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Domtar Agrees Sell Forest Products Business

March 29, 2010 - Domtar said that it has entered into an agreement to sell its forest products business to EACOM Timber Corp. for CDN$80 million plus elements of working capital estimated at CDN$30 to CDN$40 million.

Domtar will receive 19% of the proceeds in shares of EACOM.

"Our forest products employees have demonstrated tremendous resilience throughout the years. Their sustained efforts to reduce costs and pursue the continuous improvement of operations have positioned the business well for the recovery," said John D. Williams, Domtar's president and CEO.

"All Domtar forest products employees, and its management team currently led by Jean-Francois Merette, will be transitioning to EACOM. EACOM will establish its headquarters in Montreal, QC and will become one of the largest publicly-traded lumber producers in Eastern Canada," Williams said. "The company will be a focused, well capitalized, standalone operation dedicated to the manufacturing of solid and value-added wood products."

The transaction includes five operating sawmills: Timmins, Nairn Centre and Gogama in Ontario, and Val-d'Or and Matagami in Quebec; as well as two non-operating sawmills: Ear Falls in Ontario and Ste-Marie in Quebec. The sawmills have approximately 3.5 million cubic meters of annual harvesting rights and a production capacity of close to 900 million board feet.

Also included in the deal is the Sullivan remanufacturing facility in Quebec and Domtar's interests in two investments: Anthony-Domtar Inc. and Elk Lake Planing Mill Limited.

The transaction is expected to close at the end of the second quarter of 2010.

SOURCE: Domtar Corp.




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