<b>IP Close to Selling Mill</B>

The search for a new owner for International Paper's Erie (Pa.) mill remains open, but officials say the company is getting closer to reaching an agreement with a buyer.

The Purchase, N.Y., paper company has been fielding bids from more than one potential buyer for its fine papers division, which includes the Erie mill.

Although officials will not comment on the actual number of bidders or on the specifics of the bids, the bids are "similar" and negotiations are continuing, according to Stacy Wygant, a spokeswoman.

The mill's future has been unsettled since last summer, when IP announced that it is selling off $5 billion in assets as part of a divestiture effort designed to streamline its business.

The company has found buyers for some of its other assets -- including its Washington state forestlands, Bush Broake Allen, Zanders Feinpapiere AG of Germany, its oil and gas properties and its Champion Premium Papers business. But it has been unable to secure deals to sell several of its other properties, including the fine papers division.

Wygant said the company has no firm timetable for a possible sale.

In the meantime, she expects business to continue as usual at the Erie mill, despite recent reports of possible layoffs.

The slowdown prompted the company to cut back the schedule of its pulp dryer in February, from an around-the-clock, seven-day-a-week schedule to a 10-day on, four-day off rotation.

That change had fueled the talk of layoffs, but a recent surge in orders has the pulp dryer back to its original schedule after only one cycle on the abbreviated schedule.

"We always have a bit of a lull after the first of the year," Wygant said.

"It's pretty cyclical. We're starting to see a little bit of business come back."

Wygant said the fact that the mill continues to run at full capacity suggests that the fine papers division is in good health, despite the lackluster state of the overall paper industry.

IP has been forced to close several of its mills in recent months as a result of its restructuring and of a downturn in the paper market. About 2,500 employees at mills in Alabama, Arkansas and Lock Haven, Pa., were put out of work in October. Another 263 employees at IP lumber mills in Maine will be without jobs this spring as the result of another round of layoffs. Knight Ridder