Bowater Announces Specialty Paper Expansion, Election of Board Members and Declares Dividend at 2005 Annual Meeting.

GREENVILLE, S.C. -- At its Annual Meeting of Shareholders today, Arnold M. Nemirow, Chairman, President and Chief Executive Officer of Bowater Incorporated (NYSE: BOW), announced that its Board of Directors had approved earlier in the day an $80 million capital investment to convert approximately 200,000 metric tons of annual newsprint production at its Calhoun, TN, mill to higher-margin specialty grades. The project is expected to be completed by mid-2006 and focus on the growing direct mail and related advertising markets. After the project is completed, the Calhoun site, which once produced 730,000 tons of newsprint annually, will produce 465,000 tons of specialty grades and 300,000 tons of newsprint.

Bowater shareholders also re-elected to the Board of Directors for three-year terms:

--Francis J. Aguilar, Professor Emeritus of Harvard University Graduate School of Business

--John A. Rolls, President and Chief Executive Officer of Thermion Systems International

--L. Jacques Menard, Chairman of BMO Nesbitt Burns and President, BMO Financial Group, Quebec

The Directors acknowledged the resignation of Board member Charles J. Howard due to health reasons.

KPMG LLP was ratified as the independent auditor for the 2005 fiscal year.

The Board also declared a quarterly cash dividend of $0.20 per common share payable on July 1, 2005, to holders of record at the close of business on June 10, 2005. Simultaneously, Bowater's subsidiary, Bowater Canada Inc., declared a quarterly cash dividend to holders of its exchangeable shares (TSX: BWX) in the same amount with the same record and payable dates.

Bowater Incorporated, headquartered in Greenville, SC, is a leading producer of newsprint and coated mechanical papers. In addition, the company makes uncoated mechanical papers, bleached kraft pulp and lumber products. The company has 12 pulp and paper mills in the United States, Canada and South Korea and 12 North American sawmills that produce softwood lumber. Bowater also operates two facilities that convert a mechanical base sheet to coated products. Bowater's operations are supported by approximately 1.4 million acres of timberlands owned or leased in the United States and Canada and 30 million acres of timber cutting rights in Canada. Bowater is one of the world's largest consumers of recycled newspapers and magazines. Bowater common stock is listed on the New York Stock Exchange, the Pacific Exchange and the London Stock Exchange. A special class of stock exchangeable into Bowater common stock is listed on the Toronto Stock Exchange (TSX: BWX).

All amounts are in U.S. dollars.

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, 2004, 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.