Bowater Announces Decision in Arbitration Matter

    GREENVILLE, S.C., September 12 /CNW/ - Bowater Incorporated (NYSE:   BOW;
TSX: BWX) today announced that Bowater Canadian Forest Products Inc., its
subsidiary, had received a decision in an arbitration related to the 1998 sale
to Weyerhaeuser Company of Bowater's former pulp and paper facility in Dryden,
Ontario. As reported in Bowater's annual report on Form 10-K, Bowater and
Weyerhaeuser have been arbitrating a claim regarding the cost of certain
environmental matters related to the mill. On September 7, 2007, the
arbitrators in the matter awarded Weyerhaeuser approximately C$44 million.

    "Although we disagree with the arbitrators' decision and are disappointed
with this result, this matter is now behind us," said David J. Paterson,
Chairman, President and Chief Executive Officer of Bowater.

    "We are focused on operational excellence to improve our financial
performance," he continued. "During these challenging times, we are
stringently managing capital spending. We expect to spend $120 million in
2007, about 38% of depreciation, and $30 million less than previously

    As a result of the arbitrators' decision, which is binding upon Bowater
and not subject to appeal, Bowater currently expects to record a pre-tax
charge of approximately C$29 million in its third quarter 2007 results.

    About Bowater

    Bowater Incorporated, headquartered in Greenville, SC, is a leading
producer of coated and specialty papers and newsprint. In addition, the
company sells bleached market pulp and lumber products. Bowater employs
approximately 6,900 people and has 12 pulp and paper mills in the United
States, Canada and South Korea. In North America, it also operates a
converting facility and owns 10 sawmills. Bowater's operations are supported
by approximately 708,000 acres of timberlands owned or leased in the United
States and Canada and 28 million acres of timber cutting rights in Canada.
Bowater operates six recycling plants and is one of the world's largest
consumers of recycled newspapers and magazines. Bowater common stock is listed
on the New York Stock Exchange. A special class of stock exchangeable into
Bowater common stock is listed on the Toronto Stock Exchange (TSX: BWX). To
learn more, visit

    Forward-Looking Statements

    Statements in this news release that are not reported financial results
or other historical information are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. They include,
for example, statements about the improvement of our financial performance and
our expectations regarding our capital spending estimates for the remainder of
2007. Forward-looking statements may be identified by the use of
forward-looking terminology such as the words "expect", "will", "believe",
"anticipate", and other terms with similar meaning indicating possible future
events or actions or potential impact on the business or stockholders of

    These forward-looking statements are not guarantees of future
performance. They are based on management's expectations that involve a number
of business risks and uncertainties, which could cause actual results to
differ materially. These risks and uncertainties include, but are not limited
to, negative industry conditions and further growth in alternative media,
actions of competitors, Canadian dollar exchange rates, the demand for higher
margin coated and uncoated mechanical paper and the costs of raw materials
such as energy, chemicals and fiber. In addition, with respect to our proposed
combination with Abitibi-Consolidated Inc., the following factors, among
others could cause actual results to differ materially from those set forth in
the forward-looking statements: the ability to obtain required governmental or
third party approvals of the combination on the proposed terms and schedule
and without material concessions; the risk that the businesses will not be
integrated successfully or that the anticipated improved financial
performance, product quality and, product development will not be achieved;
the risk that other combinations within the industry or other factors may
limit our ability to improve our competitive position; the risk that the cost
savings and other expected synergies from the transaction may not be fully
realized or may take longer to realize than expected; and disruption from the
transaction making it more difficult to maintain relationships with customers,
employees or suppliers. Additional factors are listed from time to time in
Bowater's Securities and Exchange Commission filings, including those
described in the company's Annual Report on Form 10-K for the year ended
December 31, 2006 under the caption "Cautionary Statement Regarding
Forward-Looking Information and Use of Third Party Data," as well as under the
caption "Risk Factors" in the company's proxy statement in connection with the
2007 Annual Meeting of Stockholders. Bowater disclaims any obligation to
update these forward-looking statements.

    Any information about industry or general economic conditions contained
in this press release is derived from third party sources that the company
believes are widely accepted and accurate; however, the company has not
independently verified this information and cannot assure its accuracy.

For further information:

For further information: Bowater Incorporated Media Contact: Kathleen M.
Bennett, 864-282-9452 Analyst Contact: Duane A. Owens, 864-282-9488

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