Recommendation of Cash Offer

    14 September 2007

For immediate release

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO
THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR ANY JURISDICTION WHERE TO DO
SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

                            Highland Timber P.L.C.                             

   Recommendation of the cash offer by European Forest Resources Acquisition   
                                    Limited                                    

Set out below is the text of a letter from the Chairman of Highland Timber
P.L.C. (the "Company"), dated 14 September 2007 to be sent to Shareholders of
the Company, withdrawing the Directors' recommendation that all Shareholders
vote at the EGM in favour of the Sale to FIM TGF IV announced on 24 August 2007
and recommending that Shareholders accept the cash offer of 120 pence per share
made by EFRAL for the entire issued and to be issued ordinary share capital of
the Company.

Additionally, in order to allow Shareholders time to consider the EFRAL Offer,
the Directors are proposing to seek at the EGM on 20 September 2007, to adjourn
the EGM to 12.00 noon on 26 September 2007, in which case the latest time for
the receipt of valid forms of proxy would therefore be 12.00 noon on 24
September 2007. Shareholders are therefore encouraged to attend the EGM on 20
September 2007.

Terms used in this announcement have the same meanings as in the document to be
sent to shareholders dated 14 September 2007.

Enquiries:

Highland Timber P.L.C. 020 7937 0755

Oliver Waring, Chief Executive Officer

Arbuthnot Securities Limited 020 7012 2000

Tom Griffiths/Richard Johnson

              "Letter from the Chairman of Highland Timber P.L.C.              

                            Highland Timber P.L.C.                             

   (Incorporated in England under the Companies Act 1985 with Company number   
                                   2531866)                                    

Directors:                                                   Registered Office:
                                                                               
Ron Williams (Chairman)                                          Beaufort House
                                                                               
Oliver Waring (Chief Executive Officer)                       51 New North Road
                                                                               
Ian Henderson (Non-Executive Director)                           Exeter EX4 4EP
                                                                               
Robert Rickman (Non-Executive Director)                          United Kingdom

                                                              14 September 2007

To Shareholders and, for information only, to the optionholder

Dear Shareholder,

European Forest Resources Acquisition Limited: Conditional Cash Offer of 120
pence per share for Highland Timber P.L.C. (the "EFRAL Offer")

FIM Timber Growth Fund IV: Conditional Sale of the Forest Assets for �
12,500,000 payable in cash (the "Sale to FIM TGF IV")

Further to my letter dated 13 September 2007, enclosing a copy of the
announcement released by the Company on the same day, I am writing on behalf of
the Board of Highland Timber, to provide a further update and to explain the
reasons why the Board considers the EFRAL Offer to be: (i) fair and reasonable;
and (ii) preferable for the Company's Shareholders to the Sale to FIM TGF IV
and, accordingly are unanimously recommending that Shareholders accept the
EFRAL Offer.

 1. Cash Offer by European Forest Resources Acquisition Limited for the Company
   
Shareholders will be aware that on 12 September 2007, European Forest Resources
Acquisition Limited ("EFRAL"), a company ultimately controlled by Louis Dreyfus
SAS, posted an Offer Document and Form of Acceptance in respect of their cash
offer of 120 pence per share for the entire issued and to be issued ordinary
share capital of the Company without the recommendation of the Board of
Highland Timber (the "EFRAL Offer"). The EFRAL Offer values the issued and to
be issued share capital of the Company at approximately �14,800,000.

It is a condition of the EFRAL Offer that (i) the Resolution to approve the
sale of the Forests Assets to FIM Timber Growth Fund IV ("FIM TGF IV") to be
put at the EGM is defeated; and (ii) that none of the individual forests
comprising the Forests is sold or otherwise materially encumbered, or their
value materially impaired, prior to the EFRAL Offer becoming or being declared
unconditional in all respects. Furthermore, the EFRAL Offer will be capable of
being declared unconditional as to acceptances at any level above 50 per cent.
of acceptances.

A number of the Company's Shareholders have given irrevocable undertakings to
accept the EFRAL Offer in respect of 2,198,499 of the Company's Ordinary
Shares, representing approximately 18.68 per cent. of the outstanding share
capital of the Company, and have agreed to vote against the Resolution to
approve the Sale to FIM TGF IV at the EGM.

Shareholders should have received the Offer Document and Form of Acceptance by
today and if not, should contact the Company Secretary on 01392 477 509 to
request a copy either by email or post.

 2. Conditional Sale of the Forest Assets to FIM Timber Growth Fund IV
   
Furthermore, Shareholders will also be aware that on 31 August 2007, the
Company posted a circular to Shareholders convening the EGM for the purposes of
approving, by way of an ordinary resolution, the disposal of the Forest Assets
in their entirety to FIM TGF IV for a total consideration of �12,500,000
payable in cash by FIM TGF IV to the Company at completion, if the Resolution
to approve the Sale to FIM TGF IV is passed. Shareholders should be aware that
the Resolution to approve the Sale to FIM TGF IV requires a simple majority of
those Shareholders voting by proxy or in person at the EGM.

Following completion of the Sale to FIM TGF IV, and the proposed exercise by
Oliver Waring of his 588,613 options over Ordinary Shares, cash balances held
by the Company will be approximately �15,000,000, net of related transaction
costs. This is equivalent to approximately 121 pence of cash per Ordinary Share
on a fully diluted basis.

In order to secure the Sale to FIM TGF IV, irrevocable undertakings have been
given by those Directors of the Company who hold Ordinary Shares in respect of
4,279,334 Ordinary Shares, being all the Ordinary Shares held legally and
beneficially by them and by interests related to them and their families,
representing approximately 36.4 per cent. of the Company's issued share
capital, to vote in favour of the Resolution to approve the Sale to FIM TGF IV
at the EGM.

Following the release of the announcement of the conditional Sale to FIM TGF IV
on 24 August 2007, the Company's Chief Executive and Arbuthnot Securities were
made aware that certain Shareholders wished to secure a full and early return
of capital to all Shareholders.

The Directors now undertake that should the Sale to FIM TGF IV be approved at
the EGM or any adjournment thereof and thereafter be successfully completed,
that they will immediately progress a voluntary liquidation of the Company and
convene as soon as reasonably practicable an extraordinary general meeting of
the Company to resolve on the matter. Shareholders should be aware that such a
resolution to approve a liquidation of the Company is a special resolution and
therefore requires 75 per cent. of those Shareholders voting in favour by proxy
or in person at the extraordinary general meeting.

 3. Background to and reasons for the recommendation of the EFRAL Offer
   
The provisions of the Code require the Directors to circulate to all
Shareholders their opinion on the EFRAL Offer. The Directors have now
considered the respective merits of each transaction referred to above and set
out below a recommendation as to which of these transactions is, in its
opinion, in the best interests of the Company and Shareholders as a whole.

Shareholders now have the benefit of considering both the EFRAL Offer and the
Sale to FIM TGF IV and I am very pleased that such a choice is available.

Shareholders will be aware from the Company's circular to Shareholders dated 31
August 2007 that prior to its announcement on 24 August 2007 of the Sale to FIM
TGF IV, the Company had held discussions with Louis Dreyfus Energy Holdings
Limited regarding a possible cash offer for the issued and to be issued share
capital of the Company at a price of 115 pence per share. Subsequently, on 11
September 2007, EFRAL announced the terms of a cash offer to be made by EFRAL
for the issued and to be issued share capital of the Company at 120 pence per
share without the recommendation of the Directors.

As announced on 13 September 2007, the Directors continue to recognise that
certain Shareholders may wish to secure a full or a partial exit from their
holding(s) in the Company in the shorter term and that this may be achieved
either by way of an offer to be made for the share capital of the Company (the
EFRAL Offer), or by way of a sale of the Forest Assets (the Sale to FIM TGF IV)
and subsequent return of capital to Shareholders.

The Directors believe that the EFRAL Offer represents the best opportunity for
all Shareholders to realise their investment in the Company at the same price
and at the same time. Furthermore, Shareholders will receive the cash proceeds
of their shares sooner than would be the case following a realisation by way of
a voluntary liquidation as proposed above, or by way of any other form of
return of capital to Shareholders.

Additionally, in the twelve months up to and including 19 June 2007 (the
business day prior to the commencement of the Offer Period), the Ordinary
Shares traded in the range of 62.5 pence to 107 pence, with the average price
being 75 pence per share. Since the commencement of the Offer Period, the
Ordinary Shares have traded in the range of 95 pence to 112 pence, with the
average price being 98 pence per Ordinary Share.

While the Directors accept that a partial realisation and remaining as
shareholders in an AIM quoted investment company may have merit and be
appealing to certain Shareholders, the Directors recognise that there can be no
certainty that the Ordinary Shares will trade at a price equivalent to the
EFRAL Offer price of 120 pence per Ordinary Share in the foreseeable future.
Accordingly, the Directors believe that the EFRAL Offer currently represents
the best available opportunity for all Shareholders to realise their investment
at a significant premium to the average Closing Price of 85.5 pence per
Ordinary Share in the six months preceding 19 June 2007, the business day prior
to the commencement of the Offer Period.

It is for these reasons, and bearing in mind the Directors' stated objectives
of both protecting the Company's assets and generating maximum Shareholder
value, that the Directors are now unanimously recommending the EFRAL Offer to
Shareholders.

 4. Recommendation
   
The EFRAL Offer facilitates a complete and early exit for all of the
Shareholders. The Directors, who have been so advised by Arbuthnot Securities,
consider the terms of the EFRAL Offer to be fair and reasonable so far as the
Company's Shareholders are concerned. In providing advice to the Directors, 
Arbuthnot Securities has taken into account the commercial assessments of the
Directors.

Accordingly, the Directors now unanimously withdraw their recommendation that
all Shareholders vote in favour of the Sale to FIM TGF IV at the EGM and now
recommend that all Shareholders, who are free to do so, vote against the
Resolution to approve the Sale to FIM TGF IV, the defeat of which is a
condition of the EFRAL Offer, and subsequently accept the EFRAL Offer.

Furthermore, in order to allow Shareholders time to consider the EFRAL Offer, 
the Directors propose to seek at the EGM on 20 September 2007 to adjourn the
EGM to 12.00 noon on 26 September 2007 to be held at the offices of Arbuthnot
Securities Limited, Arbuthnot House, 20 Ropemaker Street, London EC2Y 9AR, in
which case the latest time for the receipt of valid forms of proxy would
therefore be 12.00 noon on 24 September 2007. Shareholders are therefore
encouraged to attend the EGM on 20 September 2007.

In the event that the Resolution to approve the Sale to FIM TGF IV at the EGM 
or any adjournment thereof is approved and thereafter be successfully
completed, the Directors will immediately progress a voluntary liquidation of
the Company and convene as soon as reasonably practicable an extraordinary
general meeting of the Company to resolve on the matter.

Shareholders should note that were it not for the existence of the irrevocable
undertakings to vote in favour of the Sale to FIM TGF IV at the EGM, Directors
holding Ordinary Shares legally and beneficially by them and by interests
related to them and their families, representing approximately 36.4 per cent.
of the Company's issued share capital, would accept the EFRAL Offer in respect
of all of their Ordinary Shares.

Yours faithfully,

RON WILLIAMS

Chairman"

The Directors of the Company, accept responsibility for the information
contained in this announcement. To the best of the knowledge and belief of the
Directors (who have taken all reasonable care to ensure that such is the case),
the information contained in this announcement is in accordance with the facts
and does not omit anything likely to affect the import of such information.

Arbuthnot Securities, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting for Highland Timber P.L.C. and
no-one else in connection with the EFRAL Offer and will not be responsible to
anyone other than Highland Timber P.L.C. for providing the protections afforded
to clients of Arbuthnot Securities or for providing advice in relation to the
EFRAL Offer or the contents of this announcement or any matter referred to
herein.

Arbuthnot Securities Limited ("Arbuthnot Securities") has given and has not
withdrawn its written consent to the issue of this announcement with the
inclusion of the references to its name in the form and context in which they
appear.

A copy of this announcement is being circulated to shareholders and will be
available from the Company's website at: www.highlandtimber.co.uk

Rule 8 Notice

Under the provisions of Rule 8.3 of the Code, if any person is, or becomes,
"interested" (directly or indirectly) in 1 per cent. or more of any class of
"relevant securities" of Highland Timber, all "dealings" in any "relevant
securities" of Highland Timber P.L.C. (including by means of an option in
respect of, or a derivative referenced to, any such "relevant securities") must
be publicly disclosed by no later than 3.30 p.m. (London time) on the London
business day following the date of the relevant transaction. This requirement
will continue until the date on which the offer becomes, or is declared,
unconditional as to acceptances, lapses or is otherwise withdrawn or on which
the "offer period" otherwise ends. If two or more persons act together pursuant
to an agreement or understanding, whether formal or informal, to acquire an
"interest" in "relevant securities" of Highland Timber P.L.C., they will be
deemed to be a single person for the purpose of Rule 8.3.

Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant
securities" of Highland Timber by European Forest Resources Acquisition Limited
or Highland Timber P.L.C., or by any of their respective "associates", must be
disclosed by no later than 12.00 noon (London time) on the London business day
following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose "relevant
securities" "dealings" should be disclosed, and the number of such securities
in issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.

"Interests in securities" arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an "interest" by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the Code, which can also be found on
the Panel's website. If you are in any doubt as to whether or not you are
required to disclose a "dealing" under Rule 8, you should consult the Panel.



END
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