Buyer purports to terminate agreement relating to previously announced sale of Domtar’s Forest Products business

Montreal, October 11, 2007 – Domtar Inc., a subsidiary of Domtar Corporation, has received a notice purporting to terminate the agreement, announced on June 22, 2007, relating to the sale of Domtar’s forest products business. The alleged termination follows a written notice received by Domtar on October 1, 2007 from the Minister of Natural Resources and Wildlife for the province of Quebec purporting to revoke, effective September 14, 2007, Domtar’s forest license rights relating to the Grand-Remous and Malartic sawmills.

Domtar believes that the Minister’s action is unlawful and Domtar will vigorously defend its rights. A letter was delivered to the Minister on October 3, 2007 demanding that the decision be revoked and the licenses be reinstated.  Domtar intends to file formal proceedings before the Quebec Superior Court to enforce its rights.

Domtar also believes that the purported unilateral termination of the agreement relating to the forest products business by Conifex Inc. is invalid pursuant to the terms of the agreement. While the consent of the Minister to the transfer of Grand-Remous, Malartic and other forest license rights is a condition to the closing of the transaction, the buyer would only have the right to terminate the agreement as of December 31, 2007 in the event that Domtar was not successful in challenging the revocation of these licenses and obtaining such consent by that date.  Domtar intends to vigorously enforce all of its rights under the agreement and continue to work diligently towards a closing of this transaction.

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. 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.

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