...Strong leadership position in the North American uncoated freesheet industry, albeit a declining industry. Domtar Corp. is the leader in the North American (N.A.) uncoated freesheet (UFS) industry, having a more than 30% share of the concentrated N.A. UFS market. However, the company's products are facing secular decline due to electronic substitution. S&P Global Ratings estimates that the industry, absent the near-term tightness, will decline 3%-4% per year. Low-cost asset base with good optionality. The company's paper mills are low cost because they are large and modern, with integrated pulp and cogeneration facilities. The assets also have strong optionality; historically, the company has demonstrated the ability to convert assets into growth segments such as fluff pulp. Domtar has also identified additional projects to repurpose assets that could include converting paper assets to manufacture linerboard, although the timing remains uncertain. We believe these strategies could improve...
