Champion to Sell Canton Mill and DairyPak Ops to Carolina Paper

Champion International Corp. announced yesterday that it has agreed to sell its mill in Canton, NC, an extruding and converting facility in Waynesville, NC, and its DairyPak liquid packaging business to The Carolina Paper Co. The sale price is $200 million, consisting of $170 million in cash and a $30 million note. The agreement also provides the opportunity for Champion to receive an additional contingency payment in the future.

The Carolina Paper Co. 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. The operations include a pulp, paper and bleached board mill in Canton, NC; an extruding and converting facility in Waynesville, NC; and five plants that produce milk and juice cartons. These plants are located in Morristown, NJ; Athens, GA; Olmsted Falls, OH; Clinton, IA; and Ft. Worth, TX. Approximately 2,400 people are employed at the facilities to be sold.

This sale is part of Champion's plan, which the company announced in October 1997, to divest non-strategic product segments and facilities. At that time, the company adopted a three-pronged strategy to maximize total shareholder return by focusing on strategic businesses, increasing profitability and improving financial discipline.

This agreement is subject to several conditions, including an affirmative vote of the membership of the unions that represent some of the employees at these facilities. All Canton, Waynesville and DairyPak employees will have an equity investment in The Carolina Paper Co. through an Employee Stock Ownership Plan, or ESOP. In addition, Champion has negotiated an agreement to sell wood chips to The Carolina Paper Co. for use at the Canton mill.

Champion International Corp. 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.