Blue Ridge Paper Products Inc. Reports Third Quarter 2006 Results.

CANTON, N.C. -- Blue Ridge Paper Products Inc. (Bloomberg: bluerd) today reported a net loss of $2.8 million for the third quarter ended September 30, 2006. This compared to a net income of $2.0 million for the second quarter ended June 30, 2006 and a net loss of $5.4 million for the third quarter ended September 30, 2005. Total net sales for the third quarter ended September 30, 2006 were $145.2 million compared to $144.9 million and $129.8 million in the second quarter ended June 30, 2006 and third quarter ended September 30, 2005, respectively.

Commenting on the quarter, Richard Lozyniak, Chief Executive Officer, stated, "Our net loss was attributable to an extended scheduled mill maintenance outage and $2.1 million in charges related to an acquisition opportunity that did not materialize. We continued to see significantly improved year-over-year financial performance resulting from strong productivity and improving market conditions."

Key Business Highlights:

* Uncoated paper shipments totaled 70,829 tons in the third quarter ended September 30, 2006 compared to 70,220 tons in the second quarter ended June 30, 2006. Average pricing in the third quarter ended September 30, 2006 increased 2.2% compared to the second quarter ended June 30, 2006 and 16.0% when compared to the third quarter ended September 30, 2005. Price increases announced in the first quarter ended March 31, 2006 have been substantially implemented.

* Packaging segment shipments for the quarter ended September 30, 2006 decreased 3.4 % when compared to the second quarter ended June 30, 2006 and increased 8.2% when compared to the third quarter ended September 30, 2005. Shipments decreased compared to the second quarter ended June 30, 2006 due primarily to the seasonality impact from school milk demand. Pricing for the packaging segment for the third quarter ended September 30, 2006 increased 3.1% over the second quarter ended June 30, 2006.

* Raw material costs increased in the third quarter ended September 30, 2006 compared to the second quarter ended June 30, 2006 by approximately $0.7 million. This increase was primarily due to increases in the costs of purchased pulp, wood chips and polyethylene. Recent decreases in energy prices have resulted in lower raw material and transportation costs going into the fourth quarter ending December 31, 2006.

* The Canton mill conducted its annual planned hardwood pulp mill maintenance outage in the third quarter ended September 30, 2006. A corresponding planned annual outage was conducted in the pine pulp mill in the second quarter ended June 30, 2006. The cost of the third quarter outage was approximately $3.7 million greater than the second quarter outage due primarily to additional planned work in the recovery boiler area and a planned maintenance outage of 3.5 days on the paperboard machine, both of which did not occur during the second quarter outage.

* Through September 30, 2006, the Company incurred due diligence and legal fees totaling $2.1 million associated with a potential growth opportunity. The transaction was not consummated; therefore, these costs were expensed in the third quarter ended September 30, 2006.

The Company defines EBITDA as net income before interest, taxes and depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for certain unusual and non-cash items. EBITDA and Adjusted EBITDA are non-GAAP measures. The Company uses EBITDA and Adjusted EBITDA as relevant and useful measures to compare operating results. The presentation of EBITDA and Adjusted EBITDA has economic substance because these measures are used by management as measures to analyze the operating performance of the Company and the ability of the business to generate cash. Additionally, management believes some investors consider EBITDA and Adjusted EBITDA to be useful in analyzing and assessing the Company's ability to service debt. EBITDA and Adjusted EBITDA have material limitations as analytic tools compared to net income because, among other things, they do not include depreciation or interest expense, and therefore do not reflect current or future capital expenditures or the cost of capital. Management compensates for these limitations by using EBITDA and Adjusted EBITDA as only one of several comparative tools, together with GAAP measurements, to assist in the evaluation of operating performance and to measure cash flow generated by ongoing operations. EBITDA and Adjusted EBITDA, as the Company defines these terms, may not be comparable to similarly titled financial performance measures presented by other companies.

The Adjusted EBITDA for the three-month period ended September 30, 2006 was $7.7 million compared to Adjusted EBITDA of $10.0 million for the three-month period ended June 30, 2006.

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(A) ESOP expense is a non-cash labor expense the Company incurs each year in connection with the Employee Stock Ownership Plan of the Company's parent. The ESOP Plan specified that 40% of the common stock authorized would be allocated to the ESOP participants from May 14, 1999 through May 13, 2006. As of May 14, 2006, the value of all shares have been accrued, except for any valuation changes that may occur on December 31, 2006.

(B) Flood impact from Hurricanes Frances and Ivan reflects the costs of flood prevention, offset by grant funds received from the state and federal government.

(C) Through September 30, 2006, the Company incurred due diligence and legal fees associated with a potential growth opportunity. The transaction was not consummated; therefore, these costs were expensed in the quarter ended September 30, 2006.

For additional information, please refer to the Company's annual report on Form 10-K for the fiscal year ended December 31, 2005.

Certain statements in this presentation constitute forward-looking statements or statements that may be deemed or construed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "forecast," "estimate," "project," "intend," "expect," "should," "would," "believe" and similar expressions and all statements that are not historical facts are intended to identify forward-looking statements. These forward-looking statements involve and are subject to known and unknown risks, uncertainties and other factors, which could cause our actual results, performance (financial or operation), or achievements to differ from the future results, performance (financial or operating), or achievements expressed or implied by such forward-looking statements. These factors include but are not limited to the following: changes in underlying paper and packaging prices, raw material prices and demand for our products, and the success of various cost-savings initiatives. These and other risks are more fully discussed in our annual report on Form 10-K for the fiscal year ended December 31, 2005, as updated in our quarterly reports on Form 10-Q for the fiscal quarters ended March 31, 2006 and June 30, 2006.

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