Domtar Corporation files registration statement for proposed exchange offers and proxy solicitations

Montreal, September 26, 2007 – Domtar Corporation announced today that it has filed a registration statement with the Securities and Exchange Commission (SEC) relating to proposed exchange offers and proxy solicitations relating to the outstanding public debt of its subsidiary, Domtar Inc.

Domtar Corporation intends to make offers to holders of Domtar Inc.’s outstanding U.S. dollar denominated 7.875% Notes due 2011, 5.375% Notes due 2013, 7 1/8% Notes due 2015 and 9 1/2% Debentures due 2016 to exchange any and all of such securities for Domtar Corporation’s newly issued notes of the corresponding series bearing interest at the same rate and maturing on the same date as the Domtar Inc. U.S. dollar denominated notes tendered in exchange.  

In conjunction with such offers, Domtar Corporation intends to solicit consents to amendments to the indentures pursuant to which the Domtar Inc. securities were issued.

Domtar Inc. intends concurrently to solicit proxies from holders of its outstanding Canadian dollar denominated 10% Debentures due 2011 and 10.85% Debentures due 2017, for use at a meeting of holders of each series of such debentures, at which Domtar Inc. will seek the approval of such holders to amend the indenture pursuant to which such series of debentures were issued to provide Domtar Corporation with the right to acquire, at any time, all outstanding debentures of such series in consideration for the issuance of an equal principal amount of Domtar Corporation’s newly issued Canadian dollar denominated debt securities bearing interest at the same rate and maturing on the same date as the Domtar Inc. Canadian debentures which may be acquired by Domtar Corporation.

J.P. Morgan Securities Inc. is the lead dealer manager and lead solicitation agent and Deutsche Bank Securities Inc. is the co-dealer manager and co-solicitation agent for the exchange offers and consent solicitations for the Domtar Inc. U.S. dollar denominated notes and Scotia Capital Inc. and Scotia Capital (USA) Inc. are the dealer managers for the Canadian proxy solicitations.

A registration statement relating to the Domtar Corporation debt securities to be issued in connection with these transactions has been filed with the SEC but has not yet become effective. The exchange offers and proxy solicitations to which this registration statement relates may not be commenced, and these securities may not be offered or exchanged, nor may offers to exchange them be accepted, prior to the time the registration statement becomes effective.

Holders of Domtar Inc.’s outstanding debt securities should read the applicable prospectus and related offer materials when they become available because they contain important information. Holders can obtain a copy of the registration statement and other exchange offer materials free of charge from the SEC's web site at http://www.sec.gov.

This press release shall not constitute an offer to exchange or the solicitation of an offer to buy.

There shall be no sale of the Domtar Corporation debt securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

A prospectus and related offer documents will, when available, be provided to all holders of Domtar Inc.’s outstanding debt securities free of charge.

Forward-Looking Statements

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.

Furthermore, the ability to complete the offerings referred to in this press release is dependent on the state of the markets at the time of the proposed offerings, and the acceptability of the offering terms to the holders of Domtar Inc.’s debt securities. Accordingly, investors should not place any reliance on forward-looking statements as a prediction of actual results. We disclaim any intention to, and undertake no obligation to, update or revise any forward- looking statements contained in this press release.

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®, Microprint®, Windsor Offset®, Cougar® as well as its full line of environmentally and socially responsible papers, 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 http://www.domtar.com/

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