Domtar to Shut Uncoated Freesheet Machine in North Carolina

Feb. 5, 2009 - Domtar today said that it will permanently reduce its fine paper manufacturing at its Plymouth, North Carolina mill, by shutting down one of the two paper machines in the mill's fine paper production unit.

About 185 employees at the mill will be affected by the shutdown, which will remove 293,000 short tons of the mill's uncoated freesheet production capacity.

The shutdown will take place at the end of February, Domtar said.

"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 CEO 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," Williams added.

The Plymouth mill will continue to operate two pulp lines, one pulp dryer and one paper machine, Domtar said.

The machine 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.

Domtar said that it will take appropriate measures to assist employees affected by these decisions in accordance with its policies.

SOURCE: Domtar Corp.

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