American Pad & Paper Signs Letter of Intent for Sale of Williamhouse Division.

Business Editors

DALLAS--(BUSINESS WIRE)--July 17, 2000

American Pad & Paper Company (OTCBB:AMPPQ) (AP&P) announced today that it has signed a Letter of Intent with Saratoga Partners for the sale of the assets of its Williamhouse division. The sale is subject to a number of conditions including execution of a definitive sale agreement and bankruptcy court approval.

As previously announced, AP&P has been pursuing the sale of its various business assets in order to reduce debt. The sale of Williamhouse will be the Company's second sale of a major business asset. On May 9, AP&P concluded the sale of its Chicago-based Creative Card division to Taylor Corporation. The Company is also pursuing the sale of its Ampad and Forms divisions.

"We are pleased to have a financial buyer of Saratoga's caliber express its intent to purchase the Williamhouse business," stated James W. Swent III, chief executive officer. "This transaction will create a stronger Williamhouse and generate benefits for our customers, suppliers and employees. Williamhouse has long been a major force in the marketplace and combined with Saratoga Partners will have the opportunity to bring its market leadership to a new level."

"Williamhouse is widely known and respected," stated Christian L. Oberbeck of Saratoga Partners. "This acquisition fits well with our strategy of investing, in partnership with management, in businesses with a strong market share and brand equity. We look forward to providing the financial strength to ensure Williamhouse remains the vendor of choice for its customers."

Saratoga Partners, a New York-based Merchant Bank, founded in 1984, has led buyout and private equity investments in 28 companies with an aggregate acquisition value exceeding $3.3 billion. Saratoga's investments have included Koppers Industries, CapMAC, Formica Corporation and telecommunications related companies, including EUR Data Center.

American Pad & Paper Co., which invented the legal pad in 1888, is a leading manufacturer and marketer of paper-based office products in North America. Product offerings include envelopes, writing pads, file folders, machine papers, greeting cards and other office products. The key operating divisions of the Company are Williamhouse, AMPAD and Forms. AP&P has been operating under Chapter 11 protection since January 10, 2000 and has secured debtor-in-possession (DIP) financing adequate for its operations while in Chapter 11. Company revenues in 1999 were $573 million, additional information is available on the Company's Website at http://www.americanpad.com.

This release contains forward-looking statements relating to future results of AP&P. Actual results may differ significantly from these statements due to risk factors including, but not limited to the following: changing business and economic conditions; changes in customer order patterns, including loss of key customers, order cancellations or reduced sales; price and product competition; manufacturing risks; raw material availability and price changes; excess or obsolete inventory; the loss of key personnel and new product development, including acceptance of new products. Additional information, which could affect American Pad & Paper's financial results are included in AP&P's filings with the Securities and Exchange Commission.