Bowater to Purchase Newsprint South Paper Mill.

Business Editors

GREENVILLE, S.C.--(BUSINESS WIRE)--July 14, 2000

Bowater Incorporated (NYSE:BOW) announced today that it has agreed to acquire the Newsprint South, Inc. paper mill, located in Grenada, Mississippi, from GE Capital Structured Finance Group (SFG) and shareholders.

The Newsprint South mill has an annual production capacity of approximately 250,000 metric tons of newsprint. Built in 1989, the mill has one of the lowest operating costs of any newsprint mill in the United States. The mill complements Bowater's strong presence in the Southeastern U.S. and will allow the company to expand in the Southwest.

The agreement provides for a cash purchase price of $370 million and the assumption of $8.9 million in debt. Bowater anticipates that the transaction, which is subject to certain regulatory approvals, will be completed in the third quarter.

"This acquisition brings one of the best newsprint mills in the world to Bowater's production and distribution systems. Over the past five years, we have consistently purchased low-cost, high-quality assets, while divesting of non-strategic or unprofitable operations. We expect that this acquisition will be accretive to earnings and cash flow in the first year," said Arnold Nemirow, Bowater's Chairman, President and Chief Executive Officer.

"We are pleased to be able to place Newsprint South within the high caliber Bowater system," said Mark Mylon, Managing Director and head of Global Asset Management for SFG. "We are confident that the dedicated employees and valued customers of Newsprint South will benefit greatly from this business combination."

Bowater Incorporated, headquartered in Greenville, SC, is a global leader in newsprint. In addition, the company makes coated and uncoated groundwood papers, bleached kraft pulp and lumber products. With the Newsprint South acquisition, the company will have nine pulp and paper mills in the United States, Canada and South Korea. The company also owns and operates a coating operation and three sawmills that produce softwood dimension lumber. These operations are supported by 1.8 million acres of timberlands owned or leased in the United States and Canada and over 14 million acres of timber cutting rights in Canada. The company is one of the world's largest consumers of recycled newspapers and magazines. Bowater common stock is listed on the New York Stock Exchange, U.S. regional exchanges and the London Stock Exchange. A special class of stock exchangeable in Bowater common stock is listed on the Toronto Stock Exchange (TSE:BWX).

A wholly owned subsidiary of GE Capital, SFG is a leading equity investor and provider of innovative, large ticket financial solutions for clients in the global commercial and industrial, energy, telecommunications, and transportation sectors. GE Capital, with assets of more than $345 billion, is a global, diversified financial services company with 28 specialized businesses. GE is a diversified manufacturing, technology and services company with operations worldwide. The sale of SFG's Newsprint South interest will not be material to SFG's parent.

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, 1999, and from time to time, in Bowater's other filings with the Securities and Exchange Commission.