Champion International Corporation Completes Sale of Canton Mill and DairyPak Operations to Blue Ridge Paper Products Inc.

STAMFORD, Conn.--(BUSINESS WIRE)--May 14, 1999--

Champion International Corporation (NYSE:CHA) announced today that it has completed the sale of its mill in Canton, North Carolina, an extruding and converting facility in Waynesville, North Carolina, and its DairyPak liquid packaging business to Blue Ridge Paper Products Inc. The closing price was $200 million consisting of $170 million in cash and a $30 million note. The sale agreement also provides the opportunity for Champion to receive an additional contingency payment in the future. The proceeds from this sale will be used for general corporate purposes and to retire debt.

Blue Ridge Paper Products Inc. is a new corporation created by KPS Special Situations Fund, LP, a New York-based investment fund, for the purpose of purchasing and operating this business. Ownership of the new company will be split among KPS Special Situations Fund, LP and the salaried and hourly employees at the Canton, Waynesville, and DairyPak facilities. The operations at the new company include a pulp, paper, and bleached board mill in Canton, North Carolina; an extruding and converting facility in Waynesville, North Carolina; and five plants that produce milk and juice cartons. These plants are located in Morristown, New Jersey; Athens, Georgia; Olmsted Falls, Ohio; Clinton, Iowa; and Ft. Worth, Texas. Approximately 2400 people are employed at these facilities.

In October of 1997, Champion announced its intention to divest several non-strategic product segments and facilities, including its bleached board and liquid packaging business, as part of a three-pronged strategy to maximize total shareholder return by focusing on strategic businesses, increasing productivity, and improving financial discipline. The company sold its newsprint business and Texas recycling centers to Donohue, Inc. in June, 1998, and it sold its ovenable-board business to Tenneco, Inc. in September, 1998. Champion has an agreement to sell 300,000 acres of forestlands in the states of New York, Vermont, and New Hampshire to The Conservation Fund. The sale to The Conservation Fund is expected to close during the second quarter. In addition, the company has an agreement to sell the paper mill in Deferiet, New York to The Deferiet Paper Company, a new wholly owned subsidiary of Crabar Paper & Allied Products Corporation, a privately owned holding company based in Dayton, Ohio. This agreement is also expected to close during the second quarter.

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