Domtar Corporation (“Domtar”), a leading provider of a wide
variety of fiber-based products including communication, specialty
and packaging papers, market pulp and airlaid nonwovens, and Karta
Halten B.V., a private limited company organized under the laws of
the Netherlands (“Karta Halten”) and affiliate of Paper Excellence
B.V., a private limited company organized under the laws of the
Netherlands (“Paper Excellence”), through its subsidiary, Pearl
Merger Sub Inc., a Delaware corporation (“Merger Sub”), priced its
previously announced offering to eligible purchasers of $775.0
million aggregate principal amount of 6.750% senior secured notes
due 2028 (the “Notes”). The Notes will mature on October 1, 2028,
with interest payment dates on April 1 and October 1 of each year,
beginning on April 1, 2022. The Offering is exempt from the
registration requirements of the Securities Act of 1933, as amended
(the "Securities Act"). The Notes will be issued at a price of 100%
of the aggregate principal amount thereof. The issuance and sale of
the Notes is scheduled to settle on or about October 18, 2021,
subject to customary closing conditions.
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The Offering is part of the financing for, and is conditioned
upon the consummation of, the proposed acquisition of Domtar and
its subsidiaries by Karta Halten. Merger Sub has been formed for
the sole purpose of completing the acquisition and, at the closing
of the acquisition, will be merged with and into Domtar (the
“Merger”), with Domtar surviving the Merger and becoming the issuer
of the Notes. As previously announced, Domtar, Karta Halten, Merger
Sub, Paper Excellence and Hervey Investments B.V., a private
limited company organized under the laws of the Netherlands,
entered into an Agreement and Plan of Merger on May 10, 2021 (the
“Merger Agreement”).
The net proceeds from the Offering will be used, together with
an equity investment, borrowings under new senior secured credit
facilities and, following the consummation of the Merger, cash on
Domtar’s balance sheet, to (i) pay the cash consideration in
connection with the Merger, (ii) repurchase Domtar’s 6.25% Senior
Notes due 2042 and 6.75% Senior Notes due 2044 (the “Existing
Domtar Notes”), if any, tendered for redemption in the change of
control offers for the Existing Domtar Notes to be conducted by
Domtar following the closing of the Merger), (iii) pay fees, costs
and expenses in connection with the Merger and related transactions
and (iv) fund cash to the balance sheet.
If the Offering closes prior to the consummation of the Merger,
the initial purchasers will deposit the gross proceeds from the
sale of the Notes into an escrow account. In the event that (i) the
Merger is not consummated by May 18, 2022 (the “Outside Date”),
(ii) Merger Sub notifies the escrow agent and the trustee for the
Notes in writing that the Merger Agreement has terminated prior to
the Outside Date or (iii) Merger Sub notifies the escrow agent that
in its reasonable judgment, the Merger will not be consummated by
the Outside Date, the Notes will be subject to a special mandatory
redemption, at a price equal to 100% of the initial issue price of
the Notes plus accrued and unpaid interest from the issue date of
the Notes to, but not including, the date of such special mandatory
redemption.
Upon the consummation of the Merger, the Notes will be fully and
unconditionally guaranteed (collectively, the “Guarantees”),
jointly and severally, on a senior secured basis by Pearl
Excellence Holdco L.P., a Delaware limited partnership, and each of
Domtar’s existing and future domestic restricted subsidiaries that
is a guarantor under Domtar’s new term loan credit agreement.
The Notes and related Guarantees will be offered only to
qualified institutional buyers under Rule 144A of the Securities
Act, and to non-U.S. persons in transactions outside the United
States under Regulation S of the Securities Act. The Notes have not
been, and will not be, registered under the Securities Act and may
not be offered or sold in the United States absent registration or
an applicable exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act and other
applicable securities laws.
This press release does not and will not constitute an offer to
sell, or the solicitation of an offer to buy, the Notes or any
other securities, nor will there be any sale of the Notes or other
securities, in any state or other jurisdiction in which such offer,
sale or solicitation would be unlawful. Any offer will be made only
by means of a private offering memorandum.
About Paper Excellence
Paper Excellence, a private limited company organized under the
laws of the Netherlands, is a diversified manufacturer of pulp and
paper, including printing and writing, packaging, and specialty
papers. Paper Excellence believes in the enduring value of
wood-based products in global markets and has built a large network
of mills and chipping plants to produce them competitively. Through
its distinct approach to operational excellence, Paper Excellence
delivers high-quality and cost-effective products to international
customers. Paper Excellence has grown through logical acquisitions
from a single mill to a group producing 2.8 million tonnes of paper
and pulp and employing more than 2,800 people over the past
decade.
Additional information about Paper Excellence is available at
https://paperexcellence.com/.
About Domtar
Domtar is a leading provider of a wide variety of fiber-based
products including communication, specialty and packaging papers,
market pulp and airlaid nonwovens. With approximately 6,400
employees serving more than 50 countries around the world, Domtar
is driven by a commitment to turn sustainable wood fiber into
useful products that people rely on every day. Domtar’s annual
sales are approximately $3.7 billion, and its common stock is
traded on the New York and Toronto Stock Exchanges. Domtar’s
principal executive office is in Fort Mill, South Carolina. To
learn more, visit www.domtar.com.
Forward-Looking
Statements
All statements made herein that are not historical facts should
be considered as forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Such
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results to differ materially. These
statements include, but are not limited to, statements regarding
the expected completion and timing of the proposed transaction
between Paper Excellence and Domtar, expected benefits and costs of
the proposed transaction, and management plans relating to the
proposed transaction, statements that address each company’s
expected future business and financial performance, statements
regarding the impact of natural disasters, health epidemics and
other outbreaks, especially the outbreak of COVID-19 since December
2019, which may have a material adverse effect on each company’s
business, results of operations and financial conditions, and other
statements identified by words such as “anticipate”, “believe”,
“expect”, “intend”, “aim”, “target”, “plan”, “continue”,
“estimate”, “project”, “may”, “will”, “should” and similar
expressions. These forward-looking statements should be considered
with the understanding that such statements involve a variety of
risks and uncertainties, known and unknown, and may be affected by
inaccurate assumptions. Consequently, no forward-looking statement
can be guaranteed and actual results may vary materially. Many
risks, contingencies and uncertainties could cause actual results
to differ materially from our forward-looking statements. Certain
of these risks are set forth in Domtar’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2020, as well as the
company’s other reports filed with the SEC.
Those risks, uncertainties and assumptions also include the
timing, receipt and terms and conditions of any required
governmental and regulatory approvals of the proposed transaction
between Paper Excellence and Domtar that could reduce anticipated
benefits or cause the parties to abandon the proposed transaction,
the occurrence of any event, change or other circumstances that
could give rise to the termination of the merger agreement, the
risk that the parties may not be able to satisfy the conditions to
the proposed transaction in a timely manner or at all, risks
related to disruption of management time from ongoing business
operations due to the proposed transaction, the risk that any
announcements relating to the proposed transaction could have
adverse effects on the market price of Domtar’s common stock, the
risk of any unexpected costs or expenses resulting from the
proposed transaction, the risk of any litigation relating to the
proposed transaction, the risk that the proposed transaction and
its announcement could have an adverse effect on the ability of
Paper Excellence or Domtar to retain customers and retain and hire
key personnel and maintain relationships with their suppliers,
customers and other business relationships and on their operating
results and businesses generally, the risk that the pending
proposed transaction could distract management of both entities and
they will incur substantial costs, the risk that the combined
company may not operate as effectively and efficiently as expected
and other important factors that could cause actual results to
differ materially from those projected. All such factors are
difficult to predict and are beyond each company’s control.
Additional factors that could cause results to differ materially
from those described above can be found in Domtar’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2020, as well
as in the company’s other reports filed with the SEC.
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INVESTOR RELATIONS Nicholas Estrela Director Investor
Relations Tel.: 514-848-5049 MEDIA RELATIONS David Struhs
Vice-President Corporate Services and Sustainability Tel.:
803-802-8031
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