Chesapeake Targets Use of $850 Million in Proceeds From Timberland Sale and Tissue Partnership.

RICHMOND, Va.--(BUSINESS WIRE)--Aug. 6, 1999--

Chesapeake Corporation (NYSE:CSK) announced its plans today for use of the cash that will be generated from its pending sale of timberlands and the formation of a commercial tissue partnership with Georgia-Pacific Corp.

As previously announced in April, Chesapeake signed a letter of intent to sell 278,000 acres of timberland in the states of Virginia, Maryland and Delaware to the Hancock Timber Resource Group, a wholly owned subsidiary of John Hancock Mutual Life Insurance Company. Closing of the timberland sale, subject to buyer financing and other customary conditions, is expected in the third quarter of 1999.

Chesapeake President and Chief Executive Officer Thomas H. Johnson said, "The sale of our timberlands is a key component of the strategic transformation of Chesapeake from a natural resources based, commodity producer, into a focused supplier of specialty packaging for selected markets."

Another major step in the transformation of Chesapeake was announced in mid-June, when Chesapeake announced that it would contribute the assets of its Wisconsin Tissue business to a commercial tissue partnership with Georgia-Pacific Corporation. Through the partnership agreement with Georgia-Pacific, Chesapeake expects to receive a 10 percent interest in the partnership and an initial tax-deferred cash distribution of approximately $730 million.

"The negotiation of definitive agreements with Georgia-Pacific is underway. We expect the partnership will be finalized late in the third quarter or early in the fourth quarter of this year," Johnson said. "The timber sale and the tissue partnership are expected to generate over $850 million of cash that will be used to repurchase Chesapeake stock, continue the growth of our core specialty packaging businesses through strategic acquisitions and alliances, and reduce debt."

Chesapeake's open market share repurchase program will continue in the near-term. In addition, the company expects to execute one or more tender offers for a total of four to seven million shares, or 20 to 30 percent of the company's outstanding common stock, using portions of the proceeds from the timberland sale and the initial cash distribution from the pending tissue partnership with Georgia-Pacific. Merrill Lynch has been retained as the dealer-manager for Chesapeake's share purchase program.

Chesapeake, headquartered in Richmond, Virginia, is a specialty packaging and tissue company with over 50 locations in the United States, Europe, Mexico and Canada. Chesapeake's web site is http://www.cskcorp.com .

This news release, including comments by Thomas H. Johnson, contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The accuracy of such statements is subject to a number of risks, uncertainties, and assumptions that may cause Chesapeake's actual results to differ materially from those expressed in the forward-looking statements including, but not limited to: competitive products and pricing; production costs, particularly for raw materials such as waste paper and corrugated box and display materials; the ability to finalize the partnership agreement with Georgia-Pacific Corp., fluctuations in demand; government policies and regulations affecting the environment; interest rates; currency translation movements; Year 2000 compliance issues; and other risks that are detailed from time to time in reports filed by the Company with the Securities and Exchange Commission.