MONTREAL, Nov. 29 /PRNewswire-FirstCall/ -- Domtar Inc., a wholly owned subsidiary of Domtar Corporation, announced today that it has commenced Offers to purchase for cash from holders, any and all of its outstanding Canadian dollar denominated 10% Debentures due 2011 and Canadian dollar denominated 10.85% Debentures due 2017.
In conjunction with the Offers, Domtar Inc. is also soliciting consents to certain proposed amendments to the indentures under which each series of Debentures were issued. The Offers and Consent Solicitations are being made pursuant to an Offer to Purchase and Consent Solicitation Statement and the related Letter of Transmittal and Consent mailed to holders today which more fully set forth the terms and conditions thereof.
The Offers will expire at the Expiration Time which is 5:00 p.m., Montreal time, on January 3, 2008, unless extended or earlier terminated. Holders of Debentures must validly deposit their Debentures under the Offers and deliver their Consent to the Proposed Amendments prior to the Early Consent Deadline which is 5:00 p.m., Montreal time, on December 17, 2007, unless extended or earlier terminated, to receive the Total Consideration.
The Total Consideration offered is an amount, paid in cash, to result, as of the applicable Settlement Date, in a yield to maturity (for each series of Debentures) equal to the sum of (i) a Reference Yield, being the yield to maturity of the relevant reference Government of Canada bonds, and (ii) an Offer spread of 125 basis points for the 10% Debentures and 150 basis points for the 10.85% Debentures as set out in more detail in the Offer and Consent Solicitation Statement.
The Total Consideration will be payable promptly on an Early Settlement Date (currently expected to be December 20, 2007) elected by Domtar Inc. upon the satisfaction of certain specified conditions following the Early Consent Deadline or, if Domtar Inc. does not elect an Early Settlement Date, on the Final Settlement Date (currently expected to be January 7, 2008) subject to the terms and conditions of the Offers. Domtar Inc. reserves the right, at its sole discretion, to extend or forgo the Early Settlement Date.
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 will only receive the Purchase Price, which is equal to the Total Consideration less an Early Consent Amount of $30.00 per $1,000 principal amount of Debentures, and which will be payable promptly after the Expiration Time on the Final Settlement Date.
Scotia Capital has been retained by Domtar Inc. to act as Dealer Manager and Solicitation Agent for the Offers and Consent Solicitations.
The Total Consideration and Purchase Price will be calculated by the Dealer Manager in accordance with standard market practice based on the Reference Yield on the date that is two business days prior to the Early Consent Deadline (currently expected to be December 13, 2007) for settlement on the applicable Settlement Date.
Domtar Inc. will also pay accrued and unpaid interest from the last interest payment date to, but not including, the applicable Settlement Date on those Debentures accepted for payment pursuant to the Offers.
In connection with the Offers, certain Debentureholders who hold, directly or indirectly, or exercise control or direction over, approximately 66.9% and 64.7% of the 10% Debentures and the 10.85% Debentures, respectively, have entered into lock-up agreements with Domtar Inc. pursuant to which the they have agreed, subject to the terms and conditions contained therein, to irrevocably deposit all of their Debentures and deliver their Consents on or prior to the Early Consent Deadline in valid acceptance of the Offers and Consent Solicitations.
In addition to retaining Scotia Capital as Dealer Manager and Solicitation Agent, Domtar Inc. has 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 further inquiries, please contact Scotia Capital at 416-863-7257 or 1-800-372-3930 (for U.S. residents). 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.
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(R), Domtar Microprint(R), Windsor Offset(R), Cougar(R) as well as its full line of environmentally and socially responsible papers, Domtar EarthChoice(R). 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/
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.
