RICHMOND, British Columbia & FORT MILL, S.C. (News release) -- Domtar Corporation ("Domtar"), a leading provider of a wide variety of fiber-based products including communication, specialty and packaging papers, market pulp and airlaid nonwovens, and Karta Halten B.V., a private limited company organized under the laws of the Netherlands ("Karta Halten") and affiliate of Paper Excellence B.V., a private limited company organized under the laws of the Netherlands ("Paper Excellence"), through its subsidiary, Pearl Merger Sub Inc., a Delaware corporation ("Merger Sub"), announced today the intention for Merger Sub to issue ("the Offering") to eligible purchasers $750.0 million aggregate principal amount of senior secured notes due 2028 (the "Notes"), subject to market conditions. The Offering will be exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act").

The Offering is part of the financing for, and is conditioned upon the consummation of, the proposed acquisition of Domtar and its subsidiaries by Karta Halten. Merger Sub has been formed for the sole purpose of completing the acquisition and, at the closing of the acquisition, will be merged with and into Domtar (the "Merger"), with Domtar surviving the Merger and becoming the issuer of the Notes. As previously announced, Domtar, Karta Halten, Merger Sub, Paper Excellence and Hervey Investments B.V., a private limited company organized under the laws of the Netherlands, entered into an Agreement and Plan of Merger on May 10, 2021 (the "Merger Agreement").

The net proceeds from the Offering will be used, together with an equity investment and borrowings under new senior secured credit facilities, to (i) pay the cash consideration in connection with the Merger, (ii) refinance Domtar's existing indebtedness (including the repurchase of Domtar's 6.25% Senior Notes due 2042 and 6.75% Senior Notes due 2044 (the "Existing Domtar Notes"), if any, purchased in the change of control offers for the Existing Domtar Notes to be conducted by Domtar following the closing of the Merger), (iii) pay fees, costs and expenses in connection with the Merger and related transactions and (iv) fund cash to the balance sheet.

If the Offering closes prior to the consummation of the Merger, the initial purchasers will deposit the gross proceeds from the sale of the Notes into an escrow account. In the event that (i) the Merger is not consummated by February 17, 2022 (the "Outside Date"), (ii) Merger Sub notifies the escrow agent and the trustee for the Notes in writing that the Merger Agreement has terminated prior to the Outside Date or (iii) Merger Sub notifies the escrow agent that in its reasonable judgment, the Merger will not be consummated by the Outside Date, the Notes will be subject to a special mandatory redemption, at a price equal to 100% of the initial issue price of the Notes plus accrued and unpaid interest from the issue date of the Notes to, but not including, the date of such special mandatory redemption.

Upon the consummation of the Merger, the Notes will be fully and unconditionally guaranteed (collectively, the "Guarantees"), jointly and severally, on a senior secured basis by Pearl Excellence Holdco L.P., a Delaware limited partnership, and each of Domtar's existing and future domestic restricted subsidiaries that is a guarantor under Domtar's new term loan credit agreement.

The Notes and related Guarantees will be offered only to qualified institutional buyers under Rule 144A of the Securities Act, and to non-U.S. persons in transactions outside the United States under Regulation S of the Securities Act. The Notes have not been, and will not be, registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.

This press release does not and will not constitute an offer to sell, or the solicitation of an offer to buy, the Notes or any other securities, nor will there be any sale of the Notes or other securities, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful. Any offer will be made only by means of a private offering memorandum.

About Paper Excellence

Paper Excellence, a private limited company organized under the laws of the Netherlands, is a diversified manufacturer of pulp and paper, including printing and writing, packaging, and specialty papers. Paper Excellence believes in the enduring value of wood-based products in global markets and has built a large network of mills and chipping plants to produce them competitively. Through its distinct approach to operational excellence, Paper Excellence delivers high-quality and cost-effective products to international customers. Paper Excellence has grown through logical acquisitions from a single mill to a group producing 2.8 million tonnes of paper and pulp and employing more than 2,800 people over the past decade.

Additional information about Paper Excellence is available at https://paperexcellence.com/.

About Domtar

Domtar is a leading provider of a wide variety of fiber-based products including communication, specialty and packaging papers, market pulp and airlaid nonwovens. With approximately 6,400 employees serving more than 50 countries around the world, Domtar is driven by a commitment to turn sustainable wood fiber into useful products that people rely on every day. Domtar's annual sales are approximately $3.7 billion, and its common stock is traded on the New York and Toronto Stock Exchanges. Domtar's principal executive office is in Fort Mill, South Carolina. To learn more, visit www.domtar.com.