Domtar Invests in Prisma Renewable Composites, LLC

Domtar Corporation (NYSE: UFS) (TSX: UFS) today announced it has
acquired a majority interest in Prisma Renewable Composites, LLC, a
company focused on developing advanced materials from lignin and other
natural resources.

With its investment, Domtar will help commercialize the process of using
lignin to make engineered plastic compounds such as Acrylonitrile
Butadiene Styrene (ABS) and other high-value fiber and lignin
applications.

“Innovation is core to Domtar Biomaterials’ growth strategy,” said
Domtar Biomaterials vice president, Mark DeAndrea. “We’re pleased to
have the opportunity to partner with an industry leading renewable
composite company. Domtar Biomaterials is a bridge between science and
commercialization. This investment leverages Prisma’s scientific
research capabilities and unique product development strategy with
Domtar’s commercialization and lignin production expertise.”

“We are excited about this partnership with Domtar,” Prisma CEO Adam
McCal said. “We believe their commercialization plans and capabilities
give Prisma an incredible advantage in establishing a robust supply
chain from lignin to the final material production.”

Lignin – the natural glue that holds wood fibers together – is a
byproduct of the Kraft pulping process that has traditionally been
burned to provide energy to a mill. However, it also has the potential
to be used in a wide range of industrial applications as a sustainable
and bio-degradable alternative to petroleum and other fossil fuels.
Domtar is a leader in lignin separation and the development of
lignin-based materials. The company recently installed a demonstration
plant in Ontario, Canada, to show how lignin pellets can potentially be
used as a bio-alternative to plastic, chemicals and other
petroleum-based products.

About DomtarDomtar is a leading provider of a wide variety
of fiber-based products including communication, specialty and packaging
papers, market pulp and absorbent hygiene products. With approximately
10,000 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 $5.1 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.

About Prisma Renewable Composites LLCPrisma Renewable
Composites, LLC is a spin-off of TennEra, LLC. Operating between
academia and industry, and having license agreements with both Oak Ridge
National Laboratory and the University of Tennessee Research Foundation,
Prisma’s technology includes lignin-derived thermoplastic co-polymers,
polymer blend compositions, lignin-acrylonitrile polymer blends, and its
patented lignin fractionation process, evolUTIATM, a process that
creates very pure lignin and cellulose streams.

Forward-Looking StatementsStatements in this release about
our plans, expectations and future performance, including the statements
by Mr. Williams and those contained under “Outlook,” are
“forward-looking statements.” Actual results may differ materially from
those suggested by these statements for a number of reasons, including
changes in customer demand and pricing, changes in manufacturing costs,
future acquisitions and divestitures, including facility closings, and
the other reasons identified under “Risk Factors” in our Form 10-K for
2017 as filed with the SEC and as updated by subsequently filed Form
10-Qs. Except to the extent required by law, we expressly disclaim any
obligation to update or revise these forward-looking statements to
reflect new events or circumstances or otherwise.

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