Alliance Forest Products Inc. - Now Completed, Acquisition of Coosa Pines Will Double Assets and Sales.

MONTREAL--(BUSINESS WIRE)--April 2, 1997--ALLIANCE FOREST PROD (ME;TSE ALP ) Alliance Forest Products Inc. closed on March 27 the acquisition of Kimberly-Clark's Coosa Pines facilities and attached woodlands, in Alabama, for US$602.7 million.

The acquired facilities include a pulp mill, a paper mill and a sawmill. As a result of the transaction, Alliance Forest Products Inc.'s assets increase to some C$1.4 billion from C$553 million as of December 31, 1996. Coosa Pines' sales stood at approximately C$540 million in 1996, while those of Alliance Forest Products Inc. were C$424 million.

The Coosa Pines facilities include a paper mill with a production capacity of 308,000 tonnes of newsprint and 85,200 tonnes of groundwood printing paper a year. Its newsprint contains 40 percent recycled fibre which is produced at the mill's deinking facility. The pulp mill has a production capacity of 220,000 tonnes of fluff pulp and 50,000 tonnes of Southern Bleached Hardwood Kraft pulp (SBHK). The facilities also include 167,000 hectares of owned and leased timberland and a sawmill with a production capacity of 51 million fbm.

"This acquisition will be accretive to our shareholders. It fits in very well with our growth strategy and represents an excellent strategic opportunity for Alliance Forest Products Inc.," said Pierre Monahan, President and Chief Executive Officer. "Aside from significant timberland holdings and complementary product lines, Coosa Pines provides Alliance with an attractive Southern U.S. mill, a significant increase in capacity and an expanded production network from which we can serve a larger client base. With about half of our assets in the U.S. - our main market - we are gaining quite an exceptional strategic position for a Canadian paper maker," he added.

Mr. Monahan concluded: "This transaction also allows us to penetrate the fluff pulp market. This specialized product is used to make consumer products, such as diapers. Coosa Pines' manufacturing costs in this sector are already very good and the loblolly pine we harvest from our timberland provides us with the best fibre for making this kind of product." The transaction includes a five-year agreement under which Kimberly-Clark will purchase a significant portion of the pulp produced at Coosa Pines.

Alliance Forest Products Inc. now benefits from significant sources of fibre supply in both Canada and the U.S.: in Canada it has timber-cutting rights of 2.1 million m3 and total supply of 2.5 million m3; and in the United States it now develops about 167,000 hectares of woodlands. The Corporation now operates nine sawmills, including one in the U.S. and one in New Brunswick, and its total lumber production capacity is more than 550 million fbm. In the paper sector, the acquisition more than doubles total production capacity to more than 700,000 tonnes per year from 335,000.

The acquisition was funded through an equity offering of nearly 21,000,000 subscription receipts (including exercise of the over-allotment option on March 27), at a price of $27.50 per subscription receipt, each of which represents one common share of the Corporation, more than doubling its number of outstanding shares to 38 million from 17 million. Net proceeds were approximately C$552 million and the remainder of the acquisition cost came from credit facilities.

"We are very pleased with the way the transaction and the financing were conducted. Thanks to the good results of the equity offering, combined with our low level of indebtedness before the transaction, we continue to benefit from a very solid financial position after doubling the size of the Company," said Dino Fuoco, Senior Vice- President and Chief Financial Officer of Alliance Forest Products Inc.

Alliance Forest Products Inc. is an integrated company specializing in timber harvesting and forest management, as well as in the production and sale of pulp, newsprint, uncoated groundwood papers, lumber and related products. The Company has operations in Canada and the United States. The common shares of Alliance Forest Products Inc. are listed on the Montreal Exchange and The Toronto Stock Exchange under the symbol ALP.

CONTACT: Alliance Forest Products Inc.

Dino Fuoco, 514/ 954-2118

http://www.Alliance-Forest.com