Tembec and its Unionized Kapuskasing Employees Extend their Current Labor Agreement until 2008

Temiscaming, Quebec, Canada, 07 June 2006 -- Tembec and the five local unions representing approximately 750 unionized employees at the company's Spruce Falls Kapuskasing operations have agreed to extend the current labor agreement to 30 September 2008. The existing agreement had expired 30 September 2005.

The new agreement, which will result in no increasing costs to the mill, also includes a number of positive initiatives and was approved by 85% of unionized workers in a ratification vote held 06 June 2006. The local unions and management also will jointly develop and implement, on an ongoing basis, changes to the operations that will improve Kapuskasing's competitive position.

"The key elements of the extension agreed to by Kapuskasing's unionized employees are an important step toward ensuring that Spruce Falls newsprint operations are sustainable and can compete in an increasingly difficult environment," said Terrence P. Kavanagh, Tembec's executive vice president and COO. "By their efforts, Kapuskasing employees have demonstrated that they are committed to the future of their mill and to continuing to be a reliable supplier of high quality newsprint."

The new agreement is a good foundation to address the next challenge, which is to reduce the mill's energy costs. "This site has made great strides in terms of reducing the consumption of purchased energy, both natural gas and electricity. The key remaining challenge for this site will be to overcome the incredible disadvantage created by the price of electricity in Ontario," concluded Mr. Kavanagh.

Tembec is currently in discussions with the Province of Ontario to address the high price of electricity.

Tembec is a large, diversified and integrated forest products company. With operations principally located in North America and in France, the company employs approximately 10,000 people. Tembec's common shares are listed on the Toronto Stock Exchange under the symbol TBC. Additional information on Tembec is available on its website at www.tembec.com