Champion International Corporation Announces Gas Turbine Project At the Bucksport, Maine Paper Mill.

STAMFORD, Conn.--(BUSINESS WIRE)--Dec. 18, 1998--Champion International Corporation (NYSE:CHA) today announced it has entered into an agreement with Bucksport Energy LLC to construct and operate a 174 megawatt, natural gas-fired turbine generator on the property of its paper mill in Bucksport, Maine. Once constructed, the turbine is expected to provide low-cost electricity and steam to the mill and result in the elimination of the use of coal as a fuel, thereby reducing the mill's overall air emissions by half.

"This project has the potential of helping the Bucksport mill become more self-reliant in terms of electricity and even more competitive in the coated paper business. By investing in this project, Champion, a leader in the manufacture and sale of lightweight coated papers, secures a long-term energy supply that is both cost effective and environmentally friendly," said Fred Oettinger, Bucksport's mill manager. "It is not very often that a project is able to significantly improve a mill's environmental performance while at the same time reduce production costs," he added.

Champion and Bucksport Energy will co-own the project. Champion will own 28% and Bucksport Energy 72%. Bucksport Energy will be responsible for the design, financing and construction of the facility and for the sale of electricity from the turbine to customers in Maine and elsewhere in New England. Champion will be responsible for the day-to-day operation of the plant. Bucksport Energy is owned jointly by an American subsidiary of Hydro-Quebec International (HQI) and by MEG International. MEG International, an electricity and gas multinational, is owned jointly by Hydro-Quebec and a Canadian subsidiary of Gaz de France. Hydro-Quebec is one of the largest utilities in North America. Gaz de France is one of the five largest gas companies in the world.

Richard E. Olson, Chairman and Chief Executive Officer of Champion International, said, "This project is consistent with the strategy Champion announced in October, 1997 to find new ways to generate economic profit and increase shareholder value. It is an excellent example of the type of innovative approach we need to be successful over the long term in a highly competitive global market." He added, "I believe this project helps to enhance the long-term viability of the Bucksport mill. By becoming more energy self-sufficient, we are demonstrating our strong commitment to the coated paper business and to the Bucksport mill and its customers."

Bucksport Energy recently benefited from a Federal Energy Regulation Commission (FERC) ruling which paved the way for a competitive market for electricity in New England. With today's announcement, the principal remaining step towards construction of the natural gas energy plant is to obtain financing for the project. Financing is expected to be in place early next year.

Overall, this project is expected to contribute approximately $40 million to the Maine economy in wages and supplies for engineering and construction of the facility. All the necessary permits have been obtained by Champion and the generator is expected to start-up in October, 2000.

Pam Person, Vice Chairman, Coalition for Sensible Energy, said, "Natural gas is a much cleaner fuel than oil and coal and is safer than nuclear. Gas fuel will help improve the air quality in Maine. This project leverages the efficiency of gas and the efficiency of cogeneration to benefit the environment and the company. This is a great project for Maine."

Champion International Corporation is an integrated forest products company with significant operations in the United States, Brazil and Canada. Champion is a major producer of coated and uncoated papers and market pulp. The company's other products include selected papers for packaging, as well as lumber and plywood. Champion also has the responsibility for the sustainable management of more than eleven million acres of forestlands supporting its manufacturing facilities.