Portland, Oregon, 06 August 2007 --(BUSINESS WIRE)-- Pope & Talbot, Inc. (NYSE:POP) today announced that it entered into a forbearance agreement with its senior secured lenders to extend access to liquidity provided by the revolving credit facility under its senior secured credit agreement for six weeks while it continues to explore options to improve its balance sheet. The forbearance agreement requires the company to expand those efforts during the six-week forbearance period to include soliciting offers to purchase all or substantially all of the company's assets or equity interests.

As Pope & Talbot previously disclosed would be likely, it is out of compliance with a financial covenant in its senior secured credit agreement calculated as of 30 June 2007. The covenant requires the company to maintain a certain minimum EBITDA -- generally earnings before interest, taxes, depreciation, and amortization with certain additional modifications as set forth in the credit agreement. The company was unable to generate the EBITDA required under its credit agreement for the four-quarter period ended 30 June 2007, and therefore is in default under the credit agreement. Pope & Talbot expects to report earnings for the second quarter of 2007 and file its Form 10-Q quarterly report on 09 August 2007.

Pope & Talbot has entered into a forbearance agreement dated as of 31 July 2007, with its secured lenders. Pursuant to the agreement, the lenders have agreed that, until 17 September 2007, the company will continue to have access to its revolving credit facility with total availability of USD 67 million. The agreement also provides for default rate interest to be paid effective 01 July 2007, and a forbearance fee, and for the implementation of a mechanism, similar to that which exists in other corporate asset-based loans, through which cash in the company's deposit accounts will be used to repay borrowings under the revolving credit facility on a daily basis and correspondingly increase availability under the facility.

Although the company may seek further forbearance or other relief from its senior lenders when the current agreement expires on 17 September 2007, it cannot provide any assurance that it will be successful in obtaining such further forbearance or other relief, or as to the terms upon which such forbearance or other relief may be granted.

Even if the company is successful in obtaining additional covenant relief, it will continue to be challenged in its ability to maintain adequate levels of liquidity relative to the size of its operations. Accordingly, the company is continuing to explore alternatives to strengthen its balance sheet and generate cash, including one or more possible asset sales or other capital infusions, and is analyzing its ability to restructure its debt and other liabilities. The company has retained Rothschild Inc. to assist in those efforts.