KPS Capital Partners Sells Blue Ridge Holdings Portfolio Company to Packaging Holdings, Inc.

New York, New York, USA, 31 July 2007 -- KPS Capital Partners, LP has sold its portfolio company, Blue Ridge Holding Corp., the parent of Blue Ridge Paper Products Inc. to Packaging Holdings, Inc. (an entity wholly owned by Rank Group Limited) for USD 338 million, subject to certain adjustments. Rank Group Limited, headquartered in New Zealand, is the owner of the Carter Holt Harvey Ltd. group of companies, Evergreen Packaging Inc. (formerly the Beverage Packaging Division of International Paper), and SIG Holding AG (Switzerland).

The transaction represents the seventh sale of a portfolio company by KPS over the past 14 months, and one of many complex, cross-border sale transactions that KPS has completed involving strategic buyers in Europe, Japan, and greater Asia.

David Shapiro, a managing partner of KPS, stated, “We take immense pride in what Blue Ridge has accomplished. KPS and our employee-owner partners created a new company to acquire a set of assets that required significant modernization, and had no senior management team, new product pipeline or customers under contract. But we saw an opportunity to create something special, and under our ownership these assets were transformed into Blue Ridge, a thriving independent enterprise. During our ownership, Blue Ridge grew market share across its core packaging product categories, achieved dominant positions with the most important industry customers, introduced industry-leading barrier structure technology, created joint ventures in Latin America and Europe, and modernized its key manufacturing assets. The success of Blue Ridge is another validation of our investment strategy.

“We congratulate Rich Lozyniak, Blue Ridge’s chief executive officer, the company’s management team, and our employee-owners on their considerable shared achievement. We thank General Electric Capital Corporation for its equity co-investment and strong support of the company over the years. We also thank the United Steelworkers for bringing us this investment opportunity and for playing a very critical role in making the company a success.”

Lozyniak added, “On behalf of the 2000 employee-owners of Blue Ridge, we thank KPS for seeing value where no one else could, and for providing the leadership and resources that allowed Blue Ridge to become an industry leading company. We look forward to continuing our commitment to customer service and manufacturing excellence, developed in partnership with KPS, under the Rank Group’s ownership.”

Leo Gerard, international president of the United Steelworkers, said, “As a result of the acquisition of Blue Ridge Paper by Packaging Holdings Incorporated the USW employee-owners, our union and KPS Capital was a driving force in creating a new and successful company out of assets many industry experts said should close. I congratulate all of those involved on their accomplishment. Through our members’ sacrifices, investment in their futures, hard work, dedication and focus, we have again proven the experts were wrong. The company’s employee-owners and our USW members are receiving nearly USD 30 million of cash in their Employee Stock Ownership Plan (ESOP) accounts, a new and improved collective bargaining agreement, and a bright future with Packaging Holdings Incorporated. This is another example of the successful collaboration between Steelworkers and KPS over the past two decades.”

KPS legal advisor with respect to this transaction was Paul, Weiss, Rifkind, Wharton & Garrison LLP. Houlihan Lokey Howard & Zukin provided a fairness opinion to Blue Ridge Holding Corp.

About Blue Ridge Paper Products Inc.

Headquartered in Canton, North Carolina, Blue Ridge Paper Products Inc. (www.blueridgepaper.com) is a leading integrated manufacturer of liquid packaging, envelope paper, and coated bleachboard used in food service packaging. The company also produces specialty uncoated and extrusion coated papers. The company conducts operations in six manufacturing facilities located in five states, and employs more than 2000.

About KPS Capital Partners, LP

KPS Capital Partners, LP is the manager of the KPS Special Situations Funds, a family of private equity funds with more than USD 1.8 billion of committed capital focused on constructive investing in restructurings, turnarounds, and other special situations. KPS has created new companies to purchase operating assets out of bankruptcy; established stand-alone entities to operate divested assets; and recapitalized highly leveraged public and private companies. The KPS investment strategy targets companies with strong franchises that are experiencing operating and financial problems. KPS invests its capital concurrently with a turnaround plan predicated on cost reduction, capital investment, and capital availability. Typically, the KPS turnaround plan is accompanied by a financial restructuring of the company's liabilities. The KPS investment strategy and portfolio companies are described in detail at the firm's Web site: www.kpsfund.com.