Chesapeake Rejects Shorewood's Attempt to Set Bid Deadline; Urges Shorewood to Engage in Negotiations

Business Wire, Feb 16, 2000

Business Editors

RICHMOND, Va.--(BUSINESS WIRE)--Feb. 16, 2000

Chesapeake Corporation (NYSE:CSK) today announced that it has rejected an apparent attempt by Shorewood Packaging Corporation (NYSE:SWD) to set a bidding deadline in connection with the Shorewood Board's consideration of alternatives for the company. Chesapeake reiterated its willingness to negotiate in good faith concerning its fully financed $17.25 per share all cash offer for Shorewood, and again requested access to customary due diligence materials and the opportunity for face-to-face negotiations.

Chesapeake noted that it signed a confidentiality agreement with Shorewood on Monday, February 14, and thereafter received less than 60 pages of rudimentary information from Shorewood. The next day, representatives of Chesapeake met with Shorewood to review that information. However, prior to that meeting, Shorewood set a 24-hour deadline for Chesapeake to provide Shorewood with its &uot;best and final offer and proposal.&uot;

Chesapeake also announced that it sent the following letter to Shorewood's financial advisors in connection with the apparent bidding deadline:

February 16, 2000

Mr. Scott L. Bok Managing Director Greenhill &Co., LLC 31 West 52nd Street, 16th Floor New York, NY 10004

Dear Scott:

We are in receipt of your letter of February 15, which appears to set an artificial deadline of 4:00 PM today for Chesapeake to provide Shorewood with its &uot;best and final proposal.&uot;

As you are well aware, since November 10, 1999, Chesapeake has repeatedly invited Shorewood's Board to engage in serious negotiations regarding the price and structure of our offer. During that three month period, Shorewood claims to have made available due diligence materials, and engaged in substantive discussions, with other interested parties regarding a possible transaction, while excluding Chesapeake from that process. Only after the sweeping decision of the Delaware Chancery Court which, among other things, found that the Shorewood Board acted in a &uot;grossly inadequate&uot; and &uot;grossly uninformed&uot; fashion in the face of Chesapeake's proposal, did Shorewood offer Chesapeake access to any due diligence materials.

It now appears that Shorewood's due diligence offer may be illusory. As you know, the parties entered into a confidentiality agreement late on Monday, February 14. Thereafter, Shorewood provided us with less than 60 pages of the most rudimentary information. The very next day - before any opportunity for access to customary due diligence materials or discussions - we received your letter with its 24 hour trigger and threat that the Shorewood Board may enter into a transaction with a third party later today, possibly including the grant of a breakup fee.

We believe that such deadline and threat are patently unreasonable, and that Chesapeake has not been afforded a level playing field in its attempts to refine its offer for Shorewood. Accordingly, Chesapeake reserves the right to challenge in court any such alternative transaction by Shorewood.

As you know, within 24 hours of receiving Shorewood's rudimentary information package, representatives of Chesapeake met in New York with Mr. Howard Liebman, President &CFO of Shorewood, to review the information. During the course of that 2 hour meeting, we were advised of certain material non-public information concerning Shorewood's recent performance.

In light of that non-public information, and our stated requirement for customary, limited due diligence to permit us to refine our offer, we delivered a short due diligence request list to Mr. Liebman this morning. As we advised your counsel this afternoon, we stand ready to work with Shorewood to accommodate Shorewood's concerns about disclosing competitively sensitive information and information that would be unduly burdensome to assemble. We continue to expect that, with prompt and reasonable access to due diligence materials and the opportunity for meaningful face-to-face negotiations, Chesapeake will be in a position to advise you of any revisions to our offer in advance of the expected record date for our consent solicitation.

Chesapeake remains willing to negotiate in good faith with the Shorewood Board regarding our fully financed $17.25 per share all cash offer. We believe it is in the best interests of Shorewood's stockholders for Chesapeake to have the benefit of access to customary due diligence, and the opportunity for face-to-face negotiations, to develop our &uot;best and final offer and proposal.&uot;

We trust that Shorewood will reconsider its unreasonable deadline, and will enter into prompt and constructive negotiations with Chesapeake.

Very truly yours,

Andrew J. Kohut

cc: Mr. Howard M. Liebman

Jeffrey W. Tindell, Esq.

This news release may contain forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. While the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 are not applicable to forward-looking statements made in connection with a tender offer, it has not been judicially determined whether such safe harbor provisions apply to forward-looking statements in a consent solicitation conducted in connection with a tender offer. The accuracy of such forward-looking statements is subject to a number of risks, uncertainties, and assumptions that may cause Chesapeake's actual results to differ materially from those expressed in the forward-looking statements including, but not limited to: competitive products and pricing; production costs, particularly for raw materials such as corrugated box, folding carton and display materials; fluctuations in demand; government policies and regulations affecting the environment; interest rates; currency translation movements; and other risks that are detailed from time to time in reports filed by the Company with the Securities and Exchange Commission.