SPOKANE, Wash.-June 15, 2001--Potlatch Corporation today announced plans to proceed with a debt refinancing program that is intended to substantially increase its financial flexibility. The company is pursuing a new $400 million bank credit facility and is seeking to raise approximately $250 million through an institutional private placement of senior subordinated notes. The company expects to complete the new credit facility and the note offering later this month, subject to market conditions. The net proceeds of the note offering and initial borrowings under the new credit facility would be used to refinance the company's existing bank loans, meet its debt maturity obligations in 2002 and provide working capital. The new credit facility is expected to consist of a $200 million three-year revolving credit facility and a $200 million four-year term loan. The company anticipates that the new credit facility will be secured by approximately 130,000 acres of its timberlands, as well as its accounts receivable and inventory. The company expects that the terms of the new credit facility will require the company to maintain compliance with financial tests, including a funded indebtedness to capitalization ratio, a minimum consolidated net worth test and a fixed charge coverage ratio. The company also expects that the new credit facility will contain restrictive covenants, including covenants limiting its ability to incur indebtedness, create liens, merge, dispose of assets, pay dividends or make certain investments.