March 21, 2011 / 3:56 PM / in 6 years

UPDATE 1-Domtar settles Windsor mill tax evaluation case

* Says reaches settlement on dispute with City of Windsor

* Withdraws originating motion for judicial review (Follows alerts)

March 21 (Reuters) - Pulp and paper producer Domtar Corp said it reached settlement on a dispute regarding the tax evaluation of its Windsor mill with the city's municipality.

Following the settlement, Domtar, one of the largest producers of uncoated freesheet paper in North America, said it withdrew its originating motion for judicial review before the Québec Superior Court.

Domtar's Windsor mill has an annual paper production capacity of 670,000 tons and annual pulp production capacity of 454,000 tonnes.

Last month, the Montreal-based company had posted quarterly results below market estimates, and said it expects North American paper demand to continue to decline in the long term.

Domtar shares were trading up 1.4 percent at C$84.50 on Monday on the Toronto Stock Exchange. (Reporting by Arnika Thakur in Bangalore; Editing by Vyas Mohan) ((arnika.thakur@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: arnika.thakur.thomsonreuters.com@reuters.net)

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