CANFOR PULP PRODUCTS INC. ANNUAL INFORMATION FORM February 6, 2012 TABLE OF CONTENTS EXPLANATORY NOTES ......................................................................................................................... 1 FORWARD-LOOKING STATEMENTS ................................................................................................ 1 CORPORATE STRUCTURE ................................................................................................................... 2 NAME, ADDRESS AND INCORPORATION .................................................................................................... 2 OWNERSHIP RELATIONSHIPS .................................................................................................................... 4 GENERAL DEVELOPMENT OF THE BUSINESS .............................................................................. 5 HISTORY .................................................................................................................................................... 5 SIGNIFICANT ACQUISITIONS ..................................................................................................................... 5 DESCRIPTION OF THE PULP INDUSTRY .......................................................................................... 6 PULP OVERVIEW ....................................................................................................................................... 6 PULP MARKETS ......................................................................................................................................... 8 NBSK PULP MARKETS .............................................................................................................................. 9 PREMIUM REINFORCING NBSK .............................................................................................................. 11 NBSK PULP PRODUCTION ...................................................................................................................... 12 NBSK PULP PRICING .............................................................................................................................. 12 DESCRIPTION OF THE PAPER INDUSTRY ..................................................................................... 13 PAPER OVERVIEW ................................................................................................................................... 13 KRAFT PAPER MARKETS ......................................................................................................................... 14 FULLY BLEACHED, HIGH PERFORMANCE KRAFT PAPER MARKET ........................................................ 14 KRAFT PAPER PRODUCTION .................................................................................................................... 14 KRAFT PAPER PRICING ............................................................................................................................ 14 THE PULP AND PAPER BUSINESS OF THE PARTNERSHIP ....................................................... 15 GENERAL ................................................................................................................................................. 15 MARKET POSITION .................................................................................................................................. 15 THE MILLS .............................................................................................................................................. 16 MANUFACTURING PROCESS .................................................................................................................... 16 PRODUCTS ............................................................................................................................................... 17 SALES AND MARKETING ......................................................................................................................... 18 CUSTOMERS ............................................................................................................................................ 19 HUMAN RESOURCES ............................................................................................................................... 20 CAPITAL EXPENDITURES ......................................................................................................................... 20 FIBRE SUPPLY ......................................................................................................................................... 21 ENERGY ................................................................................................................................................... 23 CHEMICALS ............................................................................................................................................. 24 TRANSPORTATION ................................................................................................................................... 24 ENVIRONMENT ........................................................................................................................................ 25 COMPETITION .......................................................................................................................................... 26 COMPETITIVE ADVANTAGES ................................................................................................................... 26 STRATEGIC DIRECTION AND OPPORTUNITIES ......................................................................................... 27 DESCRIPTION OF LEGAL STRUCTURE .......................................................................................... 27 CANFOR PULP PRODUCTS INC. ................................................................................................................ 27 THE PARTNERSHIP................................................................................................................................... 27 THE GENERAL PARTNER ......................................................................................................................... 29 THE BUSINESSES OF CANFOR PULP PRODUCTS INC., THE PARTNERSHIP AND THE GENERAL PARTNER ............................................................................................................................ 30 THE BUSINESS OF CANFOR PULP PRODUCTS INC. .................................................................................. 30 THE BUSINESS OF THE PARTNERSHIP ...................................................................................................... 31 THE BUSINESS OF THE GENERAL PARTNER ............................................................................................ 31 DISCLOSURE........................................................................................................................................... 31 RISK FACTORS ....................................................................................................................................... 32 RISKS RELATED TO THE STRUCTURE OF CANFOR PULP PRODUCTS INC. ............................................... 32 RISKS RELATED TO THE PULP BUSINESS AND INDUSTRY ....................................................................... 34 DESCRIPTION OF CAPITAL STRUCTURE ...................................................................................... 38 DISTRIBUTIONS AND DIVIDENDS .................................................................................................... 39 DIVIDEND POLICY ................................................................................................................................... 39 DISTRIBUTIONS OF THE PARTNERSHIP .................................................................................................... 39 HISTORICAL DISTRIBUTIONS................................................................................................................... 39 MARKET FOR SECURITIES ................................................................................................................ 41 TRADING PRICE AND VOLUME ................................................................................................................ 41 DIRECTORS AND OFFICERS .............................................................................................................. 42 DIRECTORS AND EXECUTIVE OFFICERS OF CPPI .................................................................................... 42 DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER ..................................................... 43 BIOGRAPHIES .......................................................................................................................................... 44 COMMITTEES OF THE BOARD OF DIRECTORS OF THE GENERAL PARTNER ............................................. 47 CORPORATE CEASE TRADE ORDERS OR BANKRUPTCIES ....................................................................... 51 PERSONAL BANKRUPTCIES ..................................................................................................................... 52 PENALTIES OR SANCTIONS ...................................................................................................................... 52 CONFLICTS OF INTEREST ......................................................................................................................... 52 LIQUIDITY, SUPPORT AND SECURITY HOLDER AGREEMENTS ..........................................