Premdor Inc. Signs Amendment To Its Agreement To Acquire Masonite Corporation.

Business Editors

TORONTO--(BUSINESS WIRE)--July 5, 2001

Premdor Inc. (NYSE:PI) (TSE:PDI.) today announced that it has signed an Amendment to the Purchase Agreement dated as of September 30, 2000 pursuant to which Premdor agreed to acquire Masonite Corporation from International Paper Company.

The closing date of the amended transaction will be August 31, 2001, unless otherwise agreed by the parties.

The closing of the amended transaction is subject to final regulatory approval by the U.S. Department of Justice, however Premdor and International Paper jointly have agreed to enter into a Consent Decree to permit the transaction to be completed. The parties expect to obtain final approval of the proposed Consent Decree prior to August 31, 2001. The proposed Consent Decree will require a post-closing divestiture by Premdor of Masonite's Towanda, Pa. facility. The Towanda facility manufactures molded door facings and MiraTEC(TM) trim and will continue to conduct business as a supplier of door facings to door manufacturers.

The purchase price for Masonite Corporation is $500 million subject to certain post closing and other adjustments. The purchase price will consist of $300 million payable in cash at closing and $200 million in notes to be retained by International Paper, subject to certain adjustments.

"We are very pleased that we have finalized the negotiations with International Paper. Despite the long delay we are committed to the completion of the acquisition of Masonite," said Philip S. Orsino, President and CEO of Premdor.

After closing the transaction, all other facilities of Masonite, including the molded door facing plants in Laurel, Mississippi, Carrick-on-Shannon, Ireland and Seoul, Korea will be owned by Premdor as part of Premdor's strategy to become vertically integrated and to expand internationally. Premdor will also operate Masonite's research and development center in St. Charles, Illinois and other Masonite facilities and sales offices in the United States, England, South Africa and China.

On a combined restated basis after the sale of the Towanda facility, Premdor's proforma EBITDA for the 12 months ending March 31, 2001 was approximately $185 million or 14% of net sales. This trailing twelve month period included previously discussed significantly higher energy costs and economic uncertainty which impacted negatively both Premdor's and Masonite's financial results.

Premdor will finance the cash portion of the acquisition of Masonite and refinance its current outstanding debt with senior loan facilities. Management is now in a position to finalize the terms of such facilities. International Paper will hold two junior subordinated seller notes totaling $200 million, consisting of Seller Note A for $175 million and Seller Note B for $25 million. These notes are pay-in-kind securities that have no current cash interest and a term of 7.5 years. Seller Note B will only become payable if Seller Note A is not repaid in full within 3.5 years from the closing of the transaction. Management expects that based on current cash flow projections Seller Note A will be repaid within 3.5 years. As a result for financial reporting purposes Premdor will record the purchase price of Masonite at $475 million subject to certain closing adjustments.

Premdor's management is committed to delivering superior long-term shareholder value through continued earnings-per-share growth and improvement in the quality of Premdor's earnings. "This transaction will create a vertically integrated international building products company. It will advance our objectives through further integration, a broader product offering, greater geographic diversity, technological leadership and superior customer service," stated Mr. Orsino.

Masonite was founded in 1925 by William H. Mason and quickly became a pioneer and leader in the development of high-density wood composite products. Today Masonite is one of the major manufacturers of molded door facings in the world and other advanced wood composite products.

Premdor operates over 60 facilities in eight countries and has over 9,000 employees. The Premdor Group of Companies manufacture, merchandise, and sell their products to large distributors, jobbers, home center chains and wholesale and retail building supply dealers across North, Central, and South America, France, the United Kingdom, Israel, and other countries in Europe, Asia and the Middle East.

Statements in this press release that are not historical are forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially, including whether conditions to closing of announced transactions are satisfied and whether the expected benefits from the combination are realized.

All dollar amounts in this announcement are in U.S. dollars.

A conference call is scheduled for 11:00 a.m. EST on Friday, July 6th to discuss Premdor's press release.

Toronto and overseas participants should call [phone]. All others should call [phone].

Website: www.premdor.com