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Fri, Oct 15, 2021 17:29
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Domtar and Karta Halten B.V., through its subsidiary Pearl Merger Sub Inc., Announce the launch of Private Offering of Senior Secured Notes Due 2028

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"), priced its previously announced offering to eligible purchasers of $775.0 million aggregate principal amount of 6.750% senior secured notes due 2028 (the "Notes"). The Notes will mature on October 1, 2028, with interest payment dates on April 1 and October 1 of each year, beginning on April 1, 2022. The Offering is exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). The Notes will be issued at a price of 100% of the aggregate principal amount thereof. The issuance and sale of the Notes is scheduled to settle on or about October 18, 2021, subject to customary closing conditions.

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, borrowings under new senior secured credit facilities and, following the consummation of the Merger, cash on Domtar's balance sheet, to (i) pay the cash consideration in connection with the Merger, (ii) repurchase Domtar's 6.25% Senior Notes due 2042 and 6.75% Senior Notes due 2044 (the "Existing Domtar Notes"), if any, tendered for redemption 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 May 18, 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.

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