Conifex to Acquire Domtar's Wood Operations



    New Company to invest $50 million in Facilities

    MONTREAL, June 22 /CNW Telbec/ - Conifex Inc., a newly-formed forestry
and sawmilling company with its head office in Montreal, announced today that
it is acquiring Domtar's Forest Products Division including sawmills and
timber rights in Quebec and Ontario.
    "Our goal is to become the leader in forestry and sawmilling in Eastern
Canada, and the business we are acquiring provides us with a solid foundation
to build upon," explained Ken Shields, Chair of the Board of Directors,
Conifex. "The Domtar facilities are first or second quartile performers in
terms of sustainable forest management and environmental performance. With its
FSC Certification Domtar is an unparalleled leader in sustainable forest
management practices. We are proud to inherit this mantle and are committed to
maintaining a similar leadership to Domtar in this area, particularly with
regards to FSC Certification."
    "Our challenge", continued Mr. Shields, "will be to improve productivity,
positioning the mills as first or second quartile performers in terms of North
American competitiveness. We will be investing up to $50 million in certain
mills over the next three years using state-of-the art technology to improve
productivity and employing wood-based energy systems to lower purchased energy
costs."
    Conifex is confident it will benefit from both cyclical and structural
changes taking place in the industry. Lumber prices and demand are expected to
improve in the medium to long-term. In addition, the competitive position of
lumber producers in Quebec and Ontario should improve relative to the Interior
Region of British Columbia due to the material impact that the Mountain Pine
Beetle infestation is expected to have on the mills and communities in that
region.
    "When we selected the buyer, we took into account a number of important
considerations such as its commitment to growth and to FSC certification, its
experience and deep knowledge of the lumber industry, and its undertaking to
bring Domtar's Forest Products management team and employees onboard",
stressed Raymond Royer, President and Chief Executive Officer, Domtar
Corporation. "Conifex scored high on each of these criteria."
    "An added advantage will be our people," noted Mr. Shields. "We will be
inheriting a solid management team as well as an experienced work force from
Domtar, providing us with the leadership and expertise we need to succeed.
After the closing, we will pro-actively be seeking employee input and
collaborating with them to build a culture that continues to take pride in
quality and customer service."
    Conifex will be led by Ken Shields and Jean-François Mérette, Domtar's
current Senior Vice-President, Forest Products. The former brings financial
and corporate expertise to the new entity, while the later has spent the past
16 years in different management positions in the sector. The two will be
supported by the existing management team of the Forest Products division and
by approximately 1,400 employees including 33 head office employees in
Montreal.
    The transaction, which is expected to close before the end of the year,
is subject to government approvals for the transfer of forest licences,
regulatory approvals and customary closing conditions. Conifex is acquiring
the Ear Falls, Nairn Centre, Timmins and White River sawmills in Ontario, the
Grand-Remous, Lebel-sur-Quévillon, Malartic, Matagami, Ste-Marie and Val-d'Or
sawmills in Québec, as well as the Sullivan remanufacturing mill also in Val
d'Or, Québec. Domtar's interests in the joint ventures of Elk Lake Planing
Mill Limited, Gogama Forests Products Inc., Nabakatuk Forest Products Inc.,
Olav Haavalsrud Timber Company Limited and Anthony-Domtar Inc are also
included in the transaction. The sawmills have approximately 4.8 million cubic
metres of annual harvesting rights and a production capacity of approximately
1.1 billion board feet.

    Conifex represents a combination of the words conifer and excellence.
Conifers are evergreen trees, while excellence underscores the company's goal
of surpassing or outshining the competition.

    Conifex's legal counsel is Sangra Moller LLP, and its financial advisor
is Raymond James Ltd.




For further information:

For further information: Jonathan Goldbloom, (514) 923-7779,
jonathan.goldbloom@jgoldbloom.ca

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CONIFEX

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