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Domtar Inc.
Montreal, Quebec, Canada, 20 December 2007 -- /PRNewswire/ -- Domtar Inc., a wholly owned subsidiary of Domtar Corporation, announced today, following the Early Consent Deadline on 17 December 2007, the successful completion of the first phase of its 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 depositary, Computershare Investor Services Inc., has advised Domtar Inc. that CAD 79,795,000 aggregate principal amount of the 10% Debentures representing approximately 97.31% of those outstanding, and CAD 74,352,000 aggregate principal amount of the 10.85% Debentures representing approximately 99.25% of those outstanding were validly tendered and not withdrawn before the Early Consent Deadline. The company accepted for purchase and payment today all of such validly tendered Debentures. As a result, the supplements to the respective Indentures governing the Debentures reflecting the requested amendments thereto were also entered into today.

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 receive the Purchase Price, 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 Final Settlement Date on those Debentures accepted for payment pursuant to the Offers.

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, please 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, and 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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