Domtar and Conifex Agree to Terminate Deal

Montreal, Quebec, Canada, 07 January 2008 – Domtar Corporation announced today that its wholly-owned subsidiary, Domtar Inc., and Conifex Inc. have terminated the agreement announced 22 June 2007, relating to the sale of Domtar Inc.’s forest products business.

Conifex was to acquire sawmills and other forest operations situated in Ontario and Québec. Both parties recognized that closing conditions had not been met pursuant to the terms of the agreement.

Domtar will continue to seek opportunities to maximize the value of these assets and to pursue initiatives to improve their operational efficiency.

Domtar Corporation (NYSE/TSX: UFS) is the largest integrated producer of uncoated freesheet paper in North America and the second largest in the world on the basis of 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 a 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