October 8, 2007

Agreement could lead to redevelopment of Prince Albert mill

MONTREAL, QUE-Domtar has reached an understanding with the province of Saskatchewan on a plan that could result in the redevelopment of the Prince Albert facility into a Northern Bleached Softwood Kraft (NBSK) pulp mill producing 100% FSC-certified softwood pulp for the North American and offshore markets. The annual production capacity of the redeveloped mill is expected to be approximately 328,000 tonnes. The plan provides for an arrangement for a green energy expansion of the pulp mill, which would include the sale of excess energy produced to SaskPower, the launch of an FSC certification process on the related Forest Management Area lands, as well as the eventual construction of a new wood chip and sorting facility located close to the mill. The understanding also includes the intended acquisition by the Crown Investment Corporation of Saskatchewan (CIC) of a significant portion of Domtar's equity interest in the Wapawekka sawmill, which will be substantially expanded. The CIC also plans to acquire all of Domtar's interest in the former Big River sawmill, which it will target for redevelopment. The agreement lays the foundation for a transaction that is subject to certain terms and requirements. These include engineering and feasibility analyses and studies, the development of a modern and competitive operational design for the pulp mill, consultations with First Nations, the negotiation and signing of agreements with all parties involved, as well as approvals from Domtar's board and various regulatory bodies.

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