Ainsworth Lumber Co. Ltd. Announces Modernization Plans for its BC Solid Wood Operations.

VANCOUVER, British Columbia--(BUSINESS WIRE)--July 14, 1997-- Ainsworth Lumber Co. (TSE/VSE:ANS) announced today a major modernization and rationalization of its BC solid wood operations.

The $46 million modernization program is designed to optimize the Company's competitive position in terms of technology and efficiency in the forest industry. Recent structural changes in the forest industry require Ainsworth to undertake this program. Ongoing high log costs combined with significant changes in the Company's traditional markets have rendered the Company's sawmills significantly less competitive in their current configuration.

In addition to high log costs, Ainsworth cites market shifts due to the Canada/US Softwood Lumber Agreement, as well as increased stud lumber production from eastern Canada as factors in the decision. The restrictions on shipments to the US have resulted in increased overall lumber volumes in the Canadian market, with lower prices in Canada compared to the US. Historically, the Company has developed Canadian and export markets, as opposed to the US market, to a greater extent than most interior producers. Ainsworth's share of the US Quota reflects this reality, and has resulted in a relatively smaller US market share compared to other major BC lumber producers. Also, as a major stud lumber producer, the Company has faced increased competition from lower cost eastern Canadian stud lumber. Log costs elsewhere in Canada are up to $100/mfbm lower than in the interior of BC.

In order to re-position itself and compete with the larger mills in the Province the Company must achieve the following: -0-

-- Consolidate its three sawmills into one sawmill of similar size to the successful larger sawmills in the Province.

-- Introduce the latest technology to maximize both lumber recovery and manufacturing flexibility.

-- Align mill capacity more closely to long term timber supply forecasts.

-- Optimize the allocation of logs between its lumber and veneer/plywood divisions.

-- Upgrade its veneer and plywood operations as part of the plan to optimize log recoveries.

These changes will help ensure long-term employment and community stability as well as reasonable returns on shareholders investment.

Ainsworth's rationalization plan includes the permanent closure of the existing sawmills located in Lillooet and 100 Mile House, and the upgrading of the Chasm sawmill into one large scale facility capable of producing both North American sizes and metric sizes for export. The upgrade will cost $30 million and begin immediately with anticipated completion in the summer of 1998.

The sawmill in Lillooet will be closed permanently as of October 1, 1997. The sawmill in 100 Mile House will operate at capacity until the Chasm upgrade is near completion, expected second half of 1998, at which time it will be phased out. Regretfully, these decisions will cause employment losses and short-term community instability. However, Ainsworth will continue to have significant other operations in each of the communities affected, and the changes will ensure the maintenance of future operations and long-term job stability in the communities where the Company operates.

The Company also plans to spend $16 million upgrading the veneer facility in Lillooet, and the value-added plywood facility in Savona. These changes will result in increased veneer production, improved productivity and recovery, and more opportunity for value-added veneer and plywood products. Upgrade work will begin immediately and be completed in the first half of 1998. The capacity of the veneer plant in Lillooet will be matched with the Allowable Annual Cut of the Lillooet Timber Supply Area.

In order to minimize the negative impacts of net job losses the Company has developed an "Employment Transition Plan" that will offer preferential hiring to displaced company employees, opportunities for re-training, pension bridging, and a one-time early-retirement package to long service employees nearing retirement age.

The Company is analyzing opportunities to add value to its primary product lines of plywood, veneer, Oriented Strand Board and lumber to create additional new employment. Value-added development is heavily dependent upon a collective effort by the Company, government and stakeholders. If value-added opportunities can be proven and developed, then the overall employment and community impacts will be reduced.

Ainsworth will explore joint venture opportunities with local First Nations and other local entrepreneurs in an effort to promote stability and benefit to all communities. Ainsworth is meeting with employees, government and community leaders to explain the rationalization plans and address questions and concerns.

CONTACT: Ainsworth Lumber Co. Ltd.

Brian Ainsworth, 604/661-3200

or

Ainsworth Lumber Co. Ltd.

Steve Silveira, 250/395-6200