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Management Side
Technical Side
Domtar Issues Cash Tender Offer
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Montreal, Quebec, Canada, 21 May 2010 -- /CNW Telbec/ -- Domtar Corporation (NYSE/TSX: UFS) today announced that it is commencing a cash tender offer for an aggregate principal amount of its outstanding 5.375% notes due 2013 (the first priority notes), 7 1/8% notes due 2015 (the second priority notes), 7.875% notes due 2011 (the third priority notes) and 10.75% notes due 2017 (the fourth priority notes) (all together, the notes) such that the maximum aggregate consideration for notes purchased in the tender offer, excluding accrued and unpaid interest, will not exceed CAD 350,000,000 (the maximum payment amount) and the maximum aggregate consideration for all fourth priority notes purchased in the tender offer, excluding accrued and unpaid interest, will not exceed CAD 75,000,000 (the 10.75% notes payment cap). The terms and conditions of the tender offer are described in an offer to purchase, dated 21 May 2010, and a related letter of transmittal, which are being sent to holders of notes. 
                                         Aggregate             Early  Total
                            Acceptance   Principal            Tender  Consi-
      CUSIP       Title of   Priority     Amount    Purchase  Payment  dera-
      Number      Security    Level     Outstanding  Price(1)   (1)   tion(1)
    -------------------------------------------------------------------------
    257559 AB0  5.375% Notes    1      $310,431,000  $1000      $50   $1050
                  due 2013
    257559 AC8  7 1/8% Notes    2      $399,723,000  $1020      $50   $1070
                  due 2015
    257559 AA2  7.875% Notes    3      $134,752,000  $1035      $50   $1085
                  due 2011
    257559 AG9  10.75% Notes    4      $400,000,000  $1160      $50   $1210
                  due 2017
    ------------------------
    (1)Per $1000 principal amount of notes accepted for purchase.
    

Holders of notes must validly tender and not validly withdraw their notes on or before 5:00 p.m., Eastern Time, on 04 June 2010, unless extended or earlier terminated (the early tender time) to be eligible to receive the applicable total consideration, as set forth in the table above. Holders of notes who validly tender their notes after the early tender time and on or before the expiration time (as defined below) will be eligible to receive only the applicable purchase price, which is equal to the applicable total consideration minus the early tender payment, as set forth in the table above.

In addition to the applicable total consideration or purchase price, holders whose notes are accepted for purchase by the company in the tender offer will receive accrued and unpaid interest on their purchased notes to, but not including, (i) in the case of first priority notes accepted for purchase on the early acceptance date (as defined below), the early payment date (as defined below), and (ii) in the case of all other notes accepted for purchase, the payment date (as defined below).

The tender offer is scheduled to expire at 12:00 midnight, Eastern Time, on 18 June 2010, unless extended or earlier terminated (the expiration time). As set forth in the offer to purchase, validly tendered notes may be validly withdrawn at any time on or before 5:00 p.m., Eastern Time, on 04 June 2010, unless extended.

Upon the terms and subject to the conditions of the tender offer, the company expects to accept for purchase any first priority notes validly tendered (and not withdrawn) on or before the early tender time promptly after the early tender time (the early acceptance date) and expects that it will pay the total consideration for such first priority notes on the business day after the early acceptance date (the early payment date). Upon the terms and subject to the conditions of the tender offer, the company expects to accept for purchase all other notes validly tendered (and not withdrawn) on or before the expiration time promptly after the expiration time and expects that it will pay the total consideration or purchase price, as applicable, for such notes on the business day following the date that the notes are accepted (the payment date).

The company may waive, increase, or decrease the maximum payment amount or the 10.75% notes payment cap at its sole discretion. If the aggregate consideration, excluding accrued and unpaid interest, that would be payable for all notes that are validly tendered and not validly withdrawn on or before the expiration time would exceed the maximum payment amount, the company will accept for purchase notes that have been so tendered in accordance with the applicable acceptance priority levels, subject, in the case of the fourth priority notes, to the 10.75% notes payment cap.

If the aggregate consideration, excluding accrued and unpaid interest, that would be payable for all tendered notes of the acceptance priority levels (as set forth in the table above) to be accepted for purchase exceeds the maximum payment amount, notes of the lowest acceptance priority level to be accepted for purchase will be pro rated (with adjustments downward to avoid the purchase of notes in a principal amount other than CAD 1000 or an integral multiple thereof), such that the aggregate consideration payable for all notes accepted for purchase, excluding accrued and unpaid interest, does not exceed the maximum payment amount and, in the case of fourth priority notes, such that the aggregate consideration for all fourth priority notes accepted for purchase, excluding accrued and unpaid interest, does not exceed the 10.75% notes payment cap. The company's obligation to consummate the tender offer is conditioned upon the satisfaction or waiver of certain conditions described in the offer to purchase.

Domtar has engaged Banc of America Securities LLC and Goldman, Sachs & Co. to act as dealer managers in connection with the tender offer. Questions regarding the tender offer may be directed to Banc of America at (646) 855-3401 (collect) or (888) 292-0070 (U.S. toll-free) or to Goldman Sachs at (212) 902-5183 (collect) or (800) 828-3182 (U.S. toll-free). Requests for documentation may be directed to Global Bondholder Services Corporation, the information agent and depositary for the tender offer, at (212) 430-3774 (for banks and brokers) or (866) 470-3700 (U.S. toll-free).

Domtar Corporation (NYSE/TSX:UFS) is the largest integrated manufacturer and marketer of uncoated freesheet paper in North America and the second largest in the world based on production capacity. The company also manufactures papergrade, fluff, and specialty pulp. The company designs, manufactures, markets, and distributes a wide range of business, commercial printing, publishing, converting, and specialty 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 more than 10,000 people. To learn more, visit www.domtar.com.



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