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Domtar Puts Up $1.65 Billion for Four Georgia-Pacific Paper Mills

Press release from the issuing company

Montreal, June 4, 2001 Domtar Inc. is pleased to announce that it has signed a definitive agreement with Georgia-Pacific Corporation to acquire four of its paper mills and related business for a total consideration of $US 1.65 billion. The purchase price includes $US 200 million for working capital. The four mills are located in Ashdown (Arkansas), Nekoosa and Port Edwards (Wisconsin), and Woodland (Maine). Closing of the transaction is subject to normal regulatory approvals and is expected to take place in the third quarter of 2001. "This is a very exciting moment for Domtar. We are buying more than assets in this transaction. We are benefiting from a long tradition of paper making expertise and gaining new market share, which will radically transform our Company. With annual net sales of approximately $CDN 6 billion, the new Domtar will have one of the widest product offering of business, printing, technical and specialty paper grades. We will be the second largest producer of uncoated freesheet in North America and the third largest in the world. More than 50% of our paper products will now be manufactured in the United States, our most important market. This transaction will support the growth of our customers and is consistent with our stated objective to enter into business opportunities that are accretive to earnings. Finally, we look forward to working with our new colleagues in order to make Domtar an industry leader," said Raymond Royer, President and Chief Executive Officer of Domtar. More depth and range in our product line With the four mills being acquired, Domtar will add depth and range to its product line by more than doubling its uncoated freesheet production capacity. This should enable Domtar to strengthen its position with customers looking for one stop shopping, especially when it comes to business and printing paper grades. Products from the new mills will benefit from Domtar business processes such as e-PaperTM and its strategically designed distribution network, which focus on on-time delivery. The extensive expertise found in the new Domtar combined with access to a wider variety of fiber and specialty pulps should enable the company to develop more new products to meet the evolving needs of customers. As a result, the new Domtar should be in a position to strengthen its preferred supplier status and to enter new markets. Significant synergies that will further increase Domtar's profitability The new Domtar will own and operate two mills ranked among the lowest cost producers in North America (Ashdown, Arkansas and Windsor, Qu/bec). These two mills will be responsible for 50% of total paper production of the new Domtar. An integration team, including individuals from the acquired business, will identify best practices so that added quality and productivity, and optimal use of our 31 paper machines can benefit customers and shareholders. This effort is expected to provide approximately $CDN 100 million ($US 65 million) of annual synergies. Financing The acquisition will be financed through a new credit facility. Following the closing, Domtar intends, subject to future market conditions, to refinance approximately $US 900 million through a mix of senior debt and equity offerings in order to extend maturity and reduce leverage. Domtar plans to take the appropriate measures to further reduce the acquisition debt over the next 18 months. About the new facilities The Ashdown mill, with an annual capacity of approximately 825,000 tons, predominantly manufactures copy and offset papers. The Nekoosa and Port Edwards mills, with annual capacities of approximately 220,000 and 180,000 tons, respectively, produce various premium, specialty and business paper grades. The Woodland mill has an annual capacity of approximately 125,000 tons of premium and business grades. The four mills also have a net market pulp position of approximately 375,000 tonnes. About the new Domtar The annual net sales of the new Domtar should reach $CDN 6 billion, of which approximately 75% will be in the United States. With a team of approximately 12,500 employees across North America, the new Domtar will be the second largest producer of uncoated freesheet in North America and the third largest in the world. Domtar will become a leading manufacturer of business, printing, specialty and technical papers. Approximately 50% of Domtar papers will be manufactured in the United States. Domtar's annual paper production capacity will be close to 2.8 million tons and its annual net market pulp position will be 625,000 tonnes. Domtar manages close to 36 million acres of forest land in Canada and in the United States and its forest management practices on all of these lands have or will be certified ISO 14001 or according to the standards of the Forest Stewardship Council by the end of the year. Domtar is also a significant supplier of lumber in eastern North America. The Wood segment will represent approximately 10% of Domtar net sales. Domtar owns 50% of Norampac Inc., the largest Canadian producer of containerboard and corrugated containers, and the Packaging segment will represent approximately 10% of Domtar net sales.

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