Domtar gets needed consents in exchange offers for subsidiary's notes; proxy solicitations continue

By Jennifer Chiou

New York, Oct. 31 - Domtar Corp. said it received sufficient consents in exchange offers for any and all of subsidiary Domtar Inc.'s 7 7/8% notes due 2011, 5 3/8% notes due 2013, 7 1/8% notes due 2015 and 9½% debentures due 2016.

The Montreal-based paper company said that it will issue an equal principal amount of its newly issued notes of the corresponding series.

Domtar added that it will execute supplemental indentures.

The company is soliciting consents to amend the note indentures.

As of the early consent deadline at 5 p.m. ET on Oct. 30, Domtar said it received tenders from holders of $599.63 million, or 99.94%, of the 7 7/8% notes, $348.35 million, or 99.53%, of the 5 3/8% notes, $392.48 million, or 98.12%, of the 7 1/8% notes and $124.09 million, or 99.27%, of the 9½% debentures.

Of all the notes series, the company said it received tenders from holders of 99.29% of the securities.

The offer ends at midnight ET on Nov. 14. It began on Oct. 17.

Those who tendered by the early deadline will receive a consent payment of $2.50 per $1,000 principal amount of notes.

Global Bondholder Services Corp. is the information agent (866 470-3700 or call collect 212 430-3774). J.P. Morgan Securities Inc. (866 834-4666 or call collect 212 834-4077) is the lead dealer manager and solicitation agent while the co-dealer manager and co-solicitation agent is Deutsche Bank Securities Inc. (866 627-0391 or call collect 212 250-2955).

At the same time, Domtar Inc. announced that in the proxy solicitation for its outstanding Canadian dollar-denominated 10% debentures due 2011 and 10.85% debentures due 2017, it received proxies from holders of $36.25 million, or 44.21%, of the 10% debentures and $33.94 million, or 45.3%, of the 10.85% debentures.

Of those who submitted proxies, 93.53% of the consenting 10% debentureholders voted in favor of proposed amendments, while 95.15% of consenting 10.85% debentureholders authorized the amendments.

The company will seek approval of amendments at a meeting on Nov. 14, including one to provide Domtar Corp. with the right to acquire, at anytime, all outstanding debentures in exchange for new securities with identical terms. The company is seeking proxies from at least 66 2/3% of holders.

Those who submitted proxies prior to 5 p.m. ET on Oct. 30 will receive an early consent payment of C$2.50 per C$1,000 principal amount.

The exchange offer is conditioned on the receipt of tenders from holders of at least 75% of the outstanding principal amount of all securities involved in the offer and proxy solicitation.

Georgeson Inc. is the information agent for the proxy solicitation (888 605-8384). The dealer manager for the proxy solicitations is Scotia Capital Inc. (call collect 416 863-7257).

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