Domtar to close mills, cut 1800 jobs.

DOMTAR TO CLOSE MILLS, CUT 1800 JOBS. Domtar Inc., Montreal, Quebec, Canada announced a series of targeted measures aimed at returning the company to profitability. The plan is focused to result in pre-tax restructuring costs of approximately C$ 505 million (US$ 432 million), including fixed asset write-offs of approximately C$ 313 million (US$ 268 million). It includes closures of paper mills and sawmills, the sale of a paper mill, and cost-cutting initiatives. Measures include:

* Permanent closure of the Cornwall, Ontario mill;

* Permanent closure of Paper Machine Numbers 10 and 11 at the Ottawa, Ontario mill;

* The decision to sell the Vancouver, British Columbia mill;

* Closure of the sawmills at Grand Remous and Malartic, Quebec with the intention of creating a value-added project using the existing infrastructures.

The company also unveiled a cost reduction program, which includes:

* Reduce selling, general, and administrative expenses by eliminating approximately 100 additional corporate and divisional positions, as well as other SG & A expenses;

* Implement further cost reductions at the mill level by eliminating approximately 200 additional operational positions;

* Consolidate North American administrative offices in Montreal, Quebec, Canada and Cincinnati, Ohio, USA.

IN RELATED NEWS: Domtar has also announced the shutdown of the Lebel-sur-Quevillon pulp mill on November 24, 2005 due to unfavorable economic factors. The mill employs 425 workers and produces 300,000 metric tons/yr of kraft pulp. The company plans to reopen the pulp mill at Lebel-sur-Quevillon when economic factors allow for profitable operation.