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Domtar Inc. Announces Pricing of Cash Tender Offer for Canadian Debentures

Friday, December 14, 2007

Press release from the issuing company

Montreal, December 13, 2007 - Domtar Inc., a wholly owned subsidiary of Domtar Corporation, announced today the Total Consideration payable under the 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 terms of the Offers are more fully described in an Offer to Purchase and Consent Solicitation Statement and related Letter of Transmittal and Consent dated November 28, 2007.
The Total Consideration for both series of Debentures was calculated as of 2:00 p.m., Montreal time, on December 13, 2007 by reference to:
1. an offer spread of 125 basis points over the yield to maturity on the 6.00% Government of Canada bond due June 2011 for the 10% Debentures; and
2. an offer spread of 150 basis points over the yield to maturity on the 4.00% Government of Canada bond due June 2017 for the 10.85% Debentures.
Assuming an Early Consent Deadline of 5:00 p.m., Montreal time, on December 17, 2007 and an Early Settlement Date of December 20, 2007, the Total Consideration for:
1. each $1,000 principal amount of 10% Debentures validly tendered and not withdrawn prior to the Early Consent Deadline, will be $1,143.83; and
2. each $1,000 principal amount of 10.85% Debentures validly tendered and not withdrawn prior to the Early Consent Deadline, will be $1,385.04.
In each case, the Total Consideration includes an Early Consent Amount of $30.
Holders who validly deposit their Debentures under the Offers and deliver their Consent to the Proposed Amendments after the Early Consent Deadline and prior to the Expiration Time, which is currently scheduled to be 5:00 p.m., Montreal time, on January 3, 2008, unless extended or earlier terminated, will only receive the Purchase Price, which is equal to the Total Consideration as of the Final Settlement Date less the Early Consent Amount, and which will be payable promptly after the Expiration Time on the Final Settlement Date.
Assuming a Final Settlement Date of January 7, 2008, the Purchase Price for:
1. each $1,000 principal amount of 10% Debentures validly tendered after the Early Consent Deadline, will be $1,111.86; and
2. each $1,000 principal amount of 10.85% Debentures validly tendered after the Early Consent Deadline, will be $1,353.60.
Domtar Inc. will also pay accrued and unpaid interest from the last interest payment date to, but not including, the applicable Settlement Date on those Debentures accepted for payment pursuant to the Offers.
In connection with the Offers, certain Debentureholders who hold, directly or indirectly, or exercise control or direction over, approximately 66.9% and 64.7% of the 10% Debentures and the 10.85% Debentures, respectively, have entered into lock-up agreements with Domtar Inc. pursuant to which they have agreed, subject to the terms and conditions contained therein, to irrevocably deposit all of their Debentures and deliver their Consents on or prior to the Early Consent Deadline in valid acceptance of the Offers and Consent Solicitations.
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 please 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).

 

 

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