MONTREAL, Oct. 2 Domtar Inc. announced today that it has entered into an agreement, with a group of underwriters led by CIBC World Markets Inc. and Salomon Smith Barney Inc., under which the underwriters have agreed to buy 40,209,790 common shares of Domtar at a purchase price of CDN$ 11.44 per share and sell them to the public. Domtar has also granted an over- allotment option to the underwriters, exercisable for 30 days after the date of the closing of the offering, to purchase up to 5,000,000 additional common shares. The gross proceeds of the offering will be CDN$460 million, assuming the underwriters do not exercise the over-allotment option. Domtar will use the net proceeds of the offering to repay part of the indebtedness it incurred for the purchase of four pulp and paper mills in the United States from Georgia- Pacific Corporation on August 7th, 2001. Domtar is the second largest producer of uncoated freesheet paper in North America and the third largest in the world. It is also a leading manufacturer of business papers, printing and publishing papers, and specialty and technical papers. Domtar manages close to 36 million acres of forest land in Canada and the United States, and produces lumber and other wood products. The company also has a 50% investment interest in Norampac Inc., the largest Canadian producer of containerboard. Domtar has 12,500 employees across North America. A written prospectus meeting the requirement of Section 10 of the U.S. Securities Act of 1933 may be obtained from Salomon Smith Barney Inc., Brooklyn Army Terminal, 140 58th Street, 5th floor, Brooklyn, NY 11220, (telephone: 718-765-6732). A copy of the Canadian prospectus may be obtained from CIBC World Markets Inc., Investment Banking, 161 Bay St., BCE Place, 5th floor, Toronto, Ontario, M5G 2S8, (telephone: 416-594-7750).