Domtar to sell its forest products business



    TICKER SYMBOL
    UFS (NYSE, TSX)

    MONTREAL, June 22 /CNW Telbec/ - Domtar Corporation (NYSE/TSX: UFS)
announced today that it has entered into an agreement for the sale of its
forest products business to the newly created Conifex Inc. for approximately
CDN$285 million including an estimated CDN$50 million of working capital. The
transaction is subject to government approvals for the transfer of forest
licences, regulatory approvals and customary closing conditions. Closing is
expected before the end of the year.
    "Through this transaction, Domtar is reinforcing its focus as the North
American market leader in fine paper while obtaining capital to further reduce
its debt. As indicated in the past, softwood sawmilling operations are not
core to our fine paper business" stated Raymond Royer, President and Chief
Executive Officer, Domtar Corporation. "The strategic timing of this
transaction combined with the terms of the sale provided the best alternative
for our shareholders."
    The transaction is comprised of the Ear Falls, Nairn Centre, Timmins and
White River sawmills in Ontario and 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. The sawmills have
approximately 4.8 million cubic metres of annual harvesting rights and a
production capacity of approximately 1.1 billion board feet. Also included in
the transaction are 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.
Domtar's sawmills in Saskatchewan are not included in this transaction.
    "When we selected the buyer, we also took into account a number of
important considerations such as Conifex's 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", added Mr. Royer. "Meanwhile, until closing, it will be
business-as-usual for our employees and customers."
    "Domtar's sawmills are top performers in a number of vital areas
including sustainable forest management and environmental performance," said
Ken Shields, Chair of the Board of Directors, Conifex. "Over the next three
years we will be building on this solid foundation and investing up to
CDN$50 million in our facilities to lower our costs and increase our
productivity. With the support of the existing management team and the active
involvement of staff, we are confident that we will become a leader in
forestry and sawmilling in Eastern Canada." Mr. Shields further added: "We are
also pleased that Domtar has accepted in principle to extend its support by
investing in our company an amount equal to the lesser of CDN$35 million or a
19,9% participation, subject to the conclusion of a definitive agreement to
the satisfaction of Domtar."
    To facilitate the changeover, Domtar will provide Conifex with transition
services, including information technology and human resources management, for
a period of 6 to 12 months following closing.
    Domtar remains committed to pursuing FSC certification and the continuing
production and delivery of its leading environmentally-preferable Domtar
EarthChoice(R) line of papers to the North American marketplace.

    Domtar Corporation (NYSE/TSX: UFS) is the largest integrated producer of
uncoated freesheet paper and one of the largest manufacturers of papergrade
market pulp in North America. 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), Domtar Microprint(R), Windsor Offset(R), Cougar(R) as well as its
full line of environmentally and socially responsible papers, Domtar
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,
Vice-President, Corporate Communications, (514) 848-5103; Investor relations:
Pascal Bossé, Manager, Investor Relations, (514) 848-5938

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Domtar Corporation

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DOMTAR INC.

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