Conifex to Acquire Domtar's Wood Operations

Montreal, Quebec, Canada, 22 June 2007 -- /PRNewswire/ -- Conifex Inc., a newly-formed forestry and sawmilling company with its head office in Montreal, announced today that it is acquiring Domtar's Forest Products Division including sawmills and timber rights in Quebec and Ontario.

"Our goal is to become the leader in forestry and sawmilling in Eastern Canada, and the business we are acquiring provides us with a solid foundation to build upon," explained Ken Shields, chair of the board of directors, Conifex. "The Domtar facilities are first or second quartile performers in terms of sustainable forest management and environmental performance. With its FSC Certification, Domtar is an unparalleled leader in sustainable forest management practices. We are proud to inherit this mantle and are committed to maintaining a similar leadership to Domtar in this area, particularly with regards to FSC Certification."

"Our challenge", continued Shields, "will be to improve productivity, positioning the mills as first or second quartile performers in terms of North American competitiveness. We will be investing up to CAD 50 million in certain mills over the next three years using state-of-the art technology to improve productivity and employing wood-based energy systems to lower purchased energy costs."

Conifex is confident it will benefit from both cyclical and structural changes taking place in the industry. Lumber prices and demand are expected to improve in the medium to long-term. In addition, the competitive position of lumber producers in Quebec and Ontario should improve relative to the Interior Region of British Columbia due to the material impact that the mountain pine beetle infestation is expected to have on the mills and communities in that region.

"When we selected the buyer, we took into account a number of important considerations such as its commitment to growth and to FSC certification, its experience and deep knowledge of the lumber industry, and its undertaking to bring Domtar's Forest Products management team and employees onboard", stressed Raymond Royer, president and chief executive officer, Domtar Corporation. "Conifex scored high on each of these criteria."

"An added advantage will be our people," noted Shields. "We will be inheriting a solid management team as well as an experienced work force from Domtar, providing us with the leadership and expertise we need to succeed. After the closing, we will proactively be seeking employee input and collaborating with them to build a culture that continues to take pride in quality and customer service."

Conifex will be led by Ken Shields and Jean-Francois Merette, Domtar's current senior vice-president, Forest Products. The former brings financial and corporate expertise to the new entity, while the later has spent the past 16 years in different management positions in the sector. The two will be supported by the existing management team of the Forest Products division and by approximately 1400 employees including 33 head office employees in Montreal.

The transaction, which is expected to close before the end of the year, is subject to government approvals for the transfer of forest licences, regulatory approvals, and customary closing conditions. Conifex is acquiring the Ear Falls, Nairn Centre, Timmins, and White River sawmills in Ontario; the Grand-Remous, Lebel-sur-Quevillon, Malartic, Matagami, Ste-Marie, and Val-d'Or sawmills in Quebec; and the Sullivan remanufacturing mill in Val d'Or, Quebec. Domtar's interests in the joint ventures of Elk Lake Planing Mill Limited, Gogama Forests Products Inc., Nabakatuk Forest Products Inc., Olav Haavalsrud Timber Company Limited, and Anthony-Domtar Inc are also included in the transaction. The sawmills have approximately 4.8 million cubic meters of annual harvesting rights and a production capacity of approximately 1.1 billion board feet.

Conifex represents a combination of the words conifer and excellence. Conifers are evergreen trees, while excellence underscores the company's goal of surpassing or outshining the competition.

Conifex's legal counsel is Sangra Moller LLP, and its financial advisor is Raymond James Ltd.

Source: Conifex