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Domtar Inc. announces successful completion of first phase of cash tender Offer for Canadian Debentures

Montreal, December 20, 2007 – Domtar Inc., a wholly owned subsidiary of Domtar Corporation, announced today, following the Early Consent Deadline on December 17, 2007 at 5:00 p.m. (EST), the successful completion of the first phase of its previously announced Offers to purchase for cash any and all of its outstanding Canadian dollar denominated 10% Debentures due 2011 and 10.85% Debentures due 2017.

The depositary, Computershare Investor Services Inc., has advised Domtar Inc. that CDN$79,795,000 aggregate principal amount of the 10% Debentures representing approximately 97.31% of those outstanding, and CDN$74,352,000 aggregate principal amount of the 10.85% Debentures representing approximately 99.25% of those outstanding were validly tendered and not withdrawn prior to the Early Consent Deadline. The Company accepted for purchase and payment today all of such validly tendered Debentures. As a result, the supplements to the respective Indentures governing the Debentures reflecting the requested amendments thereto were also entered into today.

Holders who validly deposit their Debentures under the Offers and deliver their Consent to the Proposed Amendments after the Early Consent Deadline and prior to the Expiration Time, which is currently scheduled to be 5:00 pm, Montreal time, on January 3, 2008, unless extended or earlier terminated, will receive the Purchase Price, which will be payable promptly after the Expiration Time on the Final Settlement Date.

Assuming a Final Settlement Date of January 7, 2008, the Purchase Price for:

1. each $1,000 principal amount of 10% Debentures validly tendered after the Early Consent Deadline, will be $1,111.86; and
2. each $1,000 principal amount of 10.85% Debentures validly tendered after the Early Consent Deadline, will be $1,353.60.

Domtar Inc. will also pay accrued and unpaid interest from the last interest payment date to, but not including, the Final Settlement Date on those Debentures accepted for payment pursuant to the Offers.

Scotia Capital has been retained by Domtar Inc. to act as Dealer Manager and Solicitation Agent for the Offers and Consent Solicitations. Domtar Inc. has also retained Georgeson Shareholder Communications Canada Inc. to act as information agent and Computershare Investor Services Inc. to act as depositary in connection with the Offers and the Consent Solicitations.

For copies of the Offer to Purchase and Consent Solicitation Statement and the related Letter of Transmittal and Consent please contact Georgeson at 1-888-605-8384. Holders of Debentures in bearer form are advised to contact Computershare at 1-800-245-4053 for instructions regarding how to deposit their Debentures. For further inquiries, please contact Scotia Capital at 416-863-7776 or 1-800-372-3930 (for U.S. residents)

Domtar Corporation (NYSE/TSX: UFS) is the largest integrated producer 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 pulp. 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®, Domtar Microprint®, Windsor Offset®, Cougar® as well as its full line of environmentally and socially responsible papers, Domtar EarthChoice®. 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.

All statements in this press 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 prospectuses contained in the registration statement on Form S-4 filed with the SEC. We disclaim any intention to, and undertake no obligation to, update or revise any forward-looking statements contained in this press release.

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