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Sat, Sep 18, 2021 00:05
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Management Side
Domtar Scraps Below-Market Bond Buyback That Set Off Uproar

FORT MILL, S.C. (News release) -- Domtar Corp. said it terminated an offer to repurchase bonds and strip key protections from its debt covenants after investors pushed back against the below-market price offered by the paper manufacturer.

Domtar was seeking consent to remove its financial reporting requirements and revise a change-of-control cause that allows holders to sell back bonds for 101 cents on the dollar in the event the company is sold.

The Fort Mill, South Carolina-based company is being taken private by a Canadian pulp and paper producer, Paper Excellence, in a transaction that is expected to close in the fourth quarter.

Here is a press release on the matter:

Karta Halten B.V., a private limited company organized under the laws of the Netherlands, through its wholly owned subsidiary, Pearl Merger Sub Inc., a Delaware corporation ('Merger Sub') and affiliate of Paper Excellence B.V., a private limited company organized under the laws of the Netherlands ('Paper Excellence'), announced today that Merger Sub has terminated its previously announced cash tender offers (each, an 'Offer' and together, the 'Offers') by Merger Sub to purchase for cash any and all of Domtar Corporation's ('Domtar') outstanding (i) 6.25% Senior Notes due 2042 (the '2042 Notes') and (ii) 6.75% Senior Notes due 2044 (the '2044 Notes' and, together with the 2042 Notes, the 'Notes,' each such series of the Notes, a 'Series'). In connection with the Offers, Merger Sub has also terminated its consent solicitation with respect to each Series of Notes (the 'Offer Consent Solicitations') to amend the senior indenture, dated as of November 19, 2007 (as supplemented and amended to date (the 'Indenture'), among Domtar, the subsidiary guarantors from time to time party thereto and The Bank of New York (predecessor to The Bank of New York Mellon), as trustee, establishing the 2042 Notes and 2044 Notes. All Notes tendered in the Offers will be returned promptly to the respective holders thereof without any action required on the part of the holders. No consideration will be paid in the Offers for any tendered Notes. The Offers and the Offer Consent Solicitations were subject to the conditions set forth in the Offer to Purchase and Consent Solicitation Statement, dated August 9, 2021 (the 'Offer to Purchase').

Concurrently, Domtar announced today that it has terminated its previously announced consent solicitations (the 'Domtar Consent Solicitations'), whereby Domtar solicited, with respect to the applicable Series of Notes, consents ('Solicitation Change of Control Consents') of Holders of such Series of Notes to certain proposed amendments to the Indenture. All Solicitation Change of Control Consents will be voided. The Domtar Consent Solicitations were subject to the conditions set forth in the Offer to Purchase.

This press release confirms formal termination of the Offers, the Offer Consent Solicitations and the Domtar Consent Solicitations. Merger Sub and Domtar reserve the right to initiate a new tender offer, consent solicitation or both at a later date if market conditions become more favorable, but the parties are under no obligation to do so.

Barclays Capital Inc., BMO Capital Markets Corp., Credit Suisse Securities (USA) LLC and Wells Fargo Securities, LLC served as the Dealer Managers for each of the Offers and as the Solicitation Agents for each of the Offer Consent Solicitations and the Domtar Consent Solicitations (the 'Dealer Managers and Solicitation Agents'). Persons with questions regarding the termination of the Offers, the Offer Consent Solicitations and the Domtar Consent Solicitations should contact Global Bondholder Services Corporation at (212) 430-3774 (for brokers and banks) or (866) 807-2200 (for all others) or email contact@gbsc-usa.com.

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