Avenor Makes Buyout Bid for Repap All-Stock Offer Accepted by Repap Board.

MONTREAL--(BUSINESS WIRE)--Dec. 18, 1996--AVENOR(TSE;ME AVR ) REPAP ENT.(TSE RPP., NASDAQ RPAPF. ) Avenor Inc. announced today that the Board of Directors of Repap Enterprises Inc. has accepted Avenor's all-stock offer to acquire all outstanding shares of Repap. Under the terms of the offer, Avenor will acquire all Repap assets. Avenor has proposed to exchange one newly issued Avenor common share for every 4.25 Repap shares. Avenor shares closed on December 17 at $21.20, Repap shares at $5.55:TSE and $US4.00:NASDAQ.

"This transaction achieves a key objective of Avenor's Transformation Strategy, to shift to higher value-added markets which have higher growth rates, higher margins and lower price cyclicality," said Avenor's President and Chief Executive Officer, Mr. Paul E. Gagne. "Avenor has moved deliberately to capitalize on this opportunity to expand our company by purchasing quality production assets, technical expertise and a major market position in the coated paper sector. The transaction reflects our commitment to enhance Avenor's long term potential for its shareholders."

Mr. Gagne continued, "This acquisition creates a solid platform for Avenor's future growth through a strategic consolidation within the North American pulp and paper market, without adding new production capacity. Repap's modern, world-class coated paper assets and technology are capable of producing high quality paper in a wide range of premium grades. Avenor also gains the benefits of Repap's technical and marketing expertise and established customer relationships."

Under the terms of the agreement announced today, Repap Chairman and Chief Executive Officer, Mr. George S. Petty has committed to vote his 29 million Repap shares -- which total 23 percent of outstanding Repap shares -- in favor of the transaction.

Commenting on the Repap Board's acceptance of the Avenor offer, Mr. Petty said, "Repap has carefully considered various options to ensure that we deliver the best possible value to our shareholders, employees and customers. Avenor's offer, and the commitment of its management to ensure that the key assets we have worked so hard to assemble are put to superior use, is excellent value and an outcome I personally am happy to support."

In announcing the Repap board's acceptance of Avenor's offer, Avenor also indicated its determination to reduce the level of debt it will incur by assuming Repap's outstanding obligations. "The financial discipline Avenor has demonstrated in its past debt reduction programs is evidence of our ability to manage this key aspect of our business," Mr. Gagne said. "Avenor intends to move quickly to realize substantial operating synergies, limit capital spending to high return projects, improve working capital management and pursue other initiatives including strategic divestitures. Avenor will also suspend its dividend," added Mr. Gagne.

Avenor also announced the establishment of new bank lines of credit of $600 million with 5 major Canadian Banks to support the liquidity needs of the company. As well, Repap British Columbia's capital base will be restructured including new bank lines of $342.5 million, of which approximately $100 million will be unused at closing. As part of this restructuring, the Toronto-Dominion Bank and the Royal Bank of Canada have committed to subscribe, at closing, to a private placement of $75 million of common shares, and of $140 million of subordinated convertible debentures of Avenor.

Completion of the transaction is expected by February 28, 1997, subject to approval by Avenor and Repap shareholders, necessary government and regulatory approvals and obtaining waivers from holders of certain debt instruments of Repap.

AVENOR/REPAP
BACKGROUND INFORMATION

TERMS
 - Avenor acquires 100 percent of Repap shares
 - Offer includes all Repap assets
 - All stock offer --One Avenor share for 4.25 Repap shares

CLOSING DATE
 - Anticipated closing by February 28, 1997 subject to shareholder
and regulatory approvals.

COMBINATION ANALYSIS (BASED ON 1995 RESULTS):
(in millions of dollars except EPS and Employees)
 - Sales                $C 5,025
 - Net earnings              547
 - EPS (Basic)              5.68
 - Assets                7,245.1
 - Employees              12,300

PRODUCTION CAPACITY POST-ACQUISITION  (000'S METRIC TONNES)
(based on 1995 data):
 - Newsprint               1,400
 - Market Pulp             1,310
 - Printing and Writing Papers
   - Coated Papers           910
   - Uncoated Freesheet      310
 - Kraft Paper               155
 - Wood Products             970  (mbf(1))
   (1)million board feet

VALUE CREATION OPPORTUNITIES
 - Substantial operating synergies
 - Tax attributes

OPERATING SYNERGIES ESTIMATED TO EXCEED $100 MILLION
IN THE FOLLOWING AREAS
 - Restructuring/Productivity
 - Buying power
 - Product upgrading
 - Network optimization
 - Others

SIGNIFICANT BENEFITS ARE AVAILABLE TO AVENOR
 - Investment tax credits      $ 172  million
 - Net operating losses          190
 - Capital cost allowance
    availability               1,148

IMPACT ON CAPITAL/DEBT STRUCTURE ($million)

                         Avenor     Repap   After Refinancing
 - Bank facilities (used)     179    983          676
 - Long term debt           1,194  1,432        2,574
 - Unused lines of credit     361     41          849

SIGNIFICANT TERMS OF CONVERTIBLE DEBENTURES

- The debentures will be convertible at the option of their holders at any time after one year of issuance at a conversion price equivalent to a 20 percent premium over the market price of the Avenor Common Shares on the date of completion of the transaction. The convertible debentures will bear interest at a rate of 6 percent per annum and will mature ten years from the completion of the transaction and are not callable for four years.

AVENOR DEBT REDUCTION TRACK RECORD
 - Debt to total capitalization ratio reduced from  64.1 percent at
year-end 1992 to 42.8 percent at close of 3Q 1996.

AVENOR FINANCIAL DISCIPLINE
 - Pursue operating synergies aggressively
 - Limit capital spending to high return projects
 - Improve working capital management
 - Pursue other initiatives including strategic divestitures
 - Suspend dividend

NEW LIQUIDITY FACILITY PUT IN PLACE

                  Existing Bank Lines      New Bank Lines
 - Availability             1,564                  1,525
 - Usage                    1,162                    676
 - Unused capacity            402                    849

INTEGRATION OF MANAGEMENT
 - Retain key Repap operating and marketing personnel
 - Create Printing and Writing Papers group
 - Commitment to Avenor's "Rules of the game"
   1. financial discipline
   2. prudent capital spending
   3. flexibility as an organization

MEETING OF SHAREHOLDERS
 - Meeting of shareholders of Avenor to approve amalgamation with
2/3 approval threshold.

 - Meeting of shareholders of Repap to approve amalgamation with
2/3 approval threshold.

TRANSACTION SUMMARY
 - Achieves major goal of transformation strategy, significant
shift toward higher value-added coated papers. Also improves the
integration of northern softwood fibre resources.

 - Value-added markets have higher growth rates, higher margins and
lower price cyclicality.

 - Gain modern world-class assets, technical expertise and a major
market position in the coated paper sector.

 - New asset base produces high quality paper in a range of premium
grades.

 - Positions Avenor for future growth through market consolidation,
without adding capacity and at a lesser cost than building new
mills.

 - Avoid production start-up and marketing risks.

 - Substantial operating and tax synergies.

 - Avenor well-positioned for future growth.

AVENOR

Main products ( percent of sales):
Newsprint (41 percent), Market Pulp (29 percent),
White Paper (15 percent), Wood Products (15 percent)

Main markets:  United States, Europe, Japan

Sales :           $2.8 billion (1995)
                  $1.7 billion (9 months 1996)

Net Earnings:     $344 million (1995)
                  $25.8 million (9 months 1996)

Employees:        6,900

Assets:           $3.5 billion

Annual Allowable Cut (AAC):
          9.8 mm cubic metres

Locations/Mills/Annual Capacities :

CANADA
New Brunswick
Avenor Maritimes (Avenor - 67 percent interest)
 - Newsprint mill (Dalhousie)/220,000 tonnes

Quebec
 - Newsprint mill (Gatineau)/438,000 tonnes
 - Manifor Sawmill (Maniwaki)/70 mm board feet

Ontario
 - Market Pulp mill (Thunder Bay)/460,000 tonnes
 - Market Pulp mill (Dryden)/70,000 tonnes
 - White Paper mill (Dryden)/310,000 tonnes
 - Newsprint mill (Thunder Bay)/507,000 tonnes
 - Stud mill (Dryden)/70 mm board feet

British Columbia
 - Market Pulp mill (Gold River)/250,000 tonnes
 - Pacific Forest Products - (Avenor - 53 percent interest)
   Sawmills - (Tahsis, Ladysmith, Nanaimo)/
   308 mm board feet

UNITED STATES
Washington State (Usk)
 - Ponderay Newsprint Company
 - (Avenor - 40 percent interest)/240,000 tonnes


REPAP

Main products ( percent of sales):
Coated Paper (66 percent), Market Pulp (16 percent),
Kraft Paper (7 percent), Wood Products (11 percent)

Main markets:  North America - Europe - Asia

Sales:            $2.07 billion (1995)
                  $1.3 billion  (9 months 1996)

Net Earnings:     $140 million (1995)
                  ($132 million) (9 months 1996)

Employees:        5,400

Assets:           $3.7 billion

Annual Allowable Cut (AAC):
          5.1 mm cubic metres

Locations/Mills/Annual Capacities:

CANADA
New Brunswick  (Miramichi)
 - Coated Paper mill/492,000 short tons
 - Kraft Pulp mill/235,000 tonnes
 - Groundwood Pulp mill/123,000 tonnes
 - Sawmills/37 mm board feet

 - ALCELL Magnesium-bisulphite Pulp mill (Atholville)/125,000
tonnes

Manitoba  (The Pas)
 - Unbleached Kraft Paper mill/155,000 tonnes
 - Sawmill/95 mm board feet

British Columbia
 - Kraft Pulp mill (Prince Rupert)/450,000 tonnes
 - Sawmill (Terrace)/176 mm board feet
 - Sawmill (Smithers)/47 mm board feet
 - Sawmill (Carnaby)/170 mm board feet

UNITED STATES
Wisconsin (Kimberly)
 - Coated Paper mill/508,000 short tons
 - Groundwood Pulp mill/45,000 tonnes
 - De-inked Pulp mill/29,000 tonnes

CONTACT: Repap Enterprises Inc.

Mr. Daniel D. Veniez, 514/ 846-1316

or

Avenor Inc.

Mrs. Emmanuelle Collin, 514/ 846-5061

or

Avenor Inc.

Mrs. Dominique Dionne, 514/ 846-5061

or

Avenor Inc.

Mr. Denis Aubin, 514/ 846-5061

or

Avenor Inc.

Mr. William Harvey, 514/ 846-5061