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Management Side
Paper Excellence Announces Sale of the Domtar Kamloops Mill to Kruger
SAN DIEGO (News release) -- The Paper Excellence Group, a global diversified manufacturer of pulp and specialty, printing, writing, and packaging papers, announced its subsidiary, Domtar Inc., has entered into an agreement with an affiliate of Kruger Specialty Papers Holding L.P. to sell its Kamloops pulp mill for an undisclosed amount.

When the Paper Excellence Group acquired Domtar on November 30, 2021 and entered into a Consent Agreement with the Commissioner of Competition (Canada), it agreed to sell Domtar's pulp mill in Kamloops, British Columbia in order to resolve the Commissioner's concerns about the Merger's implications on the purchase of wood fibre from the Thompson/Okanagan region in British Columbia. Once approved by the Commissioner, this transaction satisfies the requirements of the Consent Agreement.

The transaction is expected to close by the end of Q2.

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KRUGER'S PRESS RELEASE

MONTRÉAL -- Kruger announced that its affiliate Kruger Specialty Papers Holding L.P. entered into a definitive share purchase agreement pursuant to which one of its wholly-owned subsidiaries will purchase all the issued and outstanding shares in the capital of DKP Pulp ULC, a legal entity wholly-owned by Domtar Inc. that will, at the time of closing, own and operate the Kamloops Mill located at 2005 Mission Flats Road, Kamloops, British Columbia. The Kamloops Mill produces high quality Northern Bleached Softwood Kraft pulp and unbleached softwood Kraft for customers in North America and Asia.

"We're very excited about the opportunities that will arise from this acquisition, not only for Kruger but also for the Kamloops Mill, B.C. wood fibre suppliers and the local community," said François D'Amours, Executive Vice President and Chief Operating Officer for Kruger Inc., Kruger Specialty Papers' parent company. "There is a natural fit between Kruger and the Kamloops Mill, which has an impressive track record in terms of performance, sustainability, health and safety and employee engagement. Kruger has always maintained excellent relationships with its employees, customers, suppliers and communities and will make every effort to ensure a smooth and efficient transition, and to continue and strengthen these relationships."

Closing of the transaction contemplated by the Purchase Agreement is expected to occur in the second quarter of 2022 and is subject to customary conditions, including the approval of the Commissioner of Competition. The Paper Excellence Group, in the context of its acquisition of Domtar Corporation in November 2021, had agreed with the Commissioner to sell Domtar's pulp mill in Kamloops, British Columbia.

This acquisition will enable Kruger to secure the supply of high-quality pulp for some of its Québec paper mills. As a reminder, the Company, which has 2,700 employees in Québec, is investing about $1 billion in Sherbrooke, Québec, for the construction of two state-of-the-art tissue plants.

Also, with this acquisition, Kruger will strengthen its presence in British Columbia as a major employer and provider of essential products. Taking into account its existing operations, namely the Kruger Products tissue plant, in New Westminster, and Kruger Energy's Zeballos Lake Hydro Plant, the Company will have nearly 700 employees in B.C.

Scotiabank is acting as exclusive financial advisor to Kruger in the context of this acquisition with McCarthy Tétrault LLP acting as legal advisors.

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