Domtar (UFS)

Risks

• Failure to successfully implement the Company’s business diversification initiatives could have a material adverse effect on its business, results of operations and financial position.
• The Company’s paper products are vulnerable to long-term declines in demand due to competing technologies or materials.
• The pulp and paper industry is highly cyclical. Fluctuations in the prices of and the demand for the Company’s pulp and paper products could result in lower sales and profit.
• The Company relies heavily on a small number of significant customers, including one customer that represented approximately 12% of the Company’s sales in 2021. A significant change in customer relationships or in customer demand for our products could materially adversely affect the Company’s business, financial condition or results of operations.
• The Company may have difficulty obtaining wood fiber at favorable prices, or at all.
• An increase in the cost of the Company’s purchased energy or other raw materials would lead to higher manufacturing costs, thereby reducing its margins.
• The Company depends on third parties for transportation services.
• The Company could experience disruptions in operations and/or increased labor costs due to labor disputes.
• A material disruption in the Company supply chain, manufacturing or distribution operations could prevent it from meeting customer demand, reduce its sales and/or negatively impact its results of operations.
• The Company could encounter difficulties restructuring operations or closing or disposing of facilities or business.
• The Company could incur substantial costs as a result of compliance with, violations of or liabilities under applicable environmental laws and regulations. It could also incur costs as a result of asbestos-related personal injury litigation.
• The Company may incur substantially more debt. This could increase risks associated with its leverage.
• The Company’s operations require substantial capital, and it may not have adequate capital resources to provide for all of its capital requirements.
• The Company’s ability to generate the significant amount of cash needed to pay interest and principal on the Company’s secured and unsecured long-term indebtedness and service its other debt and financial obligations and its ability to refinance all or a portion of its indebtedness or obtain additional financing depends on many factors beyond the Company’s control.
• The Company has liabilities with respect to its pension plans and the actual cost of its pension plan obligations could exceed current provisions. As of December 31, 2021, the Company’s defined benefit plans had a surplus of $248 million on certain plans and a deficit of $59 million on others.
• The Company faces intense competition in its markets, and the failure to compete effectively could have a material adverse effect on its business and results of operations.
• Conditions in the global political and economic environment, including the global capital and credit markets, can adversely affect the Company’s business, results of operations and financial position.
• The Company is affected by changes in currency exchange rates.
• The Company’s intellectual property rights are valuable, and any inability to protect them could reduce the value of its products and its brands.
• Our operations could be adversely affected by disruptions to our Information Technology (IT) Services.