Domtar to permanently reduce paper manufacturing capacity at its Plymouth, North Carolina mill


    MONTREAL, Feb. 5 /CNW Telbec/ - Domtar Corporation (NYSE/TSX: UFS)
announced today that it will permanently reduce its fine paper manufacturing
at its Plymouth, North Carolina mill, by shutting down one of the two paper
machines comprising the mill's fine paper production unit. This will result in
the curtailment, at the end of February 2009, of 293,000 short tons of the
mill's uncoated freesheet production capacity. Domtar plans to reduce staff
across various parts of the mill by approximately 185 employees.
    "Continued adverse economic conditions and the decline of fine paper
orders require that we reduce our uncoated freesheet manufacturing capacity,"
said John D. Williams, President and Chief Executive Officer of Domtar.
"Plymouth employees have made commendable efforts over the years to keep their
facility operating efficiently and I want to thank all affected employees for
their hard work and dedication," concluded Mr. Williams.
    The Plymouth mill will continue to operate two pulp lines, one pulp dryer
and one paper machine.
    From a financial perspective, the closure will result in pre-tax charges
to earnings of approximately $51 million, of which an estimated $41 million is
non-cash relating to the write-down of the paper machine and a sheeter. Of the
pre-tax cash charges, $9 million relate to severance and employee benefits and
$1 million to other items. Pre-tax impact on earnings is expected to be
incurred in the first quarter of 2009.
    As a result of this decision, the carrying amount of the remaining assets
is currently being tested for impairment and may result in a write-down during
the first quarter of 2009. The carrying amount of these assets was
approximately $350 million at December 31, 2008.
    Domtar will take appropriate measures to assist employees affected by
these decisions in accordance with its policies.

    About Domtar

    Domtar Corporation (NYSE/TSX:UFS) is the largest integrated manufacturer
and marketer 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, fluff and specialty pulp. The Company designs, manufactures,
markets and distributes a wide range of business, commercial printing and
publication as well as converting and specialty papers including recognized
brands such as Cougar(R), Lynx(R) Opaque, Husky(R) Offset, First Choice(R) and
Domtar EarthChoice(R) Office Paper, part of a family of environmentally and
socially responsible papers. 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 11,500 people. To learn more, visit

    Forward-Looking Statements

    All statements in this news 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 latest Form
10-K filed with the SEC as periodically updated by subsequently filed Form
10-Q's. Unless specifically required by law, we assume no obligation to update
or revise these forward-looking statements to reflect new events or

For further information:

For further information: Media Relations: Michel A. Rathier, (514)
848-5103,; Investor Relations: Pascal Bossé, (514)

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