DATE: Thursday, April 3, 1997               TAG: 9704030448

SECTION: LOCAL                   PAGE: B7   EDITION: FINAL 

SOURCE: STAFF AND WIRE REPORT 

DATELINE: WEST POINT                        LENGTH:   45 lines

PAPER COMPANY SELLING WEST POINT MILL

The paper company whose roots were established in this York River town north of Williamsburg is selling its 83-year-old mill here to a Canadian company.

Chesapeake Corp. said Wednesday that it signed a preliminary agreement to sell its kraft products mill, which makes paper for grocery bags and other packaging products, to Montreal-based St. Laurent Paperboard Inc.

The planned sale is part of a $508 million deal in which St. Laurent will also acquire Chesapeake's four box plants.

For Chesapeake, the deal continues a retreat from its roots in one of the less glamorous commodity parts of the paper business. The company branched in 1985 into the production of napkins, tablecloths, towels, facial tissue and bathroom tissue - markets in which prices are more stable.

The West Point mill's sale also continues Chesapeake's retreat from this community. The company moved its corporate headquarters from West Point to fancier offices in a downtown Richmond building in 1987.

J. Carter Fox, Chesapeake's president and chief executive, said in a statement that the decision to sell the 1,000-employee West Point mill, ``which embodies the historic roots of our company, was a difficult one.''

But he said Chesapeake's management and board of directors ultimately decided the sale would be in the best interest of the company and its shareholders. Chesapeake said it expects to record a gain from the transaction. The deal is scheduled to conclude in May.

Susan Greenbaum, a Chesapeake spokeswoman, said a small number of Chesapeake employees will remain in West Point in the company's forestry division. They will oversee the harvesting of trees that will supply the West Point mill under a 15-year supply agreement between Chesapeake and St. Laurent.

The deal will enable St. Laurent to more than double its size. The facilities it is acquiring - including box plants in Richmond, Roanoke, Baltimore and North Tonawanda, N.Y., with a combined 750 employees - had sales of $412 million last year.

Chesapeake's shares closed up $2.75, at $30, in trading Wednesday on the New York Stock Exchange. MEMO: Staff writer Dave Mayfield and The Associated Press contributed to

this report.

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