Diamond Brands

February 7, 2003

      Compass Advisers, LLP ("Compass") acted as financial advisor and investment banker to the Official Committee of Unsecured Creditors (the "Creditors Committee") of Diamond Brands Operations Corp. ("Diamond Brands") during its Chapter 11 reorganization and the sale of its business operations.  At the time of the bankruptcy filing, Diamond Brands operated a privately-held company whose business consisted of the manufacture of wood matches, firestarters, and toothpicks plus plastic flatware based in Cloquet, Minnesota, with other manufacturing facilities in Maine.  Diamond Brands' subsidiary, Forster, Inc., manufactured wooden craft sticks, clothespins, dowels and toothpicks plus plastic straws and flatware.

      Diamond Brands had filed Chapter 11 nearly a year prior to the Creditors Committee's retention of Compass.  Diamond Brands had made two unsuccessful attempts to complete a much-needed sale of assets, and negotiations were stalled.  When Compass was initially retained, Diamond Brands and the secured creditors estimated that there would not be a recovery for the unsecured creditors or any creditors other than the DIP lenders and administrative and primary creditors.  As a result of the Compass' efforts, substantial additional value was created, satisfying potential IRS claims and providing a recovery to unsecured creditors.

      As the Creditors Committee's financial advisor and investment banker, Compass reviewed, analyzed and evaluated the complex financial and other issues regarding the Diamond Brands estates in order to properly advise the Creditors Committee on such issues and to provide the Creditors Committee and its counsel with the analytical support that was necessary to maximize the potential recovery to creditors.  Compass conducted due diligence, valuation analyses, evaluated the two failed sales processes to fully understand why neither transaction resulted in a sale, analyzed the numerous options presented by potential sponsors of reorganization and the range of value these options provided to unsecured creditors, participated in intense negotiations with these potential purchasers and advised the Credtiors Committee on how to respond to the various proposals.  Compass also coordinated with Diamond Brands and their advisors, assisting the Creditors Committee counsel in resolving the significant tax issues that arose throughout the proceedings.

      With the Creditors Committee counsel, Compass developed a strategy for negotiating with potential acquirors in order to improve the potential recovery to unsecured creditors, the economics of the offers, as well as the various terms and conditions of the transactions.  During the latter months of the reorganization, Compass became actively involved in the sales effort, initiating a re-auction of the company and managing that auction, resulting in four competitive bids and a final sale generating a 38% increase in total value to creditors.  Compass actively advised the Creditors Committee and its counsel in negotiating reasonable compromises regarding relative recoveries between unsecured creditors of the various estates, and successfully negotiated outstanding issues ultimately resulting in confirmation of the plan of reorganization and the sale of Diamond Brands' business.  Diamond Brands exited Chapter 11 on February 7, 2003.