FOR
IMMEDIATE RELEASE: Contact: Henry
Miller 212-338-5100 KPS AND EMPLOYEES ANNOUNCE COMPLETION OF PURCHASE OF CANTON SYSTEM FROM CHAMPION INTERNATIONAL New York, NY (May 14, 1999) -- KPS Special Situations Fund, L.P. announced that it has completed the purchase from Champion International Corporation of the "Canton System", a leading producer of envelope-grade paper and coated board used in liquid packaging. The new company, named Blue Ridge Paper Products Inc., consists of a pulp and paper mill in Canton, North Carolina; an extruding plant in Waynesville, NC; and, five converting plants which produce milk and juice cartons in Athens, Georgia; Fort Worth, Texas; Clinton, Iowa; Olmsted Falls, Ohio, and Morristown, New Jersey. The KPS Fund paid Champion $170 million at the close of the transaction, plus a note in the principal amount of $30 million, and agreed to an additional payment to Champion in the future if the new company meets certain financial targets. The KPS Fund, as the controlling investor, owns 55 percent of Blue Ridge Paper Products Inc.; the employees of Blue Ridge Paper own 40 percent of the company through an employee stock ownership plan (ESOP), and the remaining five percent is reserved for senior executives of the company. The employees of the company have voted to adopt reductions in wages and benefits over the next seven years and will receive a profit-sharing program and participation on the company's board of directors in addition to their stock ownership. The hourly employees at six of the Blue Ridge Paper Products plants are represented by PACE International Union (the Paper, Allied-Industrial, Chemical and Energy Workers); the hourly employees at the Morristown, NJ, plant are represented by the UAW (the United Automobile, Aerospace and Agricultural Implement Workers of America International Union). PACE and the UAW worked in partnership with KPS to complete this transaction. The headquarters of Blue Ridge Paper Products Inc. is in Asheville, North Carolina. Gordon Jones, an industry veteran with 23 years' experience (most recently as Vice President and an Executive Officer of Smurfit-Stone Container Corporation) was named CEO of Blue Ridge Paper Products Inc. on April 1, 1999. The KPS Special Situations Fund, L.P. is a New York City-based private equity fund that restructures and invests in under-performing middle-market companies, often in cooperation with employee groups. The principals of the KPS Fund have restructured dozens of companies in basic manufacturing and service industries. Many of those transactions have involved employee ownership, and the principals of the Fund have played a leading role in the creation of some of the largest employee-owned companies in the United States (United Airlines) and Canada (Algoma Steel). "Blue Ridge Paper Products Inc. is a partnership of capital and labor," said Eugene J. Keilin, a principal of the KPS Fund. "That partnership represents a significant competitive advantage, while also providing meaningful job security for over 2,000 employees in six states. We are excited about sponsoring the first significant ESOP in the U.S. paper industry, and we are grateful to PACE and the UAW for making this opportunity possible." The other principals in the KPS Fund are Michael Psaros and David Shapiro.
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