarily because depreciation expense and non-recurring capital asset impairment charges are not an actual cash cost, and depreciation expense varies widely from company to company in a manner that management considers largely independent of the underlying cost efficiency of their operating facilities. In addition, we believe Operating EBITDA is commonly used by securities analysts, investors and other interested parties to evaluate our financial performance.
FORM 10-Q
QUARTERLY REPORT - PAGE 31

Operating EBITDA does not reflect the impact of a number of items that affect our net income, including financing costs and the effect of derivative instruments. Operating EBITDA is not a measure of financial performance under the accounting principles generally accepted in the United States of America
("GAAP"), and should not be considered as an alternative to net income (loss)
attributable to common shareholders or income from operations as a measure of operational performance, nor as an alternative to net cash from operating activities as a measure of liquidity.
Operating EBITDA has significant limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are that Operating EBITDA does not reflect: (i) our cash expenditures, or future requirements, for capital expenditures or contractual commitments; (ii) changes in, or cash requirements for, working capital needs; (iii) the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our outstanding debt; (iv) noncontrolling interests on our Stendal mill operations;
(v) the impact of realized or marked to market changes in our derivative positions, which can be substantial; and (vi) the impact of impairment charges against our investments or assets. Because of these limitations, Operating EBITDA should only be considered as a supplemental operational performance measure and should not be considered as a measure of liquidity or cash available to us to invest in the growth of our business. See the Statement of Cash Flows set out in our interim consolidated financial statements included herein. Because all companies do not calculate Operating EBITDA in the same manner, Operating EBITDA as calculated by us may differ from Operating EBITDA or EBITDA as calculated by other companies. We compensate for these limitations by using Operating EBITDA as a supplemental measure of our operational performance and relying primarily on our GAAP financial statements. The following table provides a reconciliation of net income (loss) attributable to common shareholders to operating income (loss) and Operating EBITDA for the periods indicated:

                                                               Three Months Ended
                                                                  September 30,
                                                               2009          2008
                                                                 (in thousands)
 Net income (loss) attributable to common shareholders       € (14,112 )   € (17,173 )
 Net income (loss) attributable to noncontrolling interest      (1,937 )      (3,290 )
 Income taxes (benefits)                                           (57 )      (5,913 )
 Interest expense                                               16,085        16,424
 Investment (income) loss                                          (20 )       2,031
 Foreign exchange (gain) loss on debt                           (3,779 )       9,560
 Unrealized (gain) loss on derivative instruments                3,327         8,215

 Operating income (loss)                                          (493 )       9,854
 Add: Depreciation and amortization                             13,447        14,103

 Operating EBITDA                                            €  12,954     €  23,957

Nine Months Ended September 30, 2009 Compared to Nine Months Ended September 30, 2008
Pulp revenues for the nine months ended September 30, 2009 decreased by approximately 20.1% to €422.4 million from €528.3 million in the comparative period of 2008, primarily due to lower pulp prices. Revenues from the sale of excess energy increased by approximately 61.5% in the first nine months of 2009 to €32.3 million from €20.0 million in the same period last year as our German mills benefit from the higher biomass energy tariffs under Germany's Renewable Energy Resources Act.
FORM 10-Q
QUARTERLY REPORT - PAGE 32

Pulp sales volume increased to 1,093,664 ADMTs in the first nine months of 2009 from 1,059,212 ADMTs in the comparative period of 2008, primarily as a result of strong sales to China in the second and third quarters. In the first nine months of 2009, average pulp sales realizations decreased by approximately 22.9% to €380 per ADMT from €493 per ADMT in the same period last year, primarily due to lower pulp prices.
Pulp prices were lower in the first nine months of 2009 as a result of the impact of the global recession on world pulp markets. List prices for NBSK pulp in Europe were approximately €459 ($627) per ADMT in the first nine months of 2009 compared to approximately €582 ($886) per ADMT in the same period of 2008. Pulp production decreased to 1,040,582 ADMTs in the first nine months of 2009 from 1,086,078 ADMTs in the same period of 2008 primarily as a result of scheduled maintenance shutdowns. We took 33 days of scheduled maintenance downtime at our mills in the first nine months of 2009, compared to 22 days in the same period last year.
Costs and expenses in the first nine months of 2009 decreased to €477.3 million from €513.6 million in the comparative period of 2008, primarily as a result of lower pulp production and operating costs.
In the first nine months of 2009, operating depreciation and amortization decreased slightly to €40.3 million from €41.7 million in the comparative period of 2008.
Overall, our fiber costs decreased by approximately 14.8% in the first nine months of 2009 from the same period in 2008. Fiber costs at our German mills were lower throughout the first nine months of 2009 as a result of sustained weak demand from the European board industry. At our Celgar mill fiber costs are benefiting from efficiency improvements made to the mill's woodroom and other fiber initiatives. As we move into the fourth quarter, we expect some upward pressure in pricing for our German mills due to restocking by pulp and paper producers, seasonal demand for firewood and low harvesting rates. For the first nine months of 2009, we recorded an operating loss of €22.6 million compared to operating income of €34.7 million in the comparative period of 2008, primarily due to lower price realizations. We adopted the guidance in ASC 810-10-65 regarding "noncontrolling interest" on January 1, 2009. This adoption resulted in retrospective presentation and disclosure changes to our December 31, 2008 consolidated balance sheet. Additionally, commencing January 1, 2009, we have followed such guidance prospectively. For more information, please see Note 10 to the interim consolidated financial statements included elsewhere herein.
Interest expense in the first nine months of 2009 was largely the same at €49.0 million and €49.1 million in the comparative period of 2008. Our Stendal mill recorded an unrealized loss of €10.9 million on our interest rate derivatives during the first nine months of 2009 compared to an unrealized gain of €4.5 million in the same period last year.
In the first nine months of 2009, we recorded a gain of €4.5 million on our foreign currency denominated debt compared to a loss of €3.3 million in the same period of 2008.
FORM 10-Q
QUARTERLY REPORT - PAGE 33

In the first nine months of 2009, the noncontrolling shareholder's interest in the Stendal mill's loss for the period was €11.2 million, compared to a loss of €3.0 million in the same period last year.
We reported a net loss attributable to common shareholders for the first nine months of 2009 of €64.9 million, or €1.79 per basic and diluted share. In the first nine months of 2008, we reported a net loss attributable to common shareholders of €13.4 million, or €0.37 per basic and diluted share. In the first nine months of 2009, we reported Operating EBITDA of €17.9 million compared to Operating EBITDA of €76.6 million in the nine months ended September 30, 2008. Operating EBITDA is defined as operating income (loss) plus depreciation and amortization and non-recurring capital asset impairment charges. Operating EBITDA has significant limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. See the discussion of our results for the three months ended September 30, 2009 for additional information relating to such limitations and Operating EBITDA.
The following table provides a reconciliation of net income (loss) attributable to common shareholders to operating income (loss) and Operating EBITDA for the periods indicated:

                                                                Nine Months Ended
                                                                  September 30,
                                                               2009          2008
                                                                 (in thousands)
 Net income (loss) attributable to common shareholders       € (64,938 )   € (13,433 )
 Net income (loss) attributable to noncontrolling interest     (11,195 )      (3,037 )
 Income taxes (benefits)                                        (4,862 )       3,050
 Interest expense                                               48,953        49,057
 Investment (income) loss                                        3,044           300
 Foreign exchange (gain) loss on debt                           (4,533 )       3,291
 Unrealized (gain) loss on derivative instruments               10,889        (4,515 )

 Operating income (loss)                                       (22,642 )      34,713
 Add: Depreciation and amortization                             40,518        41,879

 Operating EBITDA                                            €  17,876     €  76,592

Liquidity and Capital Resources
The following table is a summary of selected financial information for the
periods indicated:

                                                As at             As at
                                            September 30,      December 31,
                                                 2009              2008
                                                    (in thousands)
           Financial Position
           Cash and cash equivalents        €      51,275      €    42,452
           Cash, restricted                             -           13,000
           Working capital                         70,163          154,374
           Property, plant and equipment          874,830          881,704
           Total assets                         1,085,649        1,151,600
           Long-term liabilities                  876,916          914,970
           Total equity                            80,417          132,103

FORM 10-Q
QUARTERLY REPORT - PAGE 34

Sources and Uses of Funds
Our principal sources of funds are cash flows from operations, cash on hand, the revolving working capital loan facility for our Celgar mill ("Celgar Loan Facility"), and the new €25.0 million replacement revolving working capital loan facility for our Rosenthal mill ("Rosenthal Loan Facility") we put into place in the third quarter of 2009. Our principal uses of funds consist of operating and capital expenditures, payments of principal and interest on the project loan facility relating to our Stendal mill ("Stendal Loan Facility") and interest payments on our outstanding 9.25% senior notes ("Senior Notes") and 8.5% convertible notes ("Convertible Notes").
In October 2009 we received notification from the Department of Natural Resources Canada ("NRCan") that our Celgar mill has been allocated approximately C$57.7 million in credits under the Canadian government's Pulp and Paper Green Transformation Program (the "GTP") announced earlier this year. The GTP's objective is to improve the environmental performance of Canada's pulp and paper industry by funding, by way of government grants, approved capital projects with environmental benefits, such as investments in energy efficiency. Funding credits under the GTP are based on a mill's production of black liquor, a byproduct of the pulping process, between January 1 and December 31, 2009. We have submitted the green energy project at the Celgar mill (the "Celgar Energy Project") for approval as an eligible project under the GTP and if approved expect to complete construction of the Celgar Energy Project with funding from such GTP credits. However, while we believe that the Celgar Energy Project qualifies as an eligible project under the GTP, the timing and final amount of funding the Celgar mill will receive for the Celgar Energy Project will not be known until a contribution agreement with NRCan has been put in place. We currently expect to finalize a contribution agreement in the fourth quarter. In addition we expect that the Celgar Energy Project will not utilize the full amount of credits allocated to the Celgar mill. Any remaining credits will be available for use by the Celgar mill on other eligible projects, until March 31, 2012. We are currently in the process of identifying additional opportunities to utilize such funding.
The credits under the GTP, when received by our Celgar mill, will not be reported in our income but rather will reduce the cost basis of the assets acquired.
The Celgar Energy Project was commenced by our Celgar mill in mid-2008 to increase its production of "green" energy and optimize its power generation capacity. The project includes the installation of a 48 MW condensing turbine, which is expected to bring the mill's installed generating capacity up to 100 MW, and upgrades to the mill's bark boiler and steam consuming facilities. In January 2009 the Celgar mill finalized an electricity purchase agreement (the "EPA"), with B.C. Hydro, British Columbia's primary public utility provider, for the sale of power generated from the Celgar Energy Project. Under the EPA, the Celgar mill is set to supply a minimum of approximately 238,000 MWh of surplus electrical energy annually to the utility over a ten-year term.
If we conclude a contribution agreement with NRCan as currently expected in the fourth quarter of 2009, we expect to complete the Celgar Energy Project in or about July 2010 and commence power sales under the EPA the following month. Upon completion of the Celgar Energy Project and based upon our Celgar mill operating at or around current production levels, we currently estimate that surplus power sales pursuant to the EPA will generate between approximately C$20.0 to C$25.0 million in annual revenues for our Celgar mill. Such revenues will be generated without any material incremental costs to the mill. When completed, the Celgar Energy Project is expected to provide the Celgar mill with a new stable revenue source from power sales unrelated to pulp prices. We believe that this revenue source will provide our Celgar mill with a competitive advantage over other older North American pulp mills which do not have the equipment or capacity to produce and/or sell surplus power in a meaningful amount.
As at September 30, 2009, our cash and cash equivalents were €51.3 million, compared to €42.5 million at the end of 2008 and we had working capital of €70.2 million compared to €154.4 million at the end of 2008. The decrease in working capital includes €14.0 million of higher current indebtedness resulting from the reclassification of the Celgar Loan Facility, which matures in May 2010, to a current liability. The lower working capital also reflects improvements in fiber supply chain management and a rebalancing of finished goods inventories from the very high levels we experienced at the end of 2008 amid plummeting world pulp markets.
As at September 30, 2009, we had fully drawn the debt service reserve account ("DSRA") under the Stendal Loan Facility compared to having restricted cash of €13.0 million in the DSRA at December 31, 2008, in order to partially fund scheduled payments under the Stendal Loan Facility.
The Stendal Loan Facility is provided by a syndicate of eleven financial institutions and the Celgar Loan Facility and Rosenthal Loan Facility are each provided by one financial institution. We have not to date experienced any reductions in credit availability with respect to these loan facilities. However, if any of these financial institutions were to default on their commitment to fund, we could be adversely affected. On November 1, 2009, CIT Group Inc. ("CIT"), which, along with a major Canadian chartered bank, is a joint owner of the lender under our Celgar Loan Facility, filed for Chapter 11 bankruptcy protection in the United States as part of a pre-packaged reorganization plan. None of CIT's subsidiaries were included in the Chapter 11 filing. As a result, we do not expect CIT's bankruptcy proceedings to adversely impact the Celgar mill's ability to access funds under the Celgar Loan Facility. During the third quarter we completed the refinancing of the Rosenthal Loan Facility, which will now mature in December 2012. As part of this refinancing, Rosenthal also entered into a four-year amortizing €4.4 million term loan (the "Rosenthal Term Loan") for the financing of approximately 85% of a wash press project at the mill. The Rosenthal Term Loan is repayable in eight equal consecutive semi-annual payments commencing August 2010.
FORM 10-Q
QUARTERLY REPORT - PAGE 35

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