Crown Vantage To Explore Separating Specialty Papers Businesses From St. Francisville Mill.

OAKLAND, Calif.--(BUSINESS WIRE)--May 5, 1998--Crown Vantage Inc. (NASDAQ:CVAN) today announced that the company will begin to explore separating its specialty papers businesses from its St. Francisville, La., pulp and paper mill, including the possible divestiture of the St. Francisville facility, in a transaction that would result in a significant reduction of debt, including the repurchase of pay-in-kind notes held by Fort James Corp.

The specialty papers businesses include packaging and converting papers and uncoated printing and publishing papers.

"Our overriding objective is to alleviate the debt burden that has hindered our flexibility and profitability," said Chairman and Chief Executive Officer Ernest S. Leopold. "We see an opportunity during this period of industry consolidation and strong markets for coated groundwood papers to separate our businesses and capture the full value of the world-class St. Francisville site.

"Assuming we are able to successfully complete such a transaction, Crown Vantage would go forward with a more workable financial structure and a sharp focus on the specialty papers common to our remaining nine mills," Leopold said. "Unimpeded by huge debt-service payments, the specialty papers business would be able to compete and grow based on the value of its products and service in the marketplace."

The nine manufacturing sites in the refocused Crown Vantage specialty papers would include 27 paper machines in the United States and Scotland producing about 600,000 tons a year of specialty paper products. The business would be about fifty percent pulp sufficient, with production of approximately 250,000 tons at its largest complex in Berlin and Gorham, N.H. The specialty papers businesses had sales in 1997 exceeding $600 million.

"We would be among the largest specialty papers companies in the world, focused on markets for high value-added papers for printing, publishing, packaging and converting," Leopold said. "We would be able to take full advantage of the interrelationship of our mills and product lines in the international markets for these products."

The Crown Vantage specialty papers business product lines include specialized printing papers such as premium text, cover and writings; opaque papers for financial printing and manuals; trade book papers, and customized forms papers. The product lines also include packaging papers, both coated and uncoated, for retail and consumer products, as well as converting papers for high-end applications such as cosmetic packaging, labels, gift wrap, and disposable medical garments.

Crown Vantage now begins a process to identify third parties interested in effecting a transaction involving the St. Francisville mill. "Our financial advisers have completed their due diligence at St. Francisville, and we hope to effect a transaction involving the exercise of our option to redeem pay-in-kind notes held by Fort James Corporation," Leopold said.

The St. Francisville mill has capacity to produce about 310,000 tons of coated groundwood papers per year on two of its paper machines and 116,000 tons of specialty converting papers capacity on its other two machines. The mill, located on a 2,000-acre site on the east bank of the Mississippi River, is totally self-sufficient in pulp through a pressurized stone groundwood pulp mill and a kraft pulp mill.

"Among the mill's greatest assets are its customer relationships, many going back 35 years or more," Leopold said. "These relationships have been built by providing high quality products and service, which will not be interrupted by this process. The transaction being explored would involve the ongoing St. Francisville operations and its sales and marketing organization."

Headquartered in Oakland, Calif., Crown Vantage had sales in 1997 of $897 million. More Crown Vantage information can be found on the Internet at www.crownvantage.com. -0-

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 intent to engage in a transaction of the type described that allows for the repurchase of the company's pay-in-kind notes and additional pay-down of its debt. There is no assurance that the company will be successful in structuring a transaction of the type described, that it will locate a third party or parties willing to engage in such a transaction, or that it will successfully or in a timely manner conclude any such transaction. Among other things, the company may determine to pursue an alternative transaction or to cease pursuing any such transactions based on circumstances and future developments.

CONTACT: Crown Vantage Inc.

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