<b>Bowater Acquiring Alliance Forest</b>

Bowater signed a definitive agreement to acquire all the outstanding shares of Alliance Forest Products Inc., a Montreal-based forest products company.

The value of the transaction, including assumed debt, is about $770 million.  Both companies’ boards have approved the deal.

The combining of the two companies will bring Alliance’s focus on supercalendered and specialty papers with Bowater’s coated groundwood and value-added papers.

Through the combination, Bowater will increase its annual newsprint, coated and specialty papers capacity to approximately 4.6 million metric tons. Annual lumber capacity will also increase to 1.0 billion board feet.

Bowater is the second largest producer of newsprint in North America and the third largest producer of market pulp. With the conversion of a newsprint machine to coated papers at its Catawba, SC mill, the construction of a new coating line at its Michigan Nuway facility and two additional Nuway facilities in the mid-South region and the mid-Atlantic region, by the end of 2002 Bowater will have over 1.6 million short tons of coated, supercalendered and other specialty grades and will be one of the world's premier producers of these groundwood papers.