Domtar gets needed consents for 10% debentures, 10.85% debentures

By Jennifer Chiou

New York, Dec. 20 - Domtar Inc., a subsidiary of Domtar Corp., said it received consents from holders of C$79.8 million, or 97.31%, of its 10% debentures due 2011 and C$74.35 million, or 99.25%, of its 10.85% debentures due 2017, enough to amend the note indentures.

The consent deadline was 5 p.m. ET on Dec. 17.

The offers expire at 5 p.m. ET on Jan. 3. The offer began on Nov. 29.

Assuming an early settlement date of Dec. 20, for each C$1,000 principal amount, tendering noteholders will receive C$1,143.83 for the 10% debentures and C$1,385.04 for the 10.85% debentures. The payout is based on the yield to maturity of a reference Canadian bond plus 125 basis points for the 10% notes and 150 bps for the 10.85% notes.

Assuming a final settlement date of Jan. 7, the company said it will pay C$1,111.86 for the 10% debentures and C$1,353.60 for the 10.85% debentures.

The payouts include a consent payment of C$30.00 per C$1,000 principal amount of notes tendered before the consent deadline. Notes tendered after the consent deadline will not receive the consent payment.

Domtar will also pay accrued interest up to but excluding the settlement date.

On Dec. 13, the company said that holders of 66.9% and 64.7% of the 10% debentures and the 10.85% debentures, respectively, had entered into lock-up agreements, under which they agreed to irrevocably deposit all of their debentures and deliver their consents on or prior to the early deadline.

Scotia Capital (416 863-7257 or 800 372-3930) is the dealer manager and solicitation agent. Georgeson Shareholder Communications Canada Inc. (888 605-8384) is the information agent.

Domtar is a paper manufacturer based in Montreal.

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