Domtar Corporation

Order

Headnote

National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- Following a going-private transaction, all of the issuer's common shares are held by a private company and the only outstanding publicly held securities of the issuer are debt securities; for one series of notes, beneficial holders of the notes resident in Canada comprise more than 2% of the total number of holders worldwide, and they beneficially own more than 2% of the series of notes; the issuer is not required under the terms of the indentures to remain a reporting issuer; holders of the debt securities are entitled to financial statements and other information under the indentures; the issuer does not intend to do a public offering of its securities to Canadian residents; revocation of reporting issuer status granted.

Applicable Legislative Provisions

Securities Act, CQLR, c. V 1.1, s. 69.

[Original text in French]

June 10, 2024

IN THE MATTER OF
THE SECURITIES LEGISLATION
OF QUEBEC AND ONTARIO
(the Jurisdictions)

AND

IN THE MATTER OF
THE PROCESS FOR CEASE TO BE A
REPORTING ISSUER APPLICATIONS

AND

IN THE MATTER OF
DOMTAR CORPORATION
(the Filer)

ORDER

Background

The securities regulatory authority or regulator in the Jurisdictions (each a Decision Maker) has received an application from the Filer for an order under the securities legislation of the Jurisdictions (the Legislation) that the Filer has ceased to be a reporting issuer in all jurisdictions of Canada in which it is a reporting issuer (the Order Sought).

Under the Process for Cease to be a Reporting Issuer Applications (for a dual application):

a) the Autorité des marchés financiers is the principal regulator for this application,

b) the Filer has provided notice that subsection 4C.5(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta, British Columbia, Saskatchewan, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, Northwest Territories, Nunavut and Yukon (together with the Jurisdictions, the Reporting Jurisdictions), and

c) this order is the order of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this order, unless otherwise defined.

Representations

This order is based on the following facts represented by the Filer:

1. The Filer is a corporation governed by the laws of the State of Delaware, with its head office in Fort Mill, South Carolina, USA.

2. The Filer is currently a reporting issuer in each of the Reporting Jurisdictions. Until March 10, 2022, the Filer was a "SEC foreign issuer" pursuant to National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers.

3. The Filer is not an "OTC reporting issuer" pursuant to Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets.

4. On May 10, 2021, the Filer, entered into an agreement and plan of merger (the Merger Agreement) with Paper Excellence B.V., a private limited company organized under the laws of the Netherlands (Paper Excellence), Karta Halten B.V., a private limited company organized under the laws of the Netherlands and an affiliate of Paper Excellence (Parent), Hervey Investments B.V., a private limited company organized under the laws of the Netherlands and Pearl Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Parent (Merger Sub), pursuant to which Merger Sub merged with and into the Filer (the Merger), with the Filer surviving the Merger.

5. Pursuant to the Merger Agreement, all the issued and outstanding common stock of the Filer (Filer Shares) were acquired by Parent resulting in the Filer becoming a wholly owned subsidiary of Parent.

6. The Merger was approved at a special meeting of the shareholders of the Filer held on July 29, 2021 and was completed on November 30, 2021.

7. The Filer Shares were delisted from the Toronto Stock Exchange on December 1, 2021 and from the New York Stock Exchange on December 20, 2021.

8. The Filer ceased to have any statutory reporting obligations in the United States with the United States Securities and Exchange Commission (the SEC) after March 10, 2022.

9. The Filer has the following principal amounts of senior notes outstanding:

a) US$116 million principal amount of unsecured 6.25% Senior Notes due 2042 (the 2042 Notes);

b) US$150 million principal amount of unsecured 6.75% Senior Notes due 2044 (the 2044 Notes); and

c) US$642 million principal amount 6.75% Senior Secured Notes due 2028 (the 2028 Notes, and together with the 2042 Notes and the 2044 Notes, the Notes).

10. The Notes are not convertible or exchangeable into Filer Shares and are not listed on any stock exchange.

11. The 2042 Notes and the 2044 Notes were issued pursuant to and are subject to the terms of an indenture between the Filer and The Bank of New York Mellon (the Trustee) dated as of November 19, 2007 (the First Indenture). The First Indenture was supplemented with respect to the 2042 Notes on August 23, 2012, and with respect to the 2044 notes on November 26, 2013.) The 2028 Notes were issued under an indenture between Merger Sub and the Trustee dated as of October 18, 2021 (the Second Indenture, and together with the First Indenture, the Indentures).

12. Under the Indentures, the Filer is currently subject to certain contractual disclosure obligations including the obligation under the First Indenture to file periodic reports with the SEC as a voluntary filer (the Disclosure Covenants).

13. The 2042 Notes and the 2044 Notes were issued in the United States pursuant to shelf registration statements in the United States and were made available for purchase in certain jurisdictions outside the United States pursuant to applicable prospectus exemptions in such jurisdictions.

14. To the Filer's knowledge, none of the 2042 Notes or the 2044 Notes were issued in Canada.

15. Following the change of control of the Filer, the Filer was obligated, pursuant to the First Indenture, to make change of control offers to repurchase all the 2042 and 2044 Notes. On November 30, 2021, concurrently with the completion of the Merger, the Filer entered a term loan facility maturing November 30, 2028, of which US$525 million was immediately drawn and up to US$250 million was available on a delayed draw basis to fund redemptions of the 2042 and 2044 Notes pursuant to the change of control offers to repurchase all 2042 and 2044 Notes from holders at a purchase price of 101% (the Change of Control Offers).

16. The Change of Control Offers terminated on January 3, 2022 and US$134 million of the 2042 Notes and US$100 million of the 2044 Notes were tendered pursuant to the Change of Control Offers. As a result, US$116 million of the 2042 Notes and US$150 million of the 2044 Notes, remained outstanding after the payment date of January 7, 2022.

17. As part of the financing for the Merger, Merger Sub issued US$775 million aggregate principal amount of 2028 Notes to eligible purchasers. The 2028 Notes will mature on October 1, 2028. Upon the completion of the merger, Merger Sub was merged with and into the Filer with the Filer becoming the obligor of the Notes. On January 7, 2022, US$133 million of the 2028 Notes were redeemed, leaving US$642 million of 2028 Notes outstanding.

18. The 2028 Notes were issued on a private placement basis, primarily to qualified institutional buyers in the United States in accordance with Rule 144A of the United States Securities Act of 1933, as amended (the Securities Act) as well as to persons outside the United States in accordance with Regulation S of the Securities Act and were exempt from the registration requirements of the Securities Act.

19. The 2028 Notes were issued conditionally on the completion of the Merger. The purchasers for the 2028 Notes purchased the 2028 Notes after the Filer had publicly announced that it expected that, following the completion of the Merger, it would cease to be a reporting issuer in Canada and would no longer be required to file periodic and other reports with the SEC and the Canadian Securities Administrators.

20. The 2028 Notes were not marketed in Canada and the Filer did not actively solicit Canadian investors for the 2028 Notes.

21. The Notes are issued in book-entry form and are represented by global certificates registered in a nominee name of The Depositary Trust Company (DTC), with beneficial interests therein recorded in records maintained by DTC and its participants as financial intermediaries that hold securities on behalf of their clients.

22. The Filer made diligent enquiry with the Trustee and has reviewed the security position reports provided by the Trustee (Security Position Reports) which shows registered holders' holdings at DTC for the Notes as well as a report provided by Global Bondholders Services Corporation containing a more detailed breakdown of the information in the Security Position Reports, including information regarding non-objecting beneficial holders (NOBOs) of the 2042 Notes and 2044 Notes (Global Report). The Filer further obtained a report regarding NOBOs of the 2028 Notes (the 2028 NOBO Report).

23. Based on the Security Position Reports, the Global Report and the 2028 NOBO Report, it is the Filer's understanding and best estimate that:

a) The 2042 Notes are held by no NOBOs that are residents of Canada (Canadian NOBOs);

b) The 2044 Notes are held by, based on the Filer's estimate, a total of sixteen (16) Canadian NOBOs, representing a total of approximately 0.41% of the total number of NOBOs, and Canadian NOBOs hold approximately US$284,000 of the US$148,718,000 aggregate principal amount of the outstanding 2044 Notes held by NOBOs (or approximately 0.19% of the aggregate principal amount of the outstanding 2044 Notes held by NOBOs). Extrapolating with the information obtained on NOBOs, 0.41% of the total number of beneficial holders of the 2044 Notes are residents of Canada and these beneficial holders hold 0.19% of the aggregate principal amount of the outstanding 2044 Notes;

c) The 2028 Notes are held by, based on the Filer's estimate, a total of seven (7) Canadian NOBOs, representing a total of approximately 7.2% of the total number of NOBOs and Canadian NOBOs hold approximately US$25,412,000 of the US$149,221,000 aggregate principal amount of the outstanding 2028 Notes held by NOBOs (or approximately 17% of the aggregate principal amount of the outstanding 2028 Notes held by NOBOs). Extrapolating with the information obtained on NOBOs, 7.2% of the total number of beneficial holders of the 2028 Notes are residents of Canada and these beneficial holders hold 17% of the aggregate principal amount of the outstanding 2028 Notes.

24. In the past twelve (12) months prior to this decision, the Filer has not conducted a prospectus offering in Canada.

25. The Filer has no current intention to seek public financing by way of an offering of securities in Canada.

26. The Filer is not eligible to use the simplified procedure under Section 19 of National Policy 11-206 respecting Process for Cease to be a Reporting Issuer Applications (NP 11-206) because the Filer does not have fewer than 51 securityholders worldwide and it is in default of securities legislation as set out below.

27. The Filer is not eligible to use the modified procedure under Section 20 of NP 11-206 because the Filer estimates that Canadian beneficial holders of 2028 Notes represent more than to 2% of the total number of beneficial holders of 2028 Notes worldwide and they own more than 2% of 2028 Notes outstanding.

28. The Filer has no securities outstanding other than the Filer Shares (that are all held by the Parent) and the Notes.

29. No securities of the Filer, including debt securities, are traded in Canada or another country on a marketplace or any other facility for bringing together buyers and sellers of securities, where trading data is publicly reported.

30. There is no obligation or covenant in the Indentures requiring the Filer to maintain its status as a reporting issuer in any jurisdiction of Canada.

31. The Filer will continue to fulfill its contractual obligations under the Second Indenture to provide financial reporting to the holders of 2028 Notes.

32. For so long as any of the 2042 Notes and 2044 Notes are outstanding, the Filer will continue, pursuant to the Disclosure Covenants, to file annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K with the SEC as a voluntary filer, unless the First Indenture is amended to provide otherwise.

33. The Filer is not in default of securities legislation in any jurisdiction, except for the filing of, as required under National Instrument 51-102 Continuous Disclosure Obligations, its annual financial statements and its management discussion and analysis in respect of such statements for the periods ended December 31, 2022, and December 31, 2023 and its interim financial statements and related management's discussion and analysis for the interim periods for 2023 and 2024; and except for the filing of the related certificates required under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings.

34. The Filer issued a news release on November 21, 2022, announcing it had applied to the Decision Makers for a decision that it is not a reporting issuer and, if that decision were granted, the Filer would no longer be a reporting issuer in the Reporting Jurisdiction. The Filer received no complaints from holders of the Notes after the publication of the news release.

35. The Filer is applying for an order that the Filer has ceased to be a reporting issuer in each of the Reporting Jurisdictions. If each of the Decision Makers grants the Order Sought, the Filer will no longer be a reporting issuer in the Reporting Jurisdictions.

Order

Each of the Decision Makers is satisfied that the order meets the test set out in the Legislation for the Decision Maker to make the order.

The decision of the Decision Makers under the Legislation is that the Order Sought is granted.

"Marie-Claude Brunet-Ladrie"
Manager, Direction de la surveillance des émetteurs et initiés

OSC File #: 2022/0384