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Management Side
Domtar Inc. Announces Pricing of Cash Tender Offer for Canadian Debentures
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Montreal, Quebec, Canada, 13 December 2007 -- /PRNewswire/ -- Domtar Inc., a wholly owned subsidiary of Domtar Corporation, announced today the Total Consideration payable under the previously announced offers to purchase for cash any and all of its outstanding Canadian dollar denominated 10% Debentures due 2011 and 10.85% Debentures due 2017. The terms of the offers are more fully described in an Offer to Purchase and Consent Solicitation Statement and related Letter of Transmittal and Consent dated 28 November 2007.

The Total Consideration for both series of Debentures was calculated as of 13 December 2007, by reference to:

(i) an offer spread of 125 basis points over the yield to maturity
on the 6.00% Government of Canada bond due June 2011 for the
10% Debentures; and

(ii) an offer spread of 150 basis points over the yield to maturity
on the 4.00% Government of Canada bond due June 2017 for the
10.85% Debentures.

Assuming an Early Consent Deadline of 5:00 p.m., Eastern time, on 17 December 2007 and an Early Settlement Date of 20 December 2007, the Total Consideration for:

(i) each CAD 1000 principal amount of 10% Debentures validly tendered
and not withdrawn before the Early Consent Deadline, will be
CAD 1143.83; and

(ii) each CAD 1000 principal amount of 10.85% Debentures validly
tendered and not withdrawn before the Early Consent Deadline,
will be CAD 1385.04.

In each case, the Total Consideration includes an Early Consent Amount of CAD 30.

Holders who validly deposit their Debentures under the Offers and deliver their Consent to the Proposed Amendments after the Early Consent Deadline and before the Expiration Time, which is currently scheduled to be 5:00 p.m., Eastern time, on 03 January 2008, unless extended or earlier terminated, will only receive the Purchase Price, which is equal to the Total Consideration as of the Final Settlement Date less the Early Consent Amount, and which will be payable promptly after the Expiration Time on the Final Settlement Date.

Assuming a Final Settlement Date of 07 January 2008, the Purchase Price for:

(i) each CAD 1000 principal amount of 10% Debentures validly tendered
after the Early Consent Deadline, will be CAD 1111.86; and

(ii) each CAD 1000 principal amount of 10.85% Debentures validly
tendered after the Early Consent Deadline, will be CAD 1353.60.
Domtar Inc. will also pay accrued and unpaid interest from the
last interest payment date to, but not including, the
applicable Settlement Date on those Debentures accepted for
payment pursuant to the Offers.

In connection with the Offers, certain Debentureholders who hold, directly or indirectly, or exercise control or direction over, approximately 66.9% and 64.7% of the 10% Debentures and the 10.85% Debentures, respectively, have entered into lock-up agreements with Domtar Inc. pursuant to which they have agreed, subject to the terms and conditions contained therein, to irrevocably deposit all of their Debentures and deliver their Consents on or before the Early Consent Deadline in valid acceptance of the Offers and Consent Solicitations.

Scotia Capital has been retained by Domtar Inc. to act as Dealer Manager and Solicitation Agent for the Offers and Consent Solicitations. Domtar Inc. has also retained Georgeson Shareholder Communications Canada Inc. to act as information agent and Computershare Investor Services Inc. to act as depositary in connection with the Offers and the Consent Solicitations.

For copies of the Offer to Purchase and Consent Solicitation Statement and the related Letter of Transmittal and Consent, contact Georgeson at 1-888-605-8384. Holders of Debentures in bearer form are advised to contact Computershare at 1-800-245-4053 for instructions regarding how to deposit their Debentures. For further inquiries, contact Scotia Capital at 416-863-7776 or 1-800-372-3930 (for U.S. residents).

Domtar Corporation (NYSE/TSX: UFS) is the largest integrated producer of uncoated freesheet paper in North America and the second largest in the world based on production capacity. It is also a manufacturer of papergrade pulp. The company designs, manufactures, markets, and distributes a wide range of business, commercial printing, publication, technical, and specialty papers, as well as its full line of environmentally and socially responsible papers. Domtar owns and operates Domtar Distribution Group, an extensive network of strategically-located paper distribution facilities. Domtar also produces lumber and other specialty and industrial wood products. The company employs nearly 14,000 people. To learn more, visit www.domtar.com.

Source: Domtar Corporation


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