Domtar’s Forest Products Business Contest Early Termination of Sales Agreement

Montreal, Quebec, Canada, 11 October 2007 -– Domtar Inc., a subsidiary of Domtar Corporation, has received a notice purporting to terminate the agreement, announced on 22 June 2007, relating to the sale of Domtar’s forest products business. The alleged termination follows a written notice received by Domtar on 01 October 2007, from the Minister of Natural Resources and Wildlife for the province of Quebec purporting to revoke, effective 14 September 2007, Domtar’s forest license rights relating to the Grand-Remous and Malartic sawmills.

Domtar believes that the Minister’s action is unlawful and Domtar will vigorously defend its rights. A letter was delivered to the Minister on 03 October 2007, demanding that the decision be revoked and the licenses be reinstated. Domtar intends to file formal proceedings before the Quebec Superior Court to enforce its rights.

Domtar also believes that the purported unilateral termination of the agreement relating to the forest products business by Conifex Inc. is invalid pursuant to the terms of the agreement. While the consent of the Minister to the transfer of Grand-Remous, Malartic, and other forest license rights is a condition to the closing of the transaction, the buyer would only have the right to terminate the agreement as of 31 December 2007, in the event that Domtar was not successful in challenging the revocation of these licenses and obtaining such consent by that date. Domtar intends to vigorously enforce all of its rights under the agreement and continue to work diligently towards a closing of this transaction.

Domtar is the third largest producer of uncoated freesheet paper in North America. It is also a leading manufacturer of business papers, commercial printing and publication papers, and technical and specialty papers. Domtar manages according to internationally recognized standards 18 million acres of forestland in Canada and the United States, and produces lumber and other wood products. Domtar has 10,000 employees across North America. The company also has a 50% investment interest in Norampac inc., the largest Canadian producer of containerboard.