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Chesapeake Corporation Considers Financial Restructuring Alternatives
Richmond, Virginia, USA, 02 October 2008 -- Chesapeake Corporation (NYSE: CSK) today announced that it has made progress in its ongoing efforts to address the upcoming maturity of its bank credit facility and its general liquidity needs.

The holders of more than 70% of the principal amount of the corporation's 10-3/8% Sterling-denominated senior subordinated notes due in 2011 and its 7% euro-denominated senior subordinated notes due in 2014 have formed an ad hoc committee and retained Houlihan Lokey as their financial advisor. The corporation has been actively engaged in constructive discussions with the ad hoc committee and its advisor about financial restructuring alternatives that the corporation expects would, if consummated, address the corporation's short-term and long-term financing, capital structure, and operational needs. The alternatives being discussed include potential transactions involving a substantial reduction in the corporation's leverage that would result in substantial dilution or a reduction of the value of the corporation's current common stock to nominal or no value. Discussions with the ad hoc committee and its financial advisor are ongoing, but there can be no assurance that an agreement will be reached.

"We are encouraged by the significant progress with our financial restructuring plan, particularly with the discussions we have had with the holders of the senior subordinated debt and their advisor," said Andrew J. Kohut, Chesapeake's president and chief executive officer.

The lenders on the corporation's USD 250-million Senior Secured Credit Facility have agreed to an amendment to the Credit Facility, which includes a waiver of compliance with certain financial condition covenants of the credit facility through 31 October 2008. The amendment waives any potential event of default for failure to meet the financial condition covenants for the third fiscal quarter of the corporation (which ended 28 September 2008) until 31 October 2008. Based on current projections, the corporation does not expect to be in compliance with the financial covenants of the Senior Secured Credit Facility as of the end of the waiver period on 31 October 2008. While the corporation intends to attempt to resolve compliance issues with the covenants by replacing or amending the Senior Secured Credit Facility or obtaining waivers from the corporation's lenders, there can be no assurance that these alternatives will be successful on or before 31 October 2008. Failure to comply with the covenants would be an event of default under the Senior Secured Credit Facility. If such an event were to occur, the lenders under the Senior Secured Credit Facility could require immediate payment of all amounts outstanding under the Senior Secured Credit Facility and terminate their commitments to lend under the Senior Secured Credit Facility and, pursuant to cross-default provisions in many of the instruments that govern other outstanding indebtedness, immediate payment of the coorporation's other outstanding indebtedness could be required, all of which would likely have a material adverse effect on the business, results of operations, and financial condition of the corporation.

Chesapeake Corporation protects and promotes the world's great brands as a leading international supplier of value-added specialty paperboard and plastic packaging. Headquartered in Richmond, Virginia, the company is one of Europe's premier suppliers of folding cartons, leaflets and labels, and plastic packaging for niche markets. Chesapeake has 45 locations in Europe, North America, Africa, and Asia and employs approximately 5400 people worldwide.

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