Domtar Corporation announces commencement of exchange offers and proxy solicitations



    TICKER SYMBOL
    UFS (NYSE, TSX)

    MONTREAL, Oct. 17 /CNW Telbec/ - Domtar Corporation announced today the
commencement of exchange offers and proxy solicitations relating to the
outstanding public debt of its subsidiary, Domtar Inc.
    Domtar Corporation is making offers to holders of Domtar Inc.'s
outstanding U.S. dollar denominated 7.875% Notes due 2011, 5.375% Notes due
2013, 7 1/8% Notes due 2015 and 9 1/2% Debentures due 2016 (collectively, the
"Domtar Inc. U.S. notes") to exchange any and all of such securities for an
equal principal amount of Domtar Corporation's newly issued notes of the
corresponding series. In conjunction with such offers, Domtar Corporation is
also soliciting consents to amendments to the indentures pursuant to which the
Domtar Inc. U.S. notes were issued.
    Holders who validly tender and do not validly withdraw their Domtar Inc.
U.S. notes and related consents in connection with the exchange offers and
consent solicitations on or prior to 5:00 p.m., New York City time, on October
 30, 2007 (the early consent date) will be entitled to an early consent
payment in cash of U.S.$2.50 for each U.S.$1,000 principal amount of Domtar
Inc. U.S. notes tendered, unless such date is extended with respect to a
particular series of Domtar Inc. U.S. notes. The exchange offers and related
consent solicitations will expire at 12 midnight, New York City time, on
November 14, 2007, unless extended.
    The lead dealer manager for the exchange offers and lead solicitation
agent for the consent solicitations is J.P. Morgan Securities Inc. The
co-dealer manager for the exchange offers and co-solicitation agent for the
consent solicitations is Deutsche Bank Securities Inc. Questions regarding the
exchange offers may be directed to J.P. Morgan Securities Inc. at
(866) 834-4666 (toll-free) or (212) 834-4077 (collect) or Deutsche Bank
Securities Inc. at (866) 627-0391 (toll-free) or (212) 250-2955 (collect).
    Domtar Inc. is concurrently soliciting proxies from holders of its
outstanding Canadian dollar denominated 10% Debentures due 2011 and 10.85%
Debentures due 2017 (together, the "Domtar Inc. debentures") for use at a
meeting of holders of each series of such debentures, to be held on November
14, 2007, at which Domtar Inc. will seek the approval of such holders to amend
the indenture pursuant to which such series of debentures were issued to
provide Domtar Corporation with the right to acquire, at any time, all
outstanding debentures of such series in consideration for the issuance of an
equal principal amount of Domtar Corporation's newly issued Canadian dollar
denominated debt securities bearing interest at the same rate and maturing on
the same date as the Domtar Inc. debentures which may be acquired by Domtar
Corporation.
    Holders who validly submit proxies voting in favour of the amendments and
do not validly revoke such proxies prior to 5:00 p.m., Montreal time, on
October 30, 2007, unless such early consent date is extended with respect to a
particular series of Domtar Inc. debentures, will be entitled to an early
consent payment in cash of CDN$2.50 for each CDN$1,000 principal amount of
Domtar Inc. debentures with respect to which such proxies are submitted.
    The dealer manager for the proxy solicitations relating to the Canadian
debentures is Scotia Capital Inc. Questions regarding the proxy solicitations
may be directed to Scotia Capital Inc. at (416) 863-7257.
    A written prospectus providing the terms of the U.S. exchange offers and
related documents may be obtained from the information agent for the exchange
offers which can be contacted at:

    Global Bondholder Services Corporation
    65 Broadway, Suite 723
    New York, NY 10006
    Attention: Corporate Actions
    Banks and brokers call: (212) 430-3774
    All others call toll free: (866) 470-3700

    A written debentureholder information circular/prospectus providing the
terms of the Canadian proxy solicitations and related documents will be mailed
on or about October 18, 2007. Information regarding the Canadian proxy
solicitations and how to obtain additional copies of the material and how to
vote can be directed to the Proxy Solicitation and Information Agent at:

    Georgeson
    North American Toll Free Number: 1-888-605-8384

    Forward-Looking Statements

    All statements in this press release that are not based on historical
fact are "forward-looking statements". While management has based any
forward-looking statements contained herein on its current expectations, the
information on which such expectations were based may change. These
forward-looking statements rely on a number of assumptions concerning future
events and are subject to a number of risks, uncertainties, and other factors,
many of which are outside of our control, that could cause actual results to
materially differ from such statements. Such risks, uncertainties, and other
factors include, but are not necessarily limited to, those set forth under the
captions "Forward-Looking Statements" and "Risk Factors" of the prospectuses
contained in the registration statement on Form S-4 filed with the SEC.
    Furthermore, the ability to complete the offerings referred to in this
press release is dependent on the state of the markets at the time of the
proposed offerings, and the acceptability of the offering terms to the holders
of Domtar Inc.'s debt securities. Accordingly, investors should not place any
reliance on forward-looking statements as a prediction of actual results. We
disclaim any intention to, and undertake no obligation to, update or revise
any forward-looking statements contained in this press release.

    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 as well as technical and specialty
papers with recognized brands such as First Choice(R), Microprint(R), Windsor
Offset(R), Cougar(R) as well as its full line of environmentally and socially
responsible papers, EarthChoice(R). 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.




For further information:

For further information: Media relations: Michel A. Rathier, (514)
848-5103, michel.rathier@domtar.com; Investor relations: Pascal Bossé,  (514)
848-5938, pascal.bosse@domtar.com

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