Crown Vantage Announces Agreement With Fort James On Intercompany Debt.

OAKLAND, Calif.--(BUSINESS WIRE)--March 20, 1998--Crown Vantage (NASDAQ:CVAN) announced today that it entered into an agreement with Fort James Corporation related to the company's 11.45 percent senior pay-in-kind (PIK) notes held by Fort James that are due in 2007.

The agreement provides for a two-step process in which Crown Vantage would receive certain PIK notes and repurchase the remaining notes, which have a total face value of about $133 million, for a fixed price of $80 million.

In exchange for the mutual release from a variety of claims that have arisen from prior intercompany transactions, Fort James will return $33 million of the pay-in-kind notes to Crown Vantage. In addition, Crown Vantage is provided an option by Fort James to purchase the remaining PIK notes for $80 million in cash.

The option must be exercised by Sept. 30, 1998, and funded by Oct. 31, 1998. Funding would be obtained through transactions that improve the company's financial structure, such as an equity offering, sale of assets, or a combination of both.

Crown Vantage Chairman and Chief Executive Officer Ernest S. Leopold said, "We are delighted to have this agreement in place. Crown Vantage has engaged advisers to assist in a thorough review of the alternatives for funding the exercise of the option. Successful execution of both steps contained in the agreement is expected to significantly enhance the capital structure of Crown Vantage."

Both steps in the agreement are subject to certain conditions, including required consents from Crown Vantage lenders.

Crown Vantage became an independent company in August 1995 upon the spin-off of the stock of Crown Vantage by James River Corporation (now known as Fort James Corporation) to its shareholders after contribution of certain assets, liabilities and operations to the new company. The PIK notes were issued by Crown Vantage to James River at that time.

Headquartered in Oakland, Crown Vantage manufactures about one million tons of paper annually for printing, publishing and specialty packaging and converting applications at its 10 pulp and paper mills in the United States and Scotland. The company had sales in 1997 of $897 million. Crown Vantage information can be found on the Internet at www.crownvantage.com. -0-

Note to Editors: Forward-Looking Statements Within the Context of the Private Securities Litigation Reform Act of 1995.

This news release contains certain forward-looking statements reflecting the company's current expectations that it will execute both steps of the process to receive certain pay-in-kind notes and to repurchase the remaining PIK notes, including plans to fund exercise of the option through an equity offering, sale of assets, or a combination of both. There is no assurance that the company will be successful in raising the required funding in time to exercise the option.

CONTACT: Crown Vantage

Neil Stuart, 510/874-3423 (Financial)

Katie Cutler, 510/874-3458 (Media)