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Risk factors

Before agreeing to accept the Domtar Corp. notes in exchange for the Domtar Inc. U.S. notes you currently hold, you should carefully consider the risks described below in addition to the other information presented in this prospectus and consent solicitation statement. Because the Company’s business comprises the operations of both the Predecessor Company and Domtar Inc., unless the context requires otherwise, the current and forward-looking statements included in this section continue to apply to the Company following the consummation of the Acquisition Transactions, without regard to whether such statement refers to the Company or the Predecessor Company.

Risk factors relating to the exchange offers

The trading market for each series of Domtar Inc. U.S. notes not exchanged in the exchange offers may become more limited than it is at present and could for all practical purposes cease to exist, which could adversely affect the liquidity, market price and price volatility of the Domtar Inc. U.S. notes of that series.

We are offering to exchange any and all outstanding notes of each series of the Domtar Inc. U.S. notes for newly issued Domtar Corp. notes of a corresponding series. It is a condition of the exchange offers that we receive valid tenders pursuant to the exchange offers, which are not withdrawn, of an aggregate principal amount of Domtar Inc. U.S. notes that, together with the U.S. dollar equivalent of the aggregate principal amount of Domtar Inc. Canadian debentures that Domtar Corp. has the right to acquire as a result of the Canadian proxy solicitations, is at least equal to 75% of the sum of the aggregate outstanding principal amount of the Domtar Inc. U.S. notes and the U.S. dollar equivalent of the aggregate outstanding principal amount of the Domtar Inc. Canadian debentures. We have the option to waive this and any other condition to the exchange offers at our discretion. Consequently, the aggregate principal amount of each series of Domtar Inc. U.S. notes is likely to decrease substantially upon consummation of the exchange offers. A debt security with a smaller outstanding aggregate principal amount available for trading (a smaller “float”) may command a lower price and have less trading liquidity than would a comparable debt security with a larger float. Therefore, the market price for the Domtar Inc. U.S. notes that are not tendered and accepted for exchange pursuant to the exchange offers may be affected adversely to the extent that the principal amount of the Domtar Inc. U.S. notes exchanged pursuant to the exchange offers reduces the float. A reduced float may also make the trading price of the Domtar Inc. U.S. notes that are not exchanged in the exchange offers more volatile. The extent of the public market for the Domtar Inc. U.S. notes following the consummation of the exchange offers will depend upon the number of holders remaining at such time, the interest in maintaining a market in such notes on the part of securities firms and other factors. In addition, if the exchange offer for any series of Domtar Inc. U.S. notes is consummated but not all such notes are tendered and therefore notes of such series remain outstanding thereafter, or if we do not consummate the exchange offers with respect to any series of Domtar Inc. U.S. notes, Domtar Inc. may in the future redeem or tender for any of such Domtar Inc. U.S. notes or repurchase such Domtar Inc. U.S. notes pursuant to open market purchases from time to time.

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If we receive consents sufficient to amend the Domtar Inc. U.S. Indentures as proposed, the Domtar Inc. U.S. notes that are not exchanged will remain outstanding under the applicable Domtar Inc. U.S. Indenture, as amended, which will afford reduced protection to remaining holders and could adversely affect the liquidity, market price and price volatility of such Domtar Inc. U.S. notes.

In connection with the exchange offers, we are soliciting consents from the holders of each series of the Domtar Inc. U.S. notes to amend, with respect to each such series, the Domtar Inc. U.S. Indenture pursuant to which such series of the Domtar Inc. U.S. notes was issued.

If the proposed amendments to a Domtar Inc. U.S. Indenture are adopted, the provisions of that Domtar Inc. U.S. Indenture will be less restrictive and will afford reduced protection to holders of the Domtar Inc. U.S. notes issued pursuant to such indenture. The proposed amendments to the Domtar Inc. U.S. Indentures would, among other things:

If the proposed amendments to a Domtar Inc. U.S. Indenture are adopted with respect to a series of Domtar Inc. U.S. notes, each non-exchanging holder of Domtar Inc. U.S. notes of such series will be bound by the proposed amendments even though that holder did not consent to them. The elimination or modification of the covenants and other provisions in the Domtar Inc. U.S. Indentures contemplated by the proposed amendments would, among other things, permit Domtar Inc. to take actions that would not have previously been permitted by the relevant indenture and which could increase the credit risk associated with the Domtar Inc. U.S. notes and adversely affect the liquidity or marketability of the Domtar Inc. U.S. notes not tendered in the exchange offers or otherwise be adverse to the interests of the holders of such notes. See “The consent solicitation—The proposed amendments.”

If the exchange offers are completed, your ability to obtain financial and other information about Domtar Inc. could be adversely affected.

The indentures under which the Domtar Inc. U.S. notes were issued currently require Domtar Inc. to file reports under the Exchange Act, or otherwise provide financial and other information to the trustee or the holders of the Domtar Inc. U.S. notes even if it is not required to do so under applicable law. If the proposed amendments to the Domtar Inc. U.S. Indentures are adopted, this obligation will be eliminated.

Domtar Inc. intends, to the extent permitted by applicable law, to deregister all of the Domtar Inc. U.S. notes under the Exchange Act upon completion of the exchange offers. As Domtar Inc. previously deregistered its common shares under the Exchange Act upon completion of the Acquisition Transactions, upon such deregistration of the Domtar Inc. U.S. notes, Domtar Inc. will no longer have an obligation with respect to those notes or any of its other securities to file reports with the SEC. In addition, if the requisite votes of the holders of each series of the Domtar Inc. Canadian debentures to approve the amendments to the Domtar Inc. Canadian Indentures are obtained, Domtar Corp. intends to exchange newly issued Domtar Corp. debt securities for the outstanding Domtar Inc. Canadian debentures, which would terminate

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Domtar Inc.’s public reporting obligations under Canadian securities laws with respect to such debentures. If Domtar Inc. in the future redeems its outstanding preferred shares, it will cease to have any public reporting obligations under Canadian securities laws. As a result, remaining investors in Domtar Inc. U.S. notes after the completion of the exchange offers may not be able to obtain information regarding Domtar Inc.’s business, results and financial condition and investor interest in the Domtar Inc. U.S. notes could be substantially reduced, which could affect liquidity and trading prices for the Domtar Inc. U.S. notes.

If you do not follow the procedures for exchanging your Domtar Inc. U.S. notes, your exchange may not be valid.

We will only issue Domtar Corp. notes in exchange for Domtar Inc. U.S. notes that are timely and properly tendered. Therefore, you should carefully follow the instructions on how to tender your Domtar Inc. U.S. notes and you should allow sufficient time to ensure timely delivery of your Domtar Inc. U.S. notes to the exchange agent. If your Domtar Inc. U.S. notes are held by a custodial entity such as a bank, broker, dealer, trust company or other nominee, then only that custodial entity can tender your Domtar Inc. U.S. notes. In such case, you should follow the instructions sent to you separately by that institution. Neither we nor the exchange agent are required to inform you of any defects or irregularities with respect to tenders of Domtar Inc. U.S. notes. See “The exchange offers.”

If you do not validly tender your Domtar Inc. U.S. notes on or prior to the early consent date, you will not receive the early consent payment.

There is no assurance that Domtar Corp. will be deemed a successor entity to Domtar Inc. and be regarded as the new reference entity for purposes of credit default swaps related to the Domtar Inc. debt securities.

Certain holders of the Domtar Inc. debt securities may be parties to credit default swap (CDS) contracts relating to the Domtar Inc. debt securities. Under these CDS contracts, a Domtar Inc. debtholder has contracted for the right to recoup the economic value of a decline in the value of such Domtar Inc. debt security if a credit event occurs with regard to Domtar Inc., as the reference entity. This economic value is realized by delivery of such Domtar Inc. debt security to the counterparty to the CDS contract in return for the previously agreed payment. We believe that the consummation of the exchange offers, assuming that the minimum amount condition has been satisfied and the Transfer has been effected, would establish a “succession event” from Domtar Inc. to Domtar Corp. The minimum amount condition and the Transfer are intended to facilitate Domtar Corp. being a successor entity to Domtar Inc. for purposes of these CDS contracts by virtue of succeeding to obligations of Domtar Inc. “by way of” a succession event. We believe that Domtar Corp. should be deemed to be the sole reference entity for purposes of determining whether a credit event has occurred if more than 75% of the sum of the aggregate outstanding principal amount of the Domtar Inc. U.S. notes and the U.S. dollar equivalent of the aggregate outstanding principal amount of the Domtar Inc. Canadian debentures are exchanged for Domtar Corp. debt securities “by way of” a succession event. However, no assurance can be given as to the existence of a succession event or that Domtar Corp. will be deemed a successor entity to Domtar Inc. for purposes of these CDS contracts, or that Domtar Corp. will be deemed the reference entity for purposes of determination of a credit event. If such result is not achieved, holders of these CDS contracts may not be able to realize the economic values of these agreements.

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Some or all of the Domtar Corp. notes may bear original issue discount for United States federal income tax purposes.

Some or all of the Domtar Corp. notes issued in the exchange offers will likely bear original issue discount if the trading value of such Domtar Corp. notes on the date they are issued is less than the stated principal amount of such notes by more than a statutorily defined de minimis amount. In any such case, a holder of an affected Domtar Corp. note will be required to include the original issue discount in income for U.S. federal income tax purposes over the life of such Domtar Corp. note on a constant yield basis even though corresponding amounts of cash are not received currently. See “Certain material United States federal income tax consequences.”

Risk factors relating to the Domtar Corp. notes

The Company’s substantial indebtedness, which is approximately $2.4 billion as of July 1, 2007, could adversely affect its financial condition and impair its ability to operate its business.

The Company is highly leveraged. As of July 1, 2007, the Company had approximately $2.4 billion of outstanding indebtedness, including $720.0 million of indebtedness under the term loan portion of its senior secured credit facilities, $48 million of capital leases and $1.7 billion of indebtedness under the Domtar Inc. debt securities.

The Company’s substantial degree of indebtedness could have important consequences to the Company’s financial condition, operating results and business, including the following:

Despite current indebtedness levels, we and our subsidiaries may incur substantially more debt. this could further exacerbate the risks associated with our substantial leverage.

We and our subsidiaries may incur substantial additional indebtedness in the future. Although the Credit Agreement contains restrictions on the incurrence of additional indebtedness, including secured indebtedness, these restrictions are subject to a number of qualifications and

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exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. For example, as of July 1, 2007, we had no amounts drawn under our senior secured revolving credit facility and $49 million of letters of credit outstanding, resulting in $701 million of availability for future drawings. Any additional borrowings under the senior secured revolving credit facility would be effectively senior to the Domtar Corp. notes and the related guarantees to the extent of the value of the assets securing such indebtedness. Moreover, the indenture governing the Domtar Corp. debt securities will not impose any limitation on our or our subsidiaries’ incurrence of indebtedness, other than a limitation with respect to secured indebtedness (subject to a number of qualifications and exceptions). If we incur additional debt, the risks associated with our substantial leverage would increase.

Our ability to generate the significant amount of cash needed to pay interest and principal on the Domtar Corp. notes and service our other debt and financial obligations and our ability to refinance all or a portion of our indebtedness or obtain additional financing depends on many factors beyond our control.

The Company has considerable debt service obligations. On a pro forma basis after giving effect to the Acquisition Transactions, as of December 31, 2006, the Company had approximately $200 million of annual interest payments and its aggregate debt service obligations are approximately $210 million each year from 2007 through 2010. Our ability to make payments on and refinance our debt, including the Domtar Corp. debt securities, amounts borrowed under our senior secured credit facilities and other financial obligations, including the Domtar Inc. debt securities that remain outstanding following the completion of the exchange offers and the Canadian proxy solicitations, if any, and to fund our operations will depend on our ability to generate substantial operating cash flow. Our cash flow generation will depend on our future performance, which will be subject to prevailing economic conditions and to financial, business and other factors, many of which are beyond our control.

Our business may not generate sufficient cash flow from operations and future borrowings may not be available to us under our senior secured credit facilities or otherwise in amounts sufficient to enable us to service our indebtedness, including the Domtar Corp. notes, and borrowings under our senior secured credit facilities or to fund our other liquidity needs. If we cannot service our debt, we will have to take actions such as reducing or delaying capital investments, selling assets, restructuring or refinancing our debt or seeking additional equity capital. Any of these remedies may not be effected on commercially reasonable terms, or at all, and may impede the implementation of our business strategy. Further, the Credit Agreement may restrict us from adopting any of these alternatives. In addition, the restrictions on the Company’s ability to issue equity securities or convertible debt securities during the two year period following the Acquisition Closing Date without jeopardizing the intended tax consequences of the Acquisition Transactions may make it difficult for the Company to raise equity capital if needed to service its indebtedness. Because of these and other factors that may be beyond our control, we may be unable to pay the principal, premium, if any, interest or other amounts on the Domtar Corp. notes. See “Risks related to the Acquisition Transactions—The Company may be affected by significant restrictions following the Acquisition Transactions in order to avoid significant tax-related liabilities.”

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Your right to receive payments on the Domtar Corp. notes is junior to that of lenders who have a security interest in our and our subsidiaries’ assets.

Our obligations under the Domtar Corp. notes and the guarantor’s obligations under its guarantee of the Domtar Corp. notes are unsecured, but our obligations under our senior secured credit facilities and the guarantor’s obligations under its guarantee of the Credit Agreement are secured by a security interest in substantially all of our and our guarantor’s assets, including pledges of all or a portion of the capital stock of our and the guarantor’s subsidiaries, including Domtar Inc. If we are declared bankrupt or insolvent, or if we default under the Credit Agreement, the lenders could declare all of the funds borrowed thereunder, together with any accrued and unpaid interest, immediately due and payable. If we are unable to repay such indebtedness, the lenders could foreclose on or otherwise enforce their security interest in the pledged assets to the exclusion of holders of the Domtar Corp. notes and the guarantee on the Domtar Corp. notes, even if an event of default exists under the indenture governing the Domtar Corp. notes at such time. Furthermore, if the lenders foreclose on and sell or otherwise enforce their security interest in the pledged equity interests in any existing or future guarantor, then such guarantor will be released from its guarantee of the Domtar Corp. notes automatically upon such sale if the guarantor is no longer a subsidiary of ours, provided that such sale is made in compliance with the provisions of the indenture governing the Domtar Corp. notes.

In any such event, because the Domtar Corp. notes and the guarantee of the Domtar Corp. notes will not be secured by any of our or the guarantor’s assets, it is possible that there would be no assets remaining from which claims of the holders of the Domtar Corp. notes could be satisfied or, if any assets remained, that they would be insufficient to satisfy such claims fully. See “Description of other indebtedness—Senior secured credit facilities.”

As of July 1, 2007, we had $768 million of secured indebtedness, comprised in part of $720 million under our senior secured term facility and $48 million of capital leases. In addition, $701 million was available under our senior secured revolving credit facility, after giving effect to $49 million of outstanding letters of credit.

The notes will be structurally subordinated to all indebtedness of our subsidiaries that do not guarantee the Domtar Corp. notes.

You will not have any claim as a creditor against any of our existing and future subsidiaries that do not guarantee the Domtar Corp. notes. Indebtedness and other liabilities, including trade payables, whether secured or unsecured, of those subsidiaries will be structurally senior to your claims against those subsidiaries. At the date of issuance of the Domtar Corp. notes, the only guarantor will be Domtar Paper Company, LLC.

For the thirteen weeks ended July 1, 2007 our non-guarantor subsidiaries collectively represented approximately 67% of our sales, 6% of our operating income and 17% of our cash flows from operating activities. At July 1, 2007, our non-guarantor subsidiaries collectively represented approximately 62% of our total assets and 61% of our outstanding total liabilities, including trade payables, but excluding intercompany liabilities, all of which would have been structurally senior to the Domtar Corp. notes.

In addition, the indenture governing the Domtar Corp. debt securities will not contain any limitation on the amount of additional indebtedness that can be incurred by our restricted

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subsidiaries, other than secured indebtedness, and will not contain any limitation on the amount of other liabilities, such as trade payables, that may be incurred by these subsidiaries.

If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the Domtar Corp. notes.

Any default under the agreements governing our indebtedness, including a default under the Credit Agreement, could prevent us from making any payments on the Domtar Corp. notes and substantially decrease the market value of the Domtar Corp. notes. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments on our indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants of our indebtedness, we could be in default under such indebtedness. In the event of such default:

We may not be able to repurchase the Domtar Corp. notes upon a change of control.

Upon the occurrence of specific kinds of change of control events, we will be required to offer to repurchase all outstanding Domtar Corp. notes at 101% of their principal amount plus accrued and unpaid interest. The source of funds for any such purchase of the Domtar Corp. notes will be our available cash or cash generated from our subsidiaries’ operations or other sources, including borrowings, sales of assets or sales of equity. We may not be able to repurchase the Domtar Corp. notes upon a change of control because we may not have sufficient financial resources to purchase all of the notes that are tendered upon a change of control. Further, we may be contractually restricted under the terms of our senior secured credit facilities from repurchasing all of the Domtar Corp. notes tendered by holders upon a change of control. Accordingly, we may not be able to satisfy our obligations to purchase the Domtar Corp. notes. Our failure to repurchase any series of the Domtar Corp. notes upon a change of control would cause a default under the indenture governing the Domtar Corp. notes and a cross-default under the Credit Agreement. The Credit Agreement also provides that a change of control will be a default that permits lenders to accelerate the maturity of borrowings thereunder. Any of our future debt agreements may contain similar provisions.

An active market may not develop for the Domtar Corp. notes, which may hinder your ability to liquidate your investment.

Each series of the Domtar Corp. notes is a new issue of securities with no established trading market. The U.S. Dealer Managers have informed us that they intend to make a market in the Domtar Corp. notes after the completion of this exchange offer; however, they are not obligated to do so and may discontinue such market making at any time. As a result, we cannot assure you that an active trading market will develop for any series of the Domtar Corp. notes.

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Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the Domtar Corp. notes offered hereby. The market for the Domtar Corp. notes, if any, may be subject to similar disruptions. Any such disruptions may adversely affect the value of the Domtar Corp. notes. In addition, subsequent to their initial issuance, trading prices of the Domtar Corp. notes may vary, depending upon prevailing interest rates, the market for similar notes and the interest of securities dealers in making a market in the Domtar Corp. notes offered hereby, our operating performance and financial condition, our prospects or the prospects for companies in our industry generally and other factors, including those described herein.

The Domtar Corp. notes are obligations of a holding company that has substantially no independent operations and is dependent on its subsidiaries for cash.

As a holding company, our investments in our operating subsidiaries constitute substantially all of our operating assets. Our subsidiaries conduct all of our consolidated operations and own substantially all of our consolidated assets. As a result, we must rely on dividends and other advances and transfers of funds from our subsidiaries to meet our debt service and other obligations. The ability of our subsidiaries to pay dividends or make other advances and transfers of funds will depend on their respective results of operations and may be restricted by, among other things, applicable laws limiting the amount of funds available for payment of dividends and agreements of those subsidiaries.

Restrictive covenants in the credit agreement may restrict our ability to pursue our business strategies.

The Credit Agreement contains a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long term best interests. These covenants restrict, among other things, our and our subsidiaries’ ability to:

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The indenture governing the Domtar Corp. debt securities will also include limitations on our ability to create liens on our or our subsidiaries’ assets to secure debt, our ability to engage in certain sale and leaseback transactions and our ability to merge or consolidate with another person or sell or otherwise dispose of all or substantially all of our assets.

A breach of any covenant contained in either the Credit Agreement or the indenture governing the Domtar Corp. debt securities could result in a default under those agreements. If any such default occurs, the lenders under the Credit Agreement or the holders of the Domtar Corp. debt securities, as the case may be, may elect (after the expiration of any applicable notice or grace periods) to declare all outstanding borrowings, together with accrued and unpaid interest and other amounts payable thereunder, to be immediately due and payable. In addition, a default under the indenture governing the Domtar Corp. debt securities with respect to any series of the Domtar Corp. debt securities would cause a default under the Credit Agreement and a default with respect to the other series of Domtar Corp. debt securities, and the acceleration of debt under the Credit Agreement or the failure to pay that debt when due or an unstayed judgment against us would cause a default under the indenture governing the Domtar Corp. debt securities (assuming the amount of that debt or judgment is in excess of $80 million or the equivalent thereof in any foreign currency). The lenders under the Credit Agreement also have the right upon an event of default thereunder to terminate any commitments they have to provide further revolving borrowings. Further, following an event of default under the Credit Agreement, the lenders thereunder will have the right to proceed against the collateral granted to them to secure that debt, which includes the available cash of our subsidiaries that guarantee the senior secured credit facilities. If the debt under the Credit Agreement or the Domtar Corp. debt securities becomes due and payable, our assets may not be sufficient to repay in full that debt or any other debt that may become due as a result of that acceleration.

Risks related to the industries and businesses of the Company and Domtar Inc.

Unless otherwise noted or the context requires otherwise, the following risk factors apply to both the Company and Domtar Inc.

The pulp, paper and wood product industries are highly cyclical. fluctuations in the prices of and the demand for the Company’s products could result in smaller profit margins and lower sales volumes.

The pulp, paper and wood product industries are highly cyclical. Historically, economic and market shifts, fluctuations in capacity and changes in foreign currency exchange rates have created cyclical changes in prices, sales volume and margins for the Company’s products. The length and magnitude of industry cycles have varied over time and by product, but generally reflect changes in macroeconomic conditions and levels of industry capacity. Most of the Company’s paper products are commodities that are widely available from other producers. Even the Company’s non-commodity products, such as value-added papers, are susceptible to commodity dynamics. Because commodity products have few distinguishing qualities from producer to producer, competition for these products is based primarily on price, which is determined by supply relative to demand.

The overall levels of demand for the products the Company manufactures and distributes, and consequently its sales and profitability, reflect fluctuations in levels of end-user demand, which depend in part on general macroeconomic conditions in North America and worldwide, as well as competition from electronic substitution. See “Some of the Company’s products are vulnerable to

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long-term declines in demand due to competing technologies or materials.” For example, demand for cut-size office paper may fluctuate with levels of white-collar employment. Demand for many of such products was materially and negatively impacted by the global economic downturn, among other things, in the early part of this decade, and the Company expects that the Company will be sensitive to such downturns in the future.

Industry supply of pulp, paper and wood products is also subject to fluctuation, as changing industry conditions can influence producers to idle or permanently close individual machines or entire mills. Such closures can result in significant cash and/or non-cash charges. In addition, to avoid substantial cash costs in connection with idling or closing a mill, some producers will choose to continue to operate at a loss, sometimes even a cash loss, which could prolong weak pricing environments due to oversupply. Oversupply can also result from producers introducing new capacity in response to favorable short-term pricing trends.

Industry supply of pulp, paper and wood products is also influenced by overseas production capacity, which has grown in recent years and is expected to continue to grow. While the weakness of the U.S. dollar has mitigated the levels of imports in recent years, imports of pulp, paper and wood products from overseas may increase, putting downward pressure on prices.

As a result, prices for all of the Company’s products are driven by many factors outside of its control, and it has little influence over the timing and extent of price changes, which are often volatile. Because market conditions beyond the Company’s control determine the prices for its commodity products, the price for any one or more of these products may fall below its cash production costs, requiring the Company to either incur cash losses on product sales or cease production at one or more of its manufacturing facilities. The Company continues to evaluate potential adjustments to its production capacity, which may include additional closures of machines or entire mills, and the Company could recognize significant cash and/or non-cash charges relating to any such closures in future periods. Therefore, the Company’s profitability with respect to these products depends on managing its cost structure, particularly wood fiber, chemical and energy costs, which represent the largest components of its operating costs and can fluctuate based upon factors beyond its control, as described below. If the prices of or demand for its products decline, or if its wood fiber, chemical or energy costs increase, or both, its sales and profitability could be materially and adversely affected.

Some of the Company’s products are vulnerable to long-term declines in demand due to competing technologies or materials.

The Company’s business competes with electronic transmission and document storage alternatives, as well as with paper grades it does not produce, such as uncoated groundwood. As a result of such competition, both the Weyerhaeuser Fine Paper Business and Domtar Inc. previously experienced decreased demand for some of their existing pulp and paper products. As the use of these alternatives grows, demand for pulp and paper products is likely to further decline. Moreover, demand for some of the Company’s wood products may decline if customers purchase alternatives from other sources.

The Company faces intense competition in its markets, and the failure to compete effectively would have a material adverse effect on its business and results of operations.

The Company competes with both U.S. and Canadian paper producers and, for many of its product lines, global producers, some of which may have greater financial resources and lower production costs than the Company. The principal basis for competition is selling price. The

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Company’s ability to maintain satisfactory margins depends in large part on its ability to control its costs. The Company cannot assure you that it can compete effectively and maintain current levels of sales and profitability. If the Company cannot compete effectively, such failure will have a material adverse effect on its business and results of operations.

The Company’s and Domtar Inc.’s intellectual property rights are valuable, and any inability to protect them could reduce the value of its products and its brands.

The Company and Domtar Inc. rely on patent, trademark, and other intellectual property laws of the United States and other countries to protect its intellectual property rights. However, the Company and Domtar Inc. may be unable to prevent third parties from using their respective intellectual property without its authorization, which may reduce any competitive advantage it has developed. If the Company or Domtar Inc. had to litigate to protect these rights, any proceedings could be costly, and it may not prevail. The Company and Domtar Inc. cannot guarantee that any U.S. or foreign patents, issued or pending, will provide it with any competitive advantage or will not be challenged by third parties. Additionally, the Company and Domtar Inc. have obtained and applied for U.S. and foreign trademark registrations, and will continue to evaluate the registration of additional service marks and trademarks, as appropriate. Neither the Company or Domtar Inc. can guarantee that any of its pending patent or trademark applications will be approved by the applicable governmental authorities and, even if the applications are approved, third parties may seek to oppose or otherwise challenge these registrations. The failure to secure any pending patent or trademark applications may limit the Company’s and Domtar Inc.’s ability to protect the intellectual property rights that these applications were intended to cover.

The Company’s manufacturing businesses may have difficulty obtaining wood fiber at favorable prices, or at all.

Wood fiber is the principal raw material used by the Company, comprising, on a pro forma basis, approximately 22% of the aggregate amount of materials, labor and other operating expenses and fiber costs for its business during 2006. Wood fiber is a commodity, and prices historically have been cyclical. The primary source for wood fiber is timber. Environmental litigation and regulatory developments have caused, and may cause in the future, significant reductions in the amount of timber available for commercial harvest in the United States and Canada. In addition, future domestic or foreign legislation and litigation concerning the use of timberlands, the protection of endangered species, the promotion of forest health and the response to and prevention of catastrophic wildfires could also affect timber supplies. Availability of harvested timber may further be limited by fire, insect infestation, disease, ice storms, wind storms, flooding and other natural and man made causes, thereby reducing supply and increasing prices. Wood fiber pricing is subject to regional market influences, and the Company’s cost of wood fiber may increase in particular regions due to market shifts in those regions. Any sustained increase in wood fiber prices would increase the Company’s operating costs, and the Company may be unable to increase prices for its products in response to increased wood fiber costs due to additional factors affecting the demand or supply of these products.

The Province of Québec adopted legislation, which became effective April 1, 2005, that reduced allowable wood-harvesting volumes by an average of 20% on public lands and 25% on territories covered by an agreement between the Government of Québec and the Cree First Nations. As a result, the amount of fiber, primarily softwood fiber, the Company is permitted to harvest annually, under its existing licenses from the Québec government, was reduced by approximately

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500,000 cubic meters to approximately 2.0 million cubic meters, reflecting a 21% reduction. The Chief Forester of Québec has proposed a further reduction of 60,000 cubic meters, or 3%, of the total softwood annual allowable cut of forests managed by the Company. This would significantly affect the supply of fiber for the Company’s Northern Québec softwood sawmill and market pulp operations. The reduction in harvest volume would also result in a corresponding increase in the unit cost of wood delivered to the sawmills. As a result of the impact of the strength of the Canadian dollar against the U.S. dollar, low lumber prices and other factors, most of the Company’s wood fiber harvesting operations in Québec have been shut down and all but one of the facilities relating to such operations have been closed indefinitely. As a result of the reduced availability, the Company may face increased costs in purchasing, and have difficulty locating wood fiber sufficient to satisfy its requirements.

On October 1, 2007, Domtar Inc. received a written notice from the Minister of Natural Resources and Wildlife for the province of Québec purporting to revoke, effective as of September 14, 2007, Domtar Inc.’s forest license rights relating to its Grand-Remous and Malarctic sawmills. The Company and Domtar Inc. believe that the Minister’s action is unlawful and will vigorously defend Domtar Inc.’s rights. As a result of this notice, Conifex has delivered a notice purporting to terminate its agreement to purchase Domtar Inc.’s Wood business. The Company and Domtar Inc. also believe that the purported unilateral termination of the agreement by Conifex is invalid under the terms of the agreement. However, if Domtar Inc. is not successful in reinstating these license rights and obtaining the consent of the Minister to transfer the license rights to Conifex on or before December 31, 2007, Conifex would have the right to terminate the agreement and, if it exercised its right to do so, the pending sale would not be completed.

Historically, Weyerhaeuser provided, on average, approximately 45% of the Weyerhaeuser Fine Paper Business’ wood fiber requirements, which is approximately 19% of the Company’s wood fiber requirements. The Company currently obtains its wood fiber requirements in part by harvesting timber pursuant to its forest licenses and forest management agreements, in part by purchasing wood fiber from Weyerhaeuser pursuant to the fiber and pulp supply agreements entered into in connection with the Acquisition Transactions, which expire between 2007 and 2027, and in part by purchasing wood fiber from third parties. If the Company’s cutting rights pursuant to its forest licenses or forest management agreements are reduced or if Weyerhaeuser or any third-party supplier of wood fiber stops selling or is unable to sell wood fiber to the Company, its financial condition and operating results would suffer.

An increase in the cost of the Company’s purchased energy or chemicals would lead to higher manufacturing costs, thereby reducing its margins.

The Company’s operations consume substantial amounts of energy such as electricity, natural gas, fuel oil, coal and hog fuel (wood waste). Energy comprised, on a pro forma basis, approximately 8% of the aggregate amount of materials, labor and other operating expenses and fiber costs for the Company’s business during 2006. Energy prices, particularly for electricity, natural gas and fuel oil, have been volatile in recent years and currently exceed historical averages. As a result, fluctuations in energy prices will impact the Company’s manufacturing costs and contribute to earnings volatility. While the Company purchases substantial portions of its energy under supply contracts, many of these contracts are based on market pricing.

Other raw materials the Company uses include various chemical compounds, such as precipitated calcium carbonate, sodium chlorate and sodium hydroxide, dyes, resins and adhesives. Purchases

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of chemicals comprised, on a pro forma basis, approximately 12% of the aggregate amount of materials, labor and other operating costs and fiber costs for the Company’s business during 2006. The costs of these chemicals have been volatile historically, and are influenced by capacity utilization, energy prices and other factors beyond the Company’s control. In the second quarter of 2007, for example, we incurred higher costs for chemical purchases than in the first quarter of 2007. Certain of our material chemical supply agreements will expire between December 31, 2007, and June 30, 2008.

For the Company’s commodity products, the relationship between industry supply and demand for these products, rather than changes in the cost of raw materials, will determine its ability to increase prices. Consequently, the Company may be unable to pass on increases in its operating costs to its customers. Any sustained increase in chemical or energy prices without any corresponding increase in product pricing would reduce the Company’s operating margins and potentially require it to limit or cease operations of one or more of its machines.

The Company could experience disruptions in operations and/or increased labor costs due to labor disputes.

Employees at 44 of the Company’s facilities, a majority of the Company’s 14,000 employees, are represented by unions through collective bargaining agreements, generally on a facility-by-facility basis, which will expire between 2007 and 2012. Currently six collective bargaining agreements are up for renegotiation. The Company may not be able to negotiate acceptable new collective bargaining agreements, which could result in strikes or work stoppages or other labor disputes by affected workers. Renewal of collective bargaining agreements could also result in higher wages or benefits paid to union members. In addition, labor organizing activities could occur at any of the Company’s facilities. Therefore, the Company could experience a disruption of its operations or higher ongoing labor costs, which could have a material adverse effect on its business and financial condition.

In connection with the Company’s restructuring efforts, the Company has suspended operations at, or closed or announced its intention to close, various facilities and may incur liability with respect to affected employees, which could have a material adverse effect on its business or financial condition. In addition, the Company continues to evaluate potential adjustments to its production capacity, which may include additional closures of machines or entire mills, and the Company could recognize significant cash and/or non-cash charges relating to any such closures in future periods.

In the early part of 2006, Weyerhaeuser closed its pulp and paper mill in Prince Albert, Saskatchewan, which the Company acquired in the Acquisition Transactions, and which remains closed. Certain unionized parties filed a grievance against Weyerhaeuser following the shut down, alleging that certain post-closure actions taken by Weyerhaeuser violated their collective bargaining agreement. In particular, the union disputed Weyerhaeuser’s post-closure contracting with a third-party vendor to oversee on-site security at Prince Albert. In connection with the Acquisition Transactions, the Company has assumed any liability with respect to this grievance. In September 2007, the Company entered into a memorandum of understanding with the Province of Saskatchewan for a plan to redevelop the pulp mill at the Prince Albert facility. However, the consummation of this plan is subject to several critical conditions. In a separate grievance relating to the closure of the Prince Albert facility, which could result in liability in excess of $20 million, the union is claiming that it is entitled to the accumulated pension benefits during the actual

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layoff period because, according to the union, a majority of employees retained still had recall rights during the layoff. The Company is currently evaluating its positions with respect to these grievances and cannot be certain that it will not incur liability, which could be material, with respect to these grievances.

The Company relies heavily on a small number of significant customers, including one customer that represented approximately 10% of the Company’s pro forma fiscal 2006 sales revenues. A loss of any of these significant customers could materially adversely affect the Company’s business, financial condition or results of operations.

The Company heavily relies on a small number of significant customers. The Company’s largest customer, Unisource Worldwide, Inc. (“Unisource”), an independent marketer and distributor of commercial printing and business imaging papers in North America, represented approximately 10% of the Company’s pro forma sales revenues in the fiscal year ended December 31, 2006.

Unisource was historically a customer of both the Weyerhaeuser Fine Paper Business and Domtar Inc. Following the Acquisition Transactions, Unisource reduced its paper purchases from the Company. A significant reduction in sales to any of the Company’s key customers, including Unisource (which could be due to factors outside its control, such as purchasing diversification) or financial difficulties experienced by these customers, could materially adversely affect the Company’s business, financial condition or results of operations.

A material disruption at one of the Company’s manufacturing facilities could prevent it from meeting customer demand, reduce its sales and/or negatively impact its net income.

Any of the Company’s paper or pulp manufacturing facilities, or any of its machines within an otherwise operational facility, could cease operations unexpectedly due to a number of events, including:

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Events such as those listed above have resulted in operating losses in the past. In the second quarter of 2002, for example, a recovery boiler at the Weyerhaeuser Fine Paper Business facilities in Plymouth, North Carolina exploded, causing operations at these facilities to be shut down for repairs for a period of 107 days from May 8, 2002 to August 23, 2002. The Company estimates that the repair costs, business disruption and increased operating costs associated with the recovery boiler explosion negatively impacted its operating income by approximately $70 million (before insurance recovery) during the second and third quarters of 2002. Also, in May 2006, the Weyerhaeuser Fine Paper Business facilities in Plymouth, North Carolina experienced a disruption in their power supply, causing damage to a turbine generator necessary to convert high pressure steam to medium and low pressure steam used by the various mill processes. As a result of this damage, various mill operations at the Weyerhaeuser Fine Paper Business’s Plymouth, North Carolina facilities were shut down for repairs for up to eleven days. The Company estimates the total financial impact of this incident on its operating income was $11 million including repair costs, the opportunity value of lost production and increased operating costs. Future events may cause similar shutdowns, which may result in additional downtime and/or cause additional damage to the Company’s facilities. Any such downtime or facility damage could prevent the Company from meeting customer demand for its products and/or require it to make unplanned capital expenditures. If one of these machines or facilities were to incur significant downtime, the Company’s ability to meet its production targets and satisfy customer requirements would be impaired, resulting in lower sales and income.

The Company’s operations require substantial capital, and it may not have adequate capital resources to provide for all of its capital requirements.

The Company’s businesses are capital intensive and require that it regularly incur capital expenditures in order to maintain its equipment, increase its operating efficiency and comply with environmental laws. The total capital expenditures related to the Weyerhaeuser Fine Paper Business were approximately $113 million in 2005, including approximately $109 million for maintenance capital and approximately $4 million for environmental expenditures, and $64 million during 2006, including approximately $62 million for maintenance capital and approximately $2 million for environmental expenditures. The Domtar Inc. business had total capital expenditures of approximately $108 million in 2005, including approximately $59 million for maintenance capital and approximately $14 million for environmental expenditures, and $95 million during 2006, including approximately $60 million for maintenance capital and approximately $8 million for environmental expenditures. The Company anticipates total capital expenditures of approximately $132 million (including approximately $67 million for maintenance capital and $14 million for environmental expenditures) for 2007, of which $46 million was incurred during the first two quarters of 2007 (including $1 million attributable to the Wood business).

The Weyerhaeuser Fine Paper Business incurred approximately $2 million and Domtar Inc. incurred approximately $8 million in capital expenditures in connection with environmental compliance and remediation during 2006. The Company anticipates spending approximately $3 million in 2007 to meet the Boiler Maximum Achievable Control Technology (MACT) Rule obligations. However, a decision for the U.S. Court of Appeals for the District of Columbia Circuit vacated the Boiler MACT Rule on July 30, 2007 and discussions are ongoing for alternative regulations. The Company is unable to estimate the total amount of capital expenditures that may be required beyond 2007 for environmental compliance. If the Company’s available cash resources and cash generated from operations are not sufficient to fund its operating needs and

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capital expenditures, the Company would have to obtain additional funds from borrowings or other available sources or reduce or delay its capital expenditures. The Company may not be able to obtain additional funds on favorable terms, or at all. In addition, the Company’s debt service obligations will reduce its available cash flows. If the Company cannot maintain or upgrade its equipment as it requires or allocate funds to ensure environmental compliance, it could be required to curtail or cease some of its manufacturing operations, or it may become unable to manufacture products that compete effectively in one or more of its product lines. For example, the Company’s air permit for its Kamloops, British Columbia pulp manufacturing facility requires that the facility reduce air emissions of particulate matter by December 31, 2007. Compliance with the permit requirements is likely to require significant capital expenditures. The Company is currently evaluating its options and is in discussions with the Province of British Columbia to extend the deadline for compliance. If the deadline is not extended or if the Company does not have sufficient resources to make necessary capital expenditures, the facility may not be able to operate after 2007 without significantly curtailing output, which would increase the Company’s production costs.

The Company could incur substantial costs as a result of compliance with, violations of or liabilities under applicable environmental laws and regulations. The Company could also incur costs as a result of asbestos-related personal injury litigation.

The Company is subject, in both the United States and Canada, to a wide range of general and industry-specific laws and regulations relating to the protection of the environment and natural resources, including those governing air emissions, wastewater discharges, harvesting, silvicultural activities, the storage, management and disposal of hazardous substances and wastes, the cleanup of contaminated sites, landfill operation and closure obligations, forestry operations and endangered species habitat, and health and safety matters. In particular, the pulp and paper industry in the United States is subject to the United States Environmental Protection Agency’s (the “EPA”) Cluster Rule and was until recently subject to the EPA’s Boiler MACT Rule (the Boiler MACT Rule has been vacated, however, alternative U.S. federal and state regulations are being discussed) that further regulate effluent and air emissions. These laws and regulations require the Company to obtain authorizations from and comply with the requirements of the appropriate governmental authorities, which have considerable discretion over the terms and timing of permits.

Weyerhaeuser and Domtar Inc. have incurred, and the Company expects that it will continue to incur, significant capital, operating and other expenditures complying with applicable environmental laws and regulations and as a result of remedial obligations. The Company incurred approximately $38 million of operating expenses and $5 million of capital expenditures in connection with environmental compliance and remediation for the 26 weeks ended July 1, 2007. As of July 1, 2007, the Company had a provision of $82 million for environmental expenditures, including certain asset retirement obligations (such as for land fill capping and asbestos removal). In addition, during the first half of 2006, Weyerhaeuser closed its pulp and paper mill in Prince Albert, Saskatchewan and the Big River Sawmill in Saskatchewan. In September 2007, the Company entered into a memorandum of understanding with the Province of Saskatchewan for a plan to redevelop the pulp mill at the Prince Albert facility. However, the consummation of this plan is subject to several critical conditions, and the Company has not determined whether either of these facilities will be reopened, sold or permanently closed. In the event the facilities are permanently closed, the Province of Saskatchewan may require active decommissioning and reclamation at one or both facilities, which would likely include

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investigation and remedial action for areas of significant environmental impacts. The Province of Saskatchewan has required certain facilities located in the Province to submit preliminary decommissioning and reclamation plans and to include in such plans estimates of costs associated with decommissioning and reclamation activities. Weyerhaeuser submitted such a plan for its pulp and paper facility in Prince Albert, Saskatchewan. In its preliminary decommissioning and reclamation plan, Weyerhaeuser included a preliminary, generalized estimate of costs ranging from CDN$20 to CDN$25 million (approximately $19 to 24 million). Weyerhaeuser advised the Province of Saskatchewan that it was not providing a detailed delineation of costs at this time because such costs will depend on site specific factors, the professional judgments of environmental specialists and experts, further detailed environmental site assessments and, most fundamentally, a decision about the future use or closure of the site. The estimate referred to above does not take into account the equipment resale value or scrap material value which is considered to be significant, nor does it include the cost of completing a phase II environmental site assessment (which could involve sampling and analysis of building materials and environmental media), or the cost of any remediation required based on such assessment. The Company has not undertaken any review of Weyerhaeuser’s estimate and the actual decommissioning and reclamation costs could materially exceed Weyerhaeuser’s estimate.

The Company also could incur substantial costs, such as civil or criminal fines, sanctions and enforcement actions (including orders limiting its operations or requiring corrective measures, installation of pollution control equipment or other remedial actions), cleanup and closure costs, and third-party claims for property damage and personal injury as a result of violations of, or liabilities under, environmental laws and regulations. The Company’s ongoing efforts to identify potential environmental concerns that may be associated with its past and present properties will lead to future environmental investigations. Those efforts will likely result in the determination of additional environmental costs and liabilities which cannot be reasonably estimated at this time.

As the owner and operator of real estate, the Company may be liable under environmental laws for cleanup, closure and other damages resulting from the presence and release of hazardous substances, including asbestos, on or from its properties or operations. The amount and timing of environmental expenditures is difficult to predict, and, in some cases, the Company’s liability may be imposed without regard to contribution or to whether we knew of, or caused, the release of hazardous substances and may exceed forecasted amounts or the value of the property itself. The discovery of additional contamination or the imposition of additional cleanup obligations at the Company’s or third-party sites may result in significant additional costs. Any material liability the Company incurs could adversely impact its financial condition or preclude it from making capital expenditures that would otherwise benefit its business.

In addition, the Company may be subject to asbestos-related personal injury litigation arising out of exposure to asbestos on or from its properties or operations, and may incur substantial costs as a result of any defense, settlement, or adverse judgment in such litigation. The Company may not have access to insurance proceeds to cover costs associated with asbestos-related personal injury litigation.

Enactment of new environmental laws or regulations or changes in existing laws or regulations, or interpretation thereof, might require significant expenditures.

The Company may be unable to generate funds or other sources of liquidity and capital to fund environmental liabilities or expenditures.

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The Company is affected by changes in currency exchange rates.

The Company manufactures a significant amount of pulp and paper in Canada. Sales of pulp and paper products by the Company’s Canadian mills will be invoiced in U.S. dollars or in Canadian dollars linked to U.S. pricing but most of the costs relating to these products will be incurred in Canadian dollars. As a result, any decrease in the value of the U.S. dollar relative to the Canadian dollar will reduce the Company’s profitability. In addition, the Company has CDN$157 (approximately $148 million) of Canadian dollar-denominated debt outstanding as of July 1, 2007 (reflecting the total outstanding principal amount of the Domtar Inc. Canadian debentures) and any increase in the value of the Canadian dollar will result in an increase in the cost of servicing such debt.

Exchange rate fluctuations are beyond the Company’s control. Since January 1, 2002, the Canadian dollar has appreciated more than 45% relative to the U.S. dollar. This has had a material adverse effect on the sales and profitability of the Canadian operations of both the Predecessor Company and Domtar Inc. and is continuing to have an adverse effect on the Company’s business, financial results and financial condition.

The Company may be required to pay significant lumber export taxes and/or countervailing and antidumping duties.

The Company may experience reduced revenues and margins on its softwood lumber business as a result of lumber export taxes and/or countervailing and antidumping duty applications.

In April 2001, the Coalition for Fair Lumber Imports (the “Coalition”) filed two petitions with the U.S. Department of Commerce (the “Department”) and the International Trade Commission (the “ITC”) claiming that production of softwood lumber in Canada was being subsidized by Canada and that imports from Canada were being “dumped” into the U.S. market (sold at less than fair value). The Coalition asked that countervailing duty (“CVD”) and antidumping (“AD”) tariffs be imposed on softwood lumber imported from Canada.

In 2006, the Canadian and U.S. governments reached a final settlement to this long-standing dispute. The provisions of the settlement included repayment of approximately 81% of the deposits, imposition of export measures in Canada, and measures to address long-term policy reform.

It is possible that the CVD and AD tariffs or tariffs similar to the CVD and AD tariffs may again be imposed on the Company, in the future.

Under the settlement agreement, Canadian softwood lumber exporters will pay an export tax when the price of lumber is at or below a threshold price. Under present market conditions, the Company’s softwood lumber exports are subject to a 5% export charge.

The Predecessor Company and Domtar Inc. experienced and the Company and Domtar Inc. may continue to experience reduced revenues and margins in the softwood lumber business as a result of the application of the settlement agreement. The settlement agreement could have a material adverse effect on the Company’s business, financial results and financial condition, including, but not limited to, facility closures or impairment of assets.

The Company depends on third parties for transportation services.

The Company relies primarily on third parties for transportation of the products it manufactures and/or distributes, as well as delivery of its raw materials. In particular, a significant portion of

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the goods it manufactures and raw materials it uses are transported by railroad or trucks, which are highly regulated. If any of its third-party transportation providers were to fail to deliver the goods the Company manufactures or distributes in a timely manner, the Company may be unable to sell those products at full value, or at all. Similarly, if any of these providers were to fail to deliver raw materials to the Company in a timely manner, it may be unable to manufacture its products in response to customer demand. In addition, if any of these third parties were to cease operations or cease doing business with the Company, it may be unable to replace them at reasonable cost. Any failure of a third-party transportation provider to deliver raw materials or finished products in a timely manner could harm the Company’s reputation, negatively impact its customer relationships and have a material adverse effect on its financial condition and operating results.

The transition services provided by Weyerhaeuser may be difficult for the Company to replace without operational problems and additional costs.

The Company entered into a transition services agreement with Weyerhaeuser pursuant to which Weyerhaeuser agreed to provide the Company certain transition services for a period of time following the Acquisition Closing Date. These services include, among others, certain services relating to finance and administration, human resources, payroll and information technology. If, after the expiration of the agreement, the Company is unable to perform these services or replace them in a timely manner or on terms and conditions as favorable as those the Company receives from Weyerhaeuser, the Company may experience operational problems and an increase in its costs. In addition, the costs for such services may be higher than the costs for such services when the Weyerhaeuser Fine Paper Business was operated as part of Weyerhaeuser. See “The Company’s relationship with Weyerhaeuser after the distribution—Transition services agreement,” and “—Risks related to the acquisition transactions—The historical financial information of the Predecessor Company may not be representative of its results if the Weyerhaeuser Fine Paper Business had been operated independently of Weyerhaeuser and, as a result, may not be a reliable indicator of its future results.”

As a result of the separation of the Weyerhaeuser Fine Paper Business from Weyerhaeuser, the Company may experience increased costs resulting from decreased purchasing power, which could decrease its overall profitability.

Prior to its separation from Weyerhaeuser, the Weyerhaeuser Fine Paper Business was able to take advantage of Weyerhaeuser’s size and reputation in procuring raw materials and other goods and services used both for the Weyerhaeuser Fine Paper Business and Weyerhaeuser’s other businesses. As an independent public company, the Company may be unable to obtain similar goods, services and technology at prices or on terms as favorable as those obtained by the Weyerhaeuser Fine Paper Business prior to its separation from Weyerhaeuser.

The Company has liabilities with respect to its pension plans and the actual cost of its pension plan obligations could exceed current provisions. As of December 31, 2006, the Weyerhaeuser Fine Paper Business’s defined benefit plans had a surplus of $17 million on certain plans and a deficit of $1 million on others. Domtar Inc.’s defined benefit plans had a surplus of $14 million on certain plans and a deficit of $171 million on others, in each case on a going concern basis.

The Company’s future funding obligations for the defined benefit pension plans depend upon changes to the level of benefits provided by the plans, the future performance of assets set aside in trusts for these plans, the level of interest rates used to determine minimum funding levels,

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actuarial data and experience, and any changes in government laws and regulations. As of July 1, 2007, the Company’s Canadian pension funds had approximately CDN$420 million (approximately $395 million), of which approximately CDN$308 million (approximately $290 million) is held by Domtar Inc.’s Canadian pension funds, invested in multiple third party asset-backed commercial paper (“ABCP”) conduits, which are currently subject to the interim arrangement of the “Montreal Proposal” pursuant to which banks and major investors are negotiating restructuring proposals with respect to such ABCP conduits; however, these discussions are at a preliminary stage, and the outcome and the effect it would have on the value of the Company’s Canadian pension fund assets has yet to be determined.

Losses in the pension fund investments, if any, would result in future increased contributions by the Company or its Canadian subsidiaries. Additional contributions to these pension funds would be required to be paid over a 5-year period. Losses, if any, would also impact operating earnings over a longer period of time and immediately increase liabilities and reduce equity.

Risks related to the Acquisition Transactions

The Company may not realize the anticipated synergies, cost savings and growth opportunities from the Acquisition Transactions.

The success of the Acquisition Transactions depends, in part, on the Company’s ability to realize the anticipated synergies, cost savings and growth opportunities from integrating the Weyerhaeuser Fine Paper Business with the Domtar Inc. business. The Company’s success in realizing these synergies, cost savings and growth opportunities, and the timing of this realization, depends on the successful integration of such businesses and operations. Even if the Company is able to integrate such businesses and operations successfully, there can be no assurance that this integration will result in the realization of the full benefits of synergies, cost savings and growth opportunities that the Company expects from this integration or that these benefits will be achieved within the anticipated time frame. For example, the elimination of duplicative costs may not be possible or may take longer than anticipated, or the benefits from the Acquisition Transactions may be offset by the loss of Weyerhaeuser’s purchasing power or the costs incurred in integrating the businesses and operations.

The integration of the Weyerhaeuser Fine Paper Business and the Domtar Inc. business following the Acquisition Transactions may present significant challenges to the Company’s management which could cause Company management to fail to respond effectively to the increasing forms of competition facing the Company’s business.

There is a significant degree of difficulty and management distraction inherent in the process of integrating the Weyerhaeuser Fine Paper Business and Domtar Inc. business. These difficulties include:

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The process of integrating operations could cause an interruption of, or loss of momentum in, the activities of the Company’s business. The Company’s senior management team may be required to devote considerable amounts of time to this integration process, which will decrease the time they will have to manage the business of the Company, service existing customers, attract new customers and develop new products or strategies. One potential consequence of such distractions could be the failure of management to realize opportunities to respond to the increasing sources and forms of competition that the Company’s business will face. If the Company’s senior management is not able to manage the integration process effectively, or if any significant business activities are interrupted as a result of the integration process, the Company’s business could suffer.

The Company cannot assure you that it will successfully or cost-effectively integrate the Weyerhaeuser Fine Paper Business and the Domtar Inc. business. The failure to do so could have a material adverse effect on the Company’s financial condition, results of operations and business.

The Company incurred and expects to continue to incur significant costs related to the Acquisition Transactions that could have a material adverse effect on its operating results.

The Company incurred financial, legal and accounting costs and sales and transfer taxes of approximately $88 million in connection with the Acquisition Transactions, of which $28 million was capitalized and $23 million was deferred. In addition, the Company estimates that it will incur costs, such as information technology costs of approximately $87 million, in connection with the separation of the Weyerhaeuser Fine Paper Business from Weyerhaeuser, of which $24 million has been incurred through July 1, 2007. The Company also anticipates that it will incur significant costs in connection with the integration of the Weyerhaeuser Fine Paper Business and the Domtar Inc. business, including, among other things, costs relating to information technology integration, severance costs and the potential write-down of assets, which cannot be reasonably estimated at this time. These costs may have a material adverse effect on the Company’s cash flows and operating results in the periods in which they are recorded.

The historical financial information of the Predecessor Company may not be representative of its results if the Weyerhaeuser Fine Paper Business had been operated independently of Weyerhaeuser and, as a result, may not be a reliable indicator of its future results.

Prior to the Acquisition Closing Date, the Weyerhaeuser Fine Paper Business was a fully integrated business unit of Weyerhaeuser. Consequently, the financial information of the Predecessor Company included in this document has been derived from the consolidated financial statements and accounting records of Weyerhaeuser and reflects assumptions and allocations made by Weyerhaeuser. The financial position, results of operations and cash flows of the Predecessor Company presented may be different from those that would have resulted had the Weyerhaeuser Fine Paper Business been operated independently. For example, in preparing

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the Predecessor Company financial statements, Weyerhaeuser has made an appropriate allocation of costs and expenses that are attributable to the Weyerhaeuser Fine Paper Business. However, these costs and expenses reflect the costs and expenses attributable to the Weyerhaeuser Fine Paper Business operated as part of a larger organization and do not reflect costs and expenses that would be incurred by this business had it been operated independently. As a result, the historical financial information of the Predecessor Company may not be a reliable indicator of future results.

Material weaknesses in our internal control over financial reporting could result in a material misstatement of our financial condition.

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management of the Company identified the following material weaknesses as of April 1, 2007 which were not remediated as of July 1, 2007.

The Company did not maintain effective controls over the completeness and accuracy of financial information produced under the transition services agreement with Weyerhaeuser. Specifically, the Company did not have controls designed and in place to ensure that financial data regarding the Weyerhaeuser Fine Paper Business was complete, accurate, produced on a timely basis and supported with appropriate documentation. Further, the Company did not maintain an appropriate accounting and financial reporting organizational structure, specifically relating to the depth of resources, to be able to ensure that the accounting records being maintained by Weyerhaeuser under the transition services agreement were accurate and complete. The financial data produced under the transition services agreement affects substantially all balance sheet and income statement accounts.

These control deficiencies resulted in adjustments to the April 1, 2007 interim financial statements and a delay in the filing of the Quarterly Report on Form 10-Q for our first quarter of 2007. In addition, and until remediated, these control deficiencies could result in a misstatement of substantially all accounts and disclosures which would result in a material misstatement of the Company’s annual or interim financial statements that would not be prevented or detected.

For a more complete description of the transition services agreement, see “The Company’s relationship with Weyerhaeuser after the distribution—Transition services agreement.”

Aboriginal interests may delay or result in challenges to the transfer of certain forest licenses and forest management agreements.

Under applicable forestry legislation in Saskatchewan, Weyerhaeuser must obtain consent from the government of Saskatchewan in order to complete the transfer of certain timber rights in Saskatchewan to the Company. Pursuant to the agreements governing the Acquisition Transactions, the transfer of these timber rights were delayed until the appropriate approvals are received. Recent Supreme Court of Canada decisions have confirmed that the federal and provincial governments in Canada have a duty to consult with, and in certain circumstances, seek to accommodate aboriginal groups whenever there is a reasonable prospect that a government’s decision may adversely affect an aboriginal group’s interests in relevant land and resources that are the subject of the decision. The Company believes that the government of Saskatchewan has consulted with relevant aboriginal groups in connection with these consent approvals. This consultation process could result in delays, constrain access to the timber or give rise to additional costs. In addition, if the Saskatchewan government does not adequately discharge its

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obligation this could result in litigation. It is not possible at present to predict the risks associated with such litigation.

If the distribution did not constitute a tax-free spin-off under section 355 of the code or a tax-free reorganization under section 368 of the code, either as a result of actions taken in connection with the distribution or as a result of subsequent acquisitions of shares of Company common stock, then the Company may be responsible for payment of substantial U.S. federal income taxes under its tax sharing agreement with Weyerhaeuser.

Weyerhaeuser received a private letter ruling from the Internal Revenue Service on February 5, 2007 to the effect that, based on the facts, assumptions, representations and undertakings set forth in the ruling, the Contribution and Distribution qualified as tax-free to Weyerhaeuser and the holders of Weyerhaeuser common shares for U.S. federal income tax purposes under Sections 355 and 368 and related provisions of the Code.

The Distribution would become taxable to Weyerhaeuser pursuant to Section 355(e) of the Code if 50% or more (by vote or value) of equity securities of the Company were acquired, directly or indirectly, by persons other than Weyerhaeuser shareholders as part of a plan or series of related transactions that included the Distribution. Because Weyerhaeuser shareholders owned more than 50% of Company common stock following the Arrangement, the Arrangement, by itself, would not have caused the Distribution to be taxable to Weyerhaeuser under Section 355(e) of the Code. However, if the IRS were to determine that other acquisitions of Company equity securities, either before or after the Distribution and the Arrangement, were part of a plan or series of related transactions that included the Distribution such determination could result in the recognition of gain by Weyerhaeuser under Section 355(e) of the Code. In such case, the gain recognized by Weyerhaeuser likely would include the entire fair market value of the Company common stock distributed to Weyerhaeuser’s shareholders, and thus would be substantial.

Under the tax sharing agreement among Weyerhaeuser, the Company, and Domtar Inc., the Company generally would be required to indemnify Weyerhaeuser against tax-related losses to Weyerhaeuser and/or its shareholders that arise as a result of certain actions taken or omissions to act by the Company, its subsidiaries or certain affiliates of the Company (“Disqualifying Actions”) after the Acquisition Transactions. See “Risks related to the acquisition transactions—The Company may be affected by significant restrictions following the Acquisition Transactions in order to avoid significant tax-related liabilities.”

The Company may be affected by significant restrictions following the Acquisition Transactions in order to avoid significant tax-related liabilities.

Even if the Distribution otherwise qualified as a tax-free reorganization, the Distribution may not qualify as a transaction that is tax-free to Weyerhaeuser if 50% or more (by vote or value) of the equity securities of the Company are acquired by persons other than Weyerhaeuser shareholders as part of a “plan” that includes the Distribution pursuant to Section 355(e) of the Code.

The tax sharing agreement requires that the Company, its subsidiaries and certain affiliates of the Company, for a two year period following the Acquisition Closing Date, avoid taking certain actions that might cause the Distribution to be treated as part of a plan pursuant to which 50% or more of the Company’s equity securities are acquired. Certain of these Disqualifying Actions subject to restrictions include:

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To the extent that the tax-free status of the Distribution is lost because of a Disqualifying Action after the date of consummation of the Acquisition Transactions, the Company generally will be required to indemnify, defend and hold harmless Weyerhaeuser from and against any and all resulting tax-related losses incurred by Weyerhaeuser and/or Weyerhaeuser shareholders, without regard to whether Weyerhaeuser gave the Company prior written consent to the specific action taken by the Company.

Because of these restrictions, the Company may be limited in its ability to pursue strategic transactions or equity or convertible debt financing or engage in new business or other transactions that may maximize the value of its business.

A third party has demanded an increase in consideration from Domtar Inc. under an existing contract in connection with the Acquisition Transactions.

In 1998, Domtar Inc. acquired all of the issued and outstanding shares of E.B. Eddy Limited and E.B. Eddy Paper, Inc., an integrated producer of specialty paper and wood products. The purchase agreement relating to this acquisition includes a purchase price adjustment whereby, in the event of the acquisition by a third party of more than 50% of the shares of Domtar Inc. in specified circumstances, Domtar Inc. may be required to pay an increase in consideration of up to a maximum of CDN$120 million. This amount gradually declines over a 25-year period and as at March 7, 2007, the Acquisition Closing Date, the maximum amount of the purchase price adjustment was CDN$110 million. No provision was recorded for this potential purchase price adjustment.

On March 14, 2007, Domtar Inc. received a letter from George Weston Limited (the previous owner of E.B. Eddy and a party to the purchase agreement) demanding payment of CDN$110 million as a result of the consummation of the Acquisition Transactions. On June 12, 2007, an action was commenced by George Weston Limited against Domtar Inc. in the Superior Court of Justice of the province of Ontario, Canada, claiming that the consummation of the Acquisition Transactions triggered the purchase price adjustment and seeking a purchase price adjustment of CDN$110 million as well as additional compensatory damages. On August 13, 2007, Domtar Inc. served its statement of defense in response to this claim. Neither the Company nor Domtar Inc. believes that the consummation of the Acquisition Transactions triggers an obligation to pay an increase in consideration under the purchase price adjustment and Domtar Inc. intends to defend itself vigorously against any claims with respect thereto. However, Domtar Inc. may not be successful in its defense of such claims, and, if it is ultimately required to pay an increase in consideration, such payment may have a material adverse effect on the Company’s and Domtar Inc.’s liquidity, results of operations and financial condition.

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The exchange offers

We are offering, on the terms and subject to the conditions set forth in this prospectus and consent solicitation statement and the related Letter of Transmittal and Consent, to exchange any and all outstanding Domtar Inc. U.S. notes for an equal principal amount of corresponding Domtar Corp. notes of the corresponding series, bearing interest at the same rate and maturing on the same date as the Domtar Inc. U.S. notes tendered in exchange. Holders whose Domtar Inc. U.S. notes are accepted for exchange will receive a cash payment representing accrued and unpaid interest to, but not including, the settlement date, and the Domtar Corp. notes received in exchange will accrue interest from and including the settlement date. In addition, we will pay to holders who validly tender their Domtar Inc. U.S. notes and do not validly withdraw their tenders on or prior to the applicable early consent date an early consent payment in cash of $2.50 for each $1,000 principal amount of Domtar Inc. U.S. notes tendered. Holders who validly tender their Domtar Inc. U.S. notes after the applicable early consent date will not receive the early consent payment.

Domtar Inc. is concurrently seeking proxies, pursuant to the Canadian proxy solicitations, from holders of the Domtar Inc. Canadian debentures, for use at a meeting of holders of each series of such debentures, at which Domtar Inc. will seek approval of such holders to amend the indenture pursuant to which such series of debentures were issued to provide Domtar Corp. with the right to acquire, at any time, all of the outstanding debentures of such series in consideration for the issuance of an equal principal amount of Domtar Corp.’s newly issued debt securities of the corresponding series, bearing interest at the same rate and maturing on the same date as the Domtar Inc. Canadian debentures for which they are exchanged. If such amendments are approved by the holders of the Domtar Inc. Canadian debentures, Domtar Corp. intends to exercise its right to acquire all of the outstanding Domtar Inc. Canadian debentures for the newly issued Domtar Corp. debt securities concurrently with the consummation of the exchange offers for the Domtar Inc. U.S. notes.

Holders who tender their Domtar Inc. U.S. notes pursuant to the exchange offers are obligated to deliver consents to certain proposed amendments to the Domtar Inc. U.S. Indentures. Please read “The consent solicitation” for more information. Holders of Domtar Inc. U.S. notes must tender the Domtar Inc. U.S. notes in integral multiples of $1,000. Domtar Corp. notes will be issued in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof.

None of Domtar Corp., Domtar Inc., Domtar Paper Company, LLC, the exchange and information agent, the trustee under the Domtar Corp. indenture, the trustee under the Domtar Inc. U.S. Indentures or any U.S. Dealer Manager makes any recommendation as to whether or not holders of Domtar Inc. U.S. notes should exchange their securities in the exchange offers or consent to the proposed amendments to the Domtar Inc. U.S. Indentures.

Overview and purpose of the exchange offers and consent solicitations

The purpose of the exchange offers is to exchange the Domtar Inc. U.S. notes for an equal principal amount of newly issued notes of the Company bearing interest at the same rate and maturing on the same date as the Domtar Inc. U.S. notes tendered in exchange, with certain changes that are described in this prospectus and consent solicitation statement. The purpose of the consent solicitations is to eliminate or amend certain provisions in the indentures pursuant to which the Domtar Inc. U.S. notes were issued which, as amended, will continue to govern any

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Domtar Inc. U.S. notes not tendered and exchanged. The purpose of the Canadian proxy solicitations is to obtain approval from holders of Domtar Inc.’s Canadian debentures at a meeting of holders of each series of such debentures to provide Domtar Corp. with the right to acquire, at any time, all of the outstanding debentures of such series in consideration for the issuance of an equal principal amount of newly issued Domtar Corp. debt securities.

The Company’s objectives in making the exchange offers and soliciting the consents and making the Canadian proxy solicitations include the following:

The Company believes holders of the Domtar Inc. debt securities may benefit from participating in the proposed exchange offers and consent solicitations and the Canadian proxy solicitations for the following reasons:

In conjunction with the exchange offers and consent solicitations and the Canadian proxy solicitations, Domtar Inc. intends to transfer some or all of the shares of its U.S. subsidiaries to Domtar Corp. If the requisite consents with respect to each series of Domtar Inc. U.S. notes are obtained, and the requisite votes of the holders of each series of the Domtar Inc. Canadian debentures to approve the amendments to the Domtar Inc. Canadian Indentures are obtained, Domtar Inc. intends to sell, in one or more transactions, 100% of the capital stock or equity interests of the shares of its U.S. subsidiaries, which together own the Ashdown, Nekoosa, Port Edwards, Port Huron and Woodland mills and the U.S. paper merchants business, to Domtar Corp. or one of its subsidiaries. The subsidiaries that would be sold to Domtar Corp. accounted for approximately 67% of Domtar Inc.’s sales for the six months ended June 30, 2007, excluding sales by such subsidiaries of products manufactured by the Canadian operations to be retained by Domtar Inc. The subsidiaries that would be sold to Domtar Corp. accounted for approximately

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54% of depreciation and amortization and 308% of operating income (due to operating losses sustained by Domtar Inc.’s Canadian subsidiaries) of Domtar Inc. for the six months ended June 30, 2007 and approximately 43% of Domtar Inc.’s total assets as of June 30, 2007. Upon being sold, these subsidiaries would become guarantors of Domtar Corp.’s and Domtar Paper Company, LLC’s borrowings under the Credit Agreement as well as the Domtar Corp. notes offered hereby. These subsidiaries will continue to guarantee borrowings of Domtar Inc. under the Credit Agreement.

If the exchange offer for any series of Domtar Inc. debt securities is consummated but the requisite consents with respect to each series of Domtar Inc. debt securities and/or the requisite votes of the holders of each series of the Domtar Inc. Canadian debentures to approve the amendments to the Domtar Inc. Canadian Indentures are not obtained, Domtar Inc. intends to sell, in one or more transactions, up to 49% of the shares of the capital stock or equity interests of Domtar Inc.’s U.S. subsidiaries to Domtar Corp. or one of its subsidiaries. In this case, the results of those subsidiaries would continue to be consolidated by Domtar Inc. for financial reporting purposes. However, Domtar Corp. will be entitled to its proportionate share of any dividends or other distributions declared or made by such subsidiaries. These subsidiaries would continue to guarantee borrowings by Domtar Inc. under the Credit Agreement, but would not become guarantors of borrowings by Domtar Corp. or Domtar Paper Company, LLC under the Credit Agreement, and would not become guarantors of the Domtar Corp. notes offered hereby.

The Domtar Corp. debt securities issued to holders of the Domtar Inc. Canadian debentures in connection with the Canadian proxy solicitations will bear interest at the same rates and have the same interest payment and maturity dates, as the corresponding series of Domtar Inc. Canadian debentures acquired. Such Domtar Corp. debt securities will have the same guarantors, and will be subject to the same covenants and change of control provisions, as the Domtar Corp. notes offered hereby.

Expiration, extensions, amendment and termination of exchange offers

Each exchange offer will expire at midnight, New York City time, on November 14, 2007, unless we extend or earlier terminate it. We may extend the expiration date of any of the exchange offers by giving written notice of such extension by means of a press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date.

We expressly reserve the right, at any time, in our absolute discretion, to extend the period of time during which the exchange offers are open, and delay acceptance for exchange of any Domtar Inc. U.S. notes of any series, or to extend the applicable early consent date with respect to the Domtar Inc. U.S. notes of any series, by giving written notice of such extension to the holders thereof as described below. We will extend the duration of the exchange offers as required by applicable law or may choose to extend them in order to provide additional time for holders of Domtar Inc. U.S. notes to tender their Domtar Inc. U.S. notes for exchange. During any such extension, all Domtar Inc. U.S. notes of the relevant series previously tendered will remain subject to the applicable exchange offer and we may accept them for exchange. Holders who have tendered their Domtar Inc. U.S. notes will not, however, be able to withdraw their tendered notes or revoke their consent with respect thereto after the applicable early consent date, even if we extend the exchange offers. Any Domtar Inc. U.S. notes not accepted for exchange for any reason will be returned without expense to the tendering holder promptly after the expiration or termination of the applicable exchange offer. In the event of a material change to the exchange

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offers, including the waiver of a material condition to the exchange offers, we will extend the exchange offers, if required by applicable law. In accordance with Rule 14e-1 under the Exchange Act, if we elect to decrease the amount of Domtar Inc. U.S. notes sought, or change the consideration offered or the U.S. Dealer Managers’ soliciting fees, the exchange offers will remain open for at least ten business days from the date that the notice of such change is first published or sent to holders of the Domtar Inc. U.S. notes.

We expressly reserve the right to amend, extend or terminate the exchange offers, and not to accept for exchange any Domtar Inc. U.S. notes, upon the occurrence of any of the conditions of the exchange offers specified below under “—Conditions to the exchange offers and consent solicitations.” We will give prompt written notice to the holders of the Domtar Inc. U.S. notes of any extension, amendment, non-acceptance or termination. Such notice, in the case of any extension, will be issued by means of a press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date.

Settlement date

We will deliver the Domtar Corp. notes and pay any cash amounts on the settlement date, which will be the third business day following the expiration date or as soon as practicable thereafter. We will not be obligated to deliver Domtar Corp. notes of any series or pay any cash amounts unless the exchange offers with respect to such series are consummated.

Conditions to the exchange offers and consent solicitations

Each exchange offer made pursuant to this prospectus and consent solicitation statement is subject to the condition that there shall have been validly tendered and not withdrawn pursuant to the exchange offers an aggregate principal amount of Domtar Inc. U.S. notes that, together with the U.S. dollar equivalent of the aggregate principal amount of Domtar Inc. Canadian debentures that Domtar Corp. has the right to acquire as a result of the Canadian proxy solicitations, is at least equal to 75% of the sum of the aggregate outstanding principal amount of the Domtar Inc. U.S. notes and the U.S. dollar equivalent of the aggregate outstanding principal amount of the Domtar Inc. Canadian debentures. The U.S. dollar equivalent of the Domtar Inc. Canadian debentures shall be determined based on the noon buying rate in New York City for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York on the business day immediately prior to the date on which the exchange offers expire.

Additionally, notwithstanding any other provision of the exchange offers, we are not required to accept for exchange, or to issue the Domtar Corp. notes in exchange for, any Domtar Inc. U.S. notes and may terminate or amend the applicable exchange offer, if any of the following events occur prior to our acceptance of the Domtar Inc. U.S. notes:

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which in our reasonable judgment in any case, and regardless of the circumstances giving rise to any such condition (which cannot be triggered by action or inaction of the Company or Domtar Inc.), makes it inadvisable to proceed with the exchange offers and/or with such acceptance for exchange or with such exchange.

In addition, we will not accept for exchange any Domtar Inc. U.S. notes tendered, and no Domtar Corp. notes will be issued in exchange for any such Domtar Inc. U.S. notes, if at that time any stop order shall be threatened or in effect with respect to the Registration Statement of which

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this prospectus and consent solicitation statement constitutes a part or the qualification of the indenture under the Trust Indenture Act of 1939, as amended.

The foregoing conditions are for our sole benefit and may be asserted or waived by us in whole or in part in our reasonable discretion prior to the expiration date. Our failure at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time prior to the expiration date.

Although we have no present plans or arrangements to do so, we reserve the right to amend, at any time, the terms of the exchange offers. We will give holders notice of any proposed amendments if required by applicable law.

If our waiver of any of the conditions would constitute a material change in any or all exchange offers, we will disclose that change through a supplement to this prospectus and consent solicitation statement that will be distributed to each registered holder of the affected series of Domtar Inc. U.S. notes. In addition, we will extend the exchange offers, in accordance with applicable law and depending upon the significance of the waiver and the manner of disclosure to the registered holders of the Domtar Inc. U.S. notes. See “—Expiration, extensions, amendments and termination of exchange offers” for more information.

Procedures for tendering and delivering consents

Holders will not be entitled to receive the early consent payment unless they tender their Domtar Inc. U.S. notes and deliver their consents to the proposed amendments with respect to such notes on or prior to the applicable early consent date. The tender of Domtar Inc. U.S. notes pursuant to an exchange offer and in accordance with the procedures described below will constitute (i) a tender of the Domtar Inc. U.S. notes and (ii) the delivery of a consent by such holder with respect to such notes. The Company is not soliciting and will not accept consents to the proposed amendments from holders who are not tendering their Domtar Inc. U.S. notes pursuant to an exchange offer, and will not accept tenders of Domtar Inc. U.S. notes from holders who do not deliver their consents pursuant to the related consent solicitations. Domtar Inc. U.S. notes may only be tendered, and consents may only be delivered, in denominations of $1,000 principal amounts and integral multiples thereof.

The procedures by which you may tender or cause to be tendered Domtar Inc. U.S. notes will depend on the manner in which you hold the Domtar Inc. U.S. notes.

Domtar Inc. U.S. notes held by custodial entity.     If you wish to accept the exchange offers and give your consent and your Domtar Inc. U.S. notes are held by a custodial entity such as a bank, broker, dealer, trust company or other nominee, then only that custodial entity can tender your Domtar Inc. U.S. notes. In that case, you must instruct the custodial entity to tender your Domtar Inc. U.S. notes and deliver consents on your behalf pursuant to the procedures of the custodial entity. You should contact the custodial entity promptly and instruct the custodial entity to tender the Domtar Inc. U.S. notes and deliver a consent on your behalf using one of the procedures described below.

If such beneficial owner wishes to tender its Domtar Inc. U.S. notes and deliver related consents itself, such beneficial owner must, prior to completing and executing the Letter of Transmittal and Consent and delivering such Domtar Inc. U.S. notes, make appropriate arrangement to register ownership of the Domtar Inc. U.S. notes in such beneficial owner’s name. The transfer of

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record ownership may take considerable time. Please refer to the procedures described in “—Domtar Inc. U.S. notes not held by a custodial entity.”

Custodial entities that are DTC participants must tender Domtar Inc. U.S. notes through ATOP. A Letter of Transmittal and Consent need not accompany tenders effected through ATOP. The delivery of an agent’s message through ATOP will constitute the giving of consent to the proposed amendments with respect to the Domtar Inc. U.S. notes so tendered, and the agreement by the custodial entity and the beneficial holder to be bound by the Letter of Transmittal and Consent. See “—Tender of Domtar Inc. notes with DTC and book-entry transfer” for more information about ATOP.

Domtar Inc. U.S. notes not held by a custodial entity .    If your Domtar Inc. U.S. notes are not held by a custodial entity and you wish to accept the exchange offers and give your consent, then you must either:

The exchange agent and DTC have confirmed that the exchange offers are eligible for ATOP. The Letter of Transmittal and Consent (or facsimile copy), with any required signature guarantees or, in the case of book-entry transfer, an agent’s message in lieu of the Letter of Transmittal and Consent, and any other required documents, must be transmitted to and received by the exchange agent on or before the expiration date of the exchange offers at its address set forth on the back cover page of this prospectus and consent solicitation statement. Domtar Inc. U.S. notes will not be deemed surrendered until the exchange agent receives the Letter of Transmittal and Consent and signature guarantees, if any, or agent’s message. See “—Tender of Domtar Inc. notes with DTC and book-entry transfer” and “—Proper execution and delivery of the letter of transmittal and consent” for more information.

If you wish to participate in any of the exchange offers and consent solicitations, delivery of your Domtar Inc. U.S. notes and other required documents are your responsibility. Delivery is not complete until the required items are actually received by the exchange agent. The method of delivery of Domtar Inc. U.S. notes, the Letter of Transmittal and Consent, and all other required documents to the exchange agent is at your election and risk. Instead of delivery by mail, you should use an overnight or hand delivery service, properly insured. In all cases, you should allow sufficient time to assure delivery to and receipt by the exchange agent on or before the expiration date. Send the Letter of Transmittal and Consent or any Domtar Inc. U.S. notes only to the exchange agent.

All Domtar Corp. notes will be delivered only in book-entry form through DTC. Accordingly, if you anticipate tendering other than through DTC, then you are urged to contact promptly a bank, broker, dealer, trust company or similar institution or other intermediary (that has the capability to hold securities custodially through DTC) to arrange for receipt of any Domtar Corp. notes to be delivered to you pursuant to the

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exchange offers and to obtain the information necessary to provide the required DTC participant with account information for the Letter of Transmittal and Consent. See “Acceptance of Domtar Inc. U.S. notes for exchange; delivery of Domtar Corp. notes” for more information.

Tender of Domtar Inc. U.S. notes with DTC and book-entry transfer

Pursuant to authority granted by DTC, if you are a DTC participant that has Domtar Inc. U.S. notes credited to your DTC account and thereby held of record by DTC’s nominee, you must directly tender your Domtar Inc. U.S. notes and deliver a consent as if you were the holder of record. Accordingly, references herein to record holders include DTC participants with Domtar Inc. U.S. notes credited to their accounts. Within two business days after the date of this prospectus and consent solicitation statement, the exchange agent will establish accounts with respect to the Domtar Inc. U.S. notes at DTC for purposes of the exchange offers. Any DTC participant that has Domtar Inc. U.S. notes credited to its DTC account may, and all custodial entities that are DTC participants must, tender Domtar Inc. U.S. notes and deliver consents to the proposed amendments to the applicable Domtar Inc. U.S. Indenture by effecting a book-entry transfer of the Domtar Inc. U.S. notes to be tendered in the exchange offers into the account of the exchange agent at DTC and, electronically transmitting its acceptance of the exchange offers through DTC’s ATOP procedures for transfer before the exchange offers expire.

If ATOP procedures are followed, DTC will verify each acceptance transmitted to it, execute a book-entry delivery to the exchange agent’s account at DTC and send an agent’s message to the exchange agent. An “agent’s message” is a message, transmitted by DTC to and received by the exchange agent and forming part of a book-entry confirmation, which states that DTC has received an express acknowledgement from a DTC participant tendering Domtar Inc. U.S. notes that the participant has received and agrees to be bound by the terms of the Letter of Transmittal and Consent and that Domtar Corp. and Domtar Inc. may enforce the agreement against the participant. DTC participants following this procedure should allow sufficient time for completion of the ATOP procedures prior to the expiration date of the exchange offers.

The Letter of Transmittal and Consent (or facsimile thereof), with any required signature guarantees, or (in the case of book-entry transfer) an agent’s message in lieu of the Letter of Transmittal and Consent, and any other required documents, must be transmitted to and received by the exchange agent prior to the expiration date at its address set forth on the back cover page of this prospectus and consent solicitation statement. Delivery of such documents to DTC or us does not constitute delivery to the exchange agent.

Proper execution and delivery of the Letter of Transmittal and Consent

Signatures on the Letter of Transmittal and Consent must be guaranteed by a firm that is a participant in the Security Transfer Agents Medallion Program or the Stock Exchange Medallion Program (generally a member of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office in the United States) (an “Eligible Institution”), unless (i) the Letter of Transmittal and Consent is signed by the registered holder of the Domtar Inc. U.S. notes tendered therewith and the Domtar Corp. notes to be issued or any Domtar Inc. U.S. notes not tendered or not accepted for exchange are to be issued directly to such holder or (ii) such Domtar Inc. U.S. notes are tendered for the account of an Eligible Institution.

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If tendered notes are registered to a person who did not sign the Letter of Transmittal and Consent, they must be endorsed by, or be accompanied by a written instrument of transfer duly executed by, the registered holder with the signature guaranteed by an Eligible Institution and appropriate powers of attorney, signed exactly as the name of the registered holder appears on the Domtar Inc. U.S. notes. All questions of adequacy of the form of the writing will be determined by us in our sole discretion.

If the Letter of Transmittal and Consent or any Domtar Inc. U.S. notes or powers of attorney are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and unless waived by us, submit evidence satisfactory to us of their authority to so act with the Letter of Transmittal and Consent.

Acceptance of Domtar Inc. U.S. notes for exchange; delivery of Domtar Corp. notes

Upon satisfaction or waiver of the conditions to the exchange offers, we will promptly issue in exchange for all Domtar Inc. U.S. notes properly tendered and not validly withdrawn Domtar Corp. notes bearing interest at the same rate as and maturing on the same date as the Domtar Inc. U.S. notes tendered. We will be deemed to have accepted properly tendered Domtar Inc. U.S. notes for exchange if and when we give oral or written notice of acceptance to the exchange agent, with written confirmation of any oral notice to follow promptly.

The Domtar Corp. notes will be credited in book-entry form to direct registration accounts maintained by our transfer agent for the benefit of the tendering holders of Domtar Inc. U.S. notes (or, in the case of Domtar Inc. U.S. notes tendered through DTC, to the account of DTC so that DTC can credit the relevant DTC participant and such participant can credit its respective account holders) in exchange for Domtar Inc. U.S. notes tendered pursuant to the exchange offers. We will also deliver cash for the early consent payment (if applicable).

If any tendered Domtar Inc. U.S. notes are not accepted for any reason or if any Domtar Inc. U.S. notes are submitted for a greater principal amount than the holder desired to exchange, the unaccepted or non-exchanged portion of Domtar Inc. U.S. notes will be returned without expense to the tendering holder to the address specified by the holder in the Letter of Transmittal (or, in the case of Domtar Inc. U.S. notes tendered by book-entry transfer into the exchange agent’s account at the book-entry transfer facility pursuant to the book-entry procedures described above, the unaccepted, non-exchanged or unsold Domtar Inc. U.S. notes will be credited to an account maintained with such book-entry transfer facility) promptly after the expiration or termination of the applicable exchange offer.

Withdrawal of tenders and revocation of corresponding consents

Tenders of Domtar Inc. U.S. notes in connection with any of the exchange offers may be withdrawn at any time prior to 5:00 p.m., New York City time, on the applicable early consent date. Tenders of Domtar Inc. U.S. notes may not be withdrawn at any time after the applicable early consent date, even if we extend the exchange offers. The valid withdrawal of tendered Domtar Inc. U.S. notes prior to the applicable early consent date will be deemed to be a concurrent revocation of the consent to the proposed amendments to the applicable Domtar Inc. U.S. Indenture. You may only revoke a consent by validly withdrawing the related Domtar Inc. U.S. notes prior to the applicable early consent date. Holders who tendered their Domtar Inc. U.S. notes by completing a Letter of Transmittal and Consent who wish to withdraw their notes

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should contact the Exchange Agent. Beneficial owners desiring to withdraw Domtar Inc. U.S. notes previously tendered should contact the DTC participant through which they hold their Domtar Inc. U.S. notes. In order to withdraw Domtar Inc. U.S. notes previously tendered, a DTC participant may, on or prior to the applicable early consent date, withdraw its instruction previously transmitted through ATOP by delivering to the exchange agent by mail, hand delivery or facsimile transmission, notice of withdrawal of such instruction.

Any such notice of withdrawal must:

We will determine all questions as to the validity, form and eligibility (including time of receipt) for such withdrawal notices. Our determination will be final and binding on all parties. Any Domtar Inc. U.S. notes so withdrawn will be considered not to have been validly tendered for purposes of the exchange offers and no Domtar Corp. notes will be issued with respect thereto. Properly withdrawn Domtar Inc. U.S. notes, however, may be re-tendered by following the procedures described above at any time prior to the expiration of the exchange offers.

Miscellaneous

All questions as to the validity, form, eligibility (including time of receipt) and acceptance for exchange of any tender of Domtar Inc. U.S. notes in connection with the exchange offers will be determined by us, in our sole discretion, and our determination will be final and binding. We reserve the absolute right to reject any or all tenders not in proper form or the acceptance for exchange of which may, in the opinion of our counsel, be unlawful.

We also reserve the absolute right to waive any defect or irregularity in the tender of any Domtar Inc. U.S. notes in the exchange offers or any conditions to the consummation of the exchange offers, and our interpretation of the terms and conditions of each exchange offer (including the instructions in the Letter of Transmittal and Consent) will be final and binding on all parties. None of Domtar Corp., Domtar Inc., the exchange and information agent, the U.S. Dealer Managers or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Tenders of Domtar Inc. U.S. notes involving any irregularities will not be deemed to have been made until those irregularities have been cured or waived. Domtar Inc. U.S. notes received by the exchange agent in connection with the exchange offers that are not validly tendered and as to which the irregularities have not been cured or waived will be returned by the exchange agent to the DTC participant who delivered those Domtar Inc. U.S. notes by crediting an account maintained at DTC designated by that DTC participant promptly after the expiration date of the exchange offers or the withdrawal or termination of the exchange offers.

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Exchange agent

Global Bondholder Services Corporation has been appointed the exchange agent for the exchange offers and consent solicitations. Letters of Transmittal and Consent and all correspondence in connection with the exchange offers and consent solicitations should be sent or delivered by each holder of Domtar Inc. U.S. notes, or the bank, depositary, broker, dealer, trust company or other nominee acting as the beneficial owner’s custodial entity, to the exchange agent at the address and telephone numbers set forth on the back cover page of this prospectus and consent solicitation statement. Domtar Corp. will pay the exchange agent reasonable and customary fees for its services and will reimburse it for its reasonable, out-of-pocket expenses in connection therewith.

Information agent

Global Bondholder Services Corporation has been appointed the information agent for the exchange offers and consent solicitations, and will receive customary compensation for its services. Questions concerning tender procedures and requests for additional copies of this prospectus and consent solicitation statement or the Letter of Transmittal and Consent should be directed to the information agent at the address and telephone numbers set forth on the back cover page of this prospectus and consent solicitation statement. Holders of Domtar Inc. U.S. notes may also contact their bank, depositary, broker, dealer, trust company or other nominee acting as their custodial entity for such holder for assistance concerning the exchange offers.

Dealer managers and solicitation agents

Domtar Corp. has engaged J.P. Morgan Securities Inc. to act as lead dealer manager and lead solicitation agent, and Deutsche Bank Securities Inc. to act as co-dealer manager and co-solicitation agent (together, the “U.S. Dealer Managers”) in connection with the exchange offers and consent solicitations, and will pay to the U.S. Dealer Managers for soliciting tenders in the exchange offers and consents in the consent solicitations a customary fee based on the Domtar Inc. U.S. notes accepted and exchanged pursuant to the exchange offers. The U.S. Dealer Managers may perform their services through or in conjunction with their affiliates. The obligations of the U.S. Dealer Managers to perform these functions are subject to certain conditions.

Domtar Corp. will also reimburse the U.S. Dealer Managers for certain expenses, including attorneys’ fees and disbursements made in connection with the exchange offers and consent solicitations.

Domtar Corp. and Domtar Paper Company, LLC have agreed to indemnify each U.S. Dealer Manager against certain liabilities, including liabilities under applicable federal securities laws. From time to time, the Dealer Managers have provided and may in the future provide various investment banking, commercial banking and financial advisory services to Domtar Corp. and Domtar Inc. and their affiliates. J.P. Morgan Securities Inc. acted as financial advisor to Domtar Inc. in connection with the Acquisition Transactions. Affiliates of J.P. Morgan Securities Inc. may be deemed to beneficially own (as that term is defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) approximately 6% of the outstanding common stock of Domtar Corp. due to their ability to vote or dispose, or direct the voting or disposition, of the common stock of Domtar Corp. owned by others. J.P. Morgan Securities Inc. acted as the sole Bookrunning Manager or as a Joint Bookrunning Manager in connection with Domtar Inc.’s offering of the 7.875% Notes, 5.375% Notes and 7  ¹ / 8 % Notes. Deutsche Bank Securities Inc. (or its predecessor) acted as a

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Co-Manager in connection with Domtar Inc.’s offering of its 7.875% Notes, 5.375% Notes and 7  ¹ / 8 % Notes. In addition, an affiliate of J.P. Morgan Securities Inc. is the Administrative Agent and a lender under the Credit Agreement and J.P. Morgan Securities Inc. is a Joint Lead Arranger and Joint Bookrunner thereunder. An affiliate of Deutsche Bank Securities Inc. is a lender under the Credit Agreement. Each U.S. Dealer Manager, in the ordinary course of its business, may make markets in our securities and those of Domtar Inc., including the Domtar Corp. debt securities and the Domtar Inc. debt securities. As a result, from time to time, any of the U.S. Dealer Managers may own certain of our securities or those of Domtar Inc., including the Domtar Corp. debt securities and the Domtar Inc. debt securities, and may tender the Domtar Inc. U.S. notes in the exchange offers and consent solicitations.

Questions regarding the terms of the exchange offers or the consent solicitations may be directed to the U.S. Dealer Managers at the addresses and telephone numbers set forth on the back cover page of this prospectus and consent solicitation statement.

Other fees and expenses

We will pay the expenses of soliciting tenders of the Domtar Inc. U.S. notes. The principal solicitation is being made by mail; however, additional solicitations may be made by facsimile transmission, telephone or in person by the U.S. Dealer Managers and the information agent, as well as by our officers and other employees and those of our affiliates.

Tendering holders of Domtar Inc. U.S. notes will not be required to pay any fee or commission to the U.S. Dealer Managers. However, if a tendering holder handles the transaction through its broker, dealer, commercial bank, trust company or other institution, that holder may be required to pay brokerage fees or commissions.

Transfer taxes

You will not be obligated to pay any U.S. or Canadian transfer taxes in connection with the exchange offers unless you instruct us to register the Domtar Corp. notes in the name of, or request that the Domtar Inc. U.S. notes not tendered or accepted in the exchange offers be returned to, a person other than the registered tendering holder. In those cases, you will be responsible for the payment of any applicable transfer taxes.

Effect of tender

Any tender by a holder of Domtar Inc. U.S. notes that is not withdrawn prior to the expiration of the applicable exchange offer will constitute a binding agreement between the holder and us, upon the terms and subject to the conditions of the exchange offers. The acceptance of an exchange offer by a tendering holder of Domtar Inc. U.S. notes will constitute the agreement by that holder to deliver good and marketable title to the tendered Domtar Inc. U.S. notes, free and clear of all liens, charges, claims, encumbrances, interests and restrictions of any kind. The successful completion of any or all exchange offers may adversely affect the liquidity and market price of any remaining Domtar Inc. U.S. notes not tendered in the exchange. See “Risk factors—Risk factors relating to the exchange offers.”

Absence of dissenter’s rights

Holders of the Domtar Inc. U.S. notes do not have any appraisal or dissenters’ rights in connection with the exchange offers and consent solicitations.

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The consent solicitations

Concurrently with the exchange offers, we are soliciting consents from the holders of each series of the Domtar Inc. U.S. notes to amend the Domtar Inc. U.S. Indenture pursuant to which each series of Domtar Inc. U.S. notes were issued to, as applicable, (i) eliminate or modify certain restrictive covenants, (ii) permit the Transfer, (iii) eliminate Domtar Inc.’s contractual reporting obligations and (iv) eliminate certain events of default. The proposed amendments are described in more detail below under “—The proposed amendments.”

Required consents

The consent of the holders of a majority of the aggregate principal amount of a series of Domtar Inc. U.S. notes outstanding will be required in order to effectuate the proposed amendments to the applicable Domtar Inc. indenture with respect to that series. If the proposed amendments are approved and effected with respect to a series of Domtar Inc. U.S. notes, they will be binding on all holders of Domtar Inc. U.S. notes of that series, including those who do not give their consent to the proposed amendments and do not tender their Domtar Inc. U.S. notes in the applicable exchange offer. If for any reason the exchange offer with respect to a series of Domtar Inc. U.S. notes is not completed, the proposed amendments to the Domtar Inc. indenture will not become effective with respect to that series and that series of Domtar Inc. U.S. notes will be subject to the same terms and conditions as existed before the exchange offers were made.

If you tender your Domtar Inc. U.S. notes in the exchange offers, you will be deemed to consent to the proposed amendments to the applicable Domtar Inc. indenture. If you consent to amend the applicable Domtar Inc. U.S. Indenture, you must tender your Domtar Inc. U.S. notes. The proposed amendments constitute a single proposal for the related consent solicitations and a consenting holder must consent to the proposed amendments applicable to the relevant Domtar Inc. U.S. notes as an entirety and may not consent selectively with respect to certain of the proposed amendments. Tendered Domtar Inc. U.S. notes may be withdrawn and consents revoked before the applicable early consent date (see “—Early consent payment”), but Domtar Inc. U.S. notes may not be withdrawn and consents may not be revoked after the applicable early consent date, even if we extend the exchange offers beyond the original expiration date. Consents given in connection with the tender of any Domtar Inc. U.S. notes cannot be revoked without withdrawing the Domtar Inc. U.S. notes, and Domtar Inc. U.S. notes cannot be withdrawn without also revoking the consent related to those notes. Our receipt of the requisite consents in advance of the expiration of the relevant exchange offer will not result in any change in the terms of the relevant Domtar Inc. U.S. Indenture until consummation of the exchange offers, at which time the proposed amendments contained in the applicable supplement indenture will become operative.

Early consent payment

If you give a valid consent that is not revoked on or before the applicable early consent date, we will pay to you an early consent payment in cash of $2.50 for each $1,000 principal amount of Domtar Inc. U.S. notes with respect to which you give consent. This early consent payment will be paid upon completion of the exchange offers. If you do not give a valid consent, or you revoke your consent, on or before the applicable early consent date, you will not receive an early consent payment. For purposes of the exchange offers and consent solicitations, the term “early consent date” means 5:00 p.m., New York City time, on October 30, 2007 or such later date and

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time to which we extend the early consent date with respect to any exchange offer. If we extend the early consent date with respect to any or all of the exchange offers, we will announce the new early consent date with respect to such series of Domtar Inc. U.S. notes no later than 9:00 a.m., New York City time, on the first business day after we make the extension.

The proposed amendments

In connection with the exchange offers, we are soliciting the consent of the holders of each series of Domtar Inc. U.S. notes to certain proposed amendments to the Domtar Inc. U.S. Indenture pursuant to which such series of Domtar Inc. U.S. notes were issued to, as applicable, (i) eliminate or modify certain restrictive covenants, (ii) amend the covenants of the applicable Domtar Inc. U.S. Indenture to permit the Transfer, (iii) eliminate Domtar Inc.’s contractual reporting obligation and (iv) eliminate certain events of default.

If the requisite consents with respect to a series of Domtar Inc. U.S. notes have been delivered, the proposed amendments to the Domtar Inc. U.S. Indenture pursuant to which such series of Domtar Inc. notes were issued will be effected with respect to such series by the execution of a supplemental indenture, each of which is expected to be executed after the applicable early consent date and before the expiration of the exchange offers. Such supplemental indenture will become effective immediately upon execution and delivery, but the proposed amendments will only become operative on the settlement date of the exchange offer with respect to such series.

The description of the proposed amendments to the Domtar Inc. U.S. Indentures set forth below does not purport to be complete and is qualified in its entirety by reference to the full and complete terms contained in the Domtar Inc. U.S. Indentures and proposed supplemental indentures, which are included as exhibits to the registration statement of which this prospectus and consent solicitation statement forms a part and are available from the information agent upon request.

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The proposed amendments to the Domtar Inc. U.S. Indentures are as follows:

2003 Indenture (5.375% Domtar Inc. notes and 7  ¹ / 8 % Domtar Inc. notes)

Proposed Amendments—Provisions to be Deleted

If the requisite consents are obtained and the proposed amendments are effected, the following provisions in the 2003 Indenture will be deleted in their entirety:

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