Bowater Announces New Freesheet Hybrid Paper.

GREENVILLE, S.C. -- Bowater Incorporated (NYSE: BOW) today announced availability of BowHybrid FS, the first product in its new family of freesheet hybrid papers. This new product blends bleached kraft pulp with bleached mechanical pulp to provide high strength, hefty bulk and high opacity at light basis weights. These characteristics offer Bowater's customers the chance to address high postal costs with the added benefit of yield savings. The bleached kraft pulp content offers outstanding strength, designed to perform well in demanding converting operations used by direct mailers and other commercial printing applications. BowHybrid FS is also lightly coated to enhance overall printability and reduce ink dot gain when compared to traditional uncoated freesheet products. At a basis weight around 42.5-lb., BowHybrid FS has the thickness and feel of a 50-lb. uncoated freesheet using 42% less wood fiber.

"The introduction of this innovative product is our next step in shifting production to value-added products," said David J. Paterson the company's President and Chief Executive Officer. "Although we have decided to suspend indefinitely the previously discussed machine conversion option at Thunder Bay, Ontario, due to the combination of the strong Canadian dollar and high Ontario energy costs, the Calhoun conversion demonstrates our ability to find and execute favorable investment alternatives. I am also encouraged by the substantial progress in the timberland sales program during the second quarter."

Bowater Incorporated, headquartered in Greenville, SC, is a leading producer of coated and uncoated mechanical papers and newsprint. In addition, the company sells bleached market pulp and lumber products. Bowater employs approximately 8,000 people and has 12 pulp and paper mills in the United States, Canada and South Korea. In North America, it also operates two converting facilities and 10 sawmills. Bowater's operations are supported by approximately 1.1 million acres of timberlands owned or leased in the United States and Canada and 28 million acres of timber cutting rights in Canada. Bowater operates six recycling plants and is one of the world's largest consumers of recycled newspapers and magazines. Bowater common stock is listed on the New York Stock Exchange and the Pacific Exchange. A special class of stock exchangeable into Bowater common stock is listed on the Toronto Stock Exchange (TSX: BWX). To learn more, visit www.bowater.com.

Statements in this news release that are not reported financial results or other historical information are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. They include, for example, statements about our business outlook, assessment of market conditions, strategies, future plans, future sales, prices for our major products, inventory levels, capital spending and tax rates. These forward-looking statements are not guarantees of future performance. They are based on management's expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. The risks and uncertainties relating to the forward-looking statements in this news release include those described under the caption "Cautionary Statement Regarding Forward-Looking Information" in Bowater's annual report on Form 10-K for the year ended December 31, 2005, and from time to time, in Bowater's other filings with the Securities and Exchange Commission. Information about industry or general economic conditions contained in this press release is derived from third party sources that the company believes are widely accepted and accurate; however, the company has not independently verified this information and cannot assure its accuracy.