| January 31, 2003 To: Potential Holders of Beneficial Interests in the Crown Paper Liquidating Trust and Other Interested Parties Re: Formation, status and tax issues regarding Crown Paper Liquidating Trust as successor to Crown Vantage, Inc. and Crown Paper Company Dear Potential Holder and Interested Party: The Crown Paper Liquidating Trust (“Trust”) became effective on March 1, 2002 as successor to Crown Vantage, Inc. and Crown Paper Company (“Crown Entities”) pursuant to the Crown Entities’ Second Amended Joint Liquidating Plan of Reorganization (“Plan”). I am writing to advise you of the formation of the trust, its current status and to supply you with important tax information, upon the chance that you will become a holder of a beneficial interest in the Trust. The identification of holders of beneficial interests in the Liquidating Trust will not be determined until the former publicly held shares and bonds of the Crown Entities are surrendered in exchange for beneficial interests in the Trust. We have engaged Wells Fargo Bank Minnesota, National Association to act as the registrar of interests in the Trust and to arrange surrender of the former publicly held shares and bonds. Such public securities were extinguished as of March 1, 2002 and will be exchanged for beneficial interests in the Trust upon the surrender of the certificates. These beneficial interests will not be certificated and are not transferable. In respect of pre-bankruptcy creditor claims, other than the bonds, such claims were extinguished on March 1, 2002 as well and will, upon becoming deemed “allowed” claims, be exchanged for beneficial interests in the Trust as well. The process of determining “allowed” claims will not commence unless and until the Trust has accumulated at least $1 million for distribution to holders of beneficial interests in the Trust. Thus, the identification of holders of beneficial interests in the Trust respecting these creditor claims will not be determined until the process of determining the “allowed” claims is commenced and concluded. These beneficial interests will not be certificated and are not transferable. Under the Plan, the Crown Entities transferred to the Trust assets that included relatively insignificant miscellaneous assets and cash and two categories of causes of action. The value of the causes of action is not able to be determined with any reasonable degree of accuracy. Under the Plan, the Trust assumed obligations to resolve certain priority claims for which reserves were established and obligations in excess of $4-6 million to administrative and other priority obligations of the Crown Entities for which there were no reserves. Additionally, the Plan provided that the Trust is required to share the proceeds of liquidation of most of the miscellaneous assets and of the causes of action with certain banks and other lenders. This share is initially 50% over a threshold of recoveries in one category of litigation and the first $2.3 million and thereafter initially 50% of recoveries in the other category of litigation. The share reduces to 30% after an aggregate recovery of $27.3 million of proceeds and it reduces further to 10% after an aggregate recovery of proceeds of $67.3 million. Finally, the Trust incurs and is obligated for its own fees and expenses. Given the Trust’s obligations, it is currently estimated that the trust will not have accumulated at least $1 million of cash for distribution to holders of beneficial interests until recoveries on the causes of action exceed at least $18 million. It is not known when or if that will occur. The Trust has very little cash with which to operate. Thus reporting to you and other formalities not absolutely required has been curtailed of necessity. However, the Trust desires to provide a mechanism for sharing information to you. Thus, this letter and the attachments are being provided. The first attachment is a statement of the history of the Trust and its current status, summarized more briefly in this letter. The second attachment is an important tax notice to you. Essentially, the tax notice indicates that for tax purposes, the value of beneficial interests in the Trust must be considered $zero as of March 1, 2002. March 1, 2002 is the date that the claims and interests of the former bondholders, other creditors and shareholders of the Crown Entities were exchanged for beneficial interests in the Trust. The primary reason for this valuation for tax purposes, as indicated in the attachment, is the inability to determine the value of the causes of action transferred to the Trust with any reasonable accuracy. Also, the trust has set up a website. The address for the website is: www.crownpapertrust.com. Again, as resources do not permit more, this site will be used as the primary vehicle for sharing and significant developments with you. Thus, you may wish to review the site periodically for updates. Sincerely, The Crown Paper Liquidating Trust By: ____________________________ Jeffrey H. Beck, Trustee
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