ANNUAL GENERAL MEETING OF SHAREHOLDERS

January 26, 2012

2 2

James V. Continenza Chairman of the Board

3 3

James M. Lopez President and Chief Executive Officer

4 4

This presentation includes “forward-looking statements” within the meaning of securities laws. Such statements relate, without limitation, to the Company’s or management’s objectives, projections, estimates, expectations or predictions of the future and can be identified by words such as “may“, “will”, “could”, “anticipate”, “estimate”, “expect” and “project”, the negative or variations thereof, and expressions of similar nature. Forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience, information available to it and its perception of future developments. Such statements are subject to a number of risks and uncertainties, including, but not limited to, changes in foreign exchange rates, product selling prices, raw material and operating costs and other factors identified in the Company’s periodic filings with securities regulatory authorities. Many of these risks are beyond the control of the Company and, therefore, may cause actual actions or results to materially differ from those expressed or implied herein. The forward-looking statements contained herein reflect the Company’s expectations as of the date hereof and are subject to change after such date. The Company disclaims any intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable securities legislation.

The information contained in this presentation is current only as of its date and has not been, and unless required pursuant to applicable securities laws, will not be, updated to reflect any changes or facts or circumstances that occurred after such date that may make such information inaccurate or incomplete. In addition, the market data included in this presentation, including information related to the Company’s relative position in the industry, is based on internal studies, market research and publicly available information and industry publications. Although the Company believes that such studies, research, information and publications are reliable as of the date of this presentation, they may prove to be inaccurate because of the method by which the Company obtained some of the data for its estimates or because this information cannot always be verified with certainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. In addition, the Company has not independently verified any of the data from third-party sources nor has it ascertained the underlying economic assumptions relied upon therein. As a result, market, ranking and other similar industry data included in this presentation, and estimates and beliefs based on the data, may not be accurate and complete.

Disclaimer

5 5

Future Vision of Tembec

Strong and stable earnings: Specialty Cellulose Pulp

Predictable earnings: Energy investments

Upside: Lumber

Result:

More stable cash flow throughout the cycle

and significant upside for shareholders

6 6

Safety – OHSA Incident Rate

2005 2006 2007 2008 2009 2010 20110

2

4

6

8

10

12

14

16

1816.6

13.413

9.2

7.8

6.3

4.7

7 7

Company Update

Financial Operational Strategic

Balance sheet and liquidity

in good shape

Term Debt maturity – 2018

New ABL termed out to 2016

Transformation of the

Company will continue

Strategic capital investments

Focus on Specialty

Cellulose Pulp

Uncompetitive assets

sold/closed – remaining

assets low cost or have

potential to become low

cost

SGA downsized to new

sales level

Efficiency improvement

projects underway

Higher CAPEX in 2011 will

positively impact results in

2012 and 2013

8 8

Significant External Events of 2011

European debt crisis stalled economic recovery in Europe

No material improvement in the U.S. housing market

Global wood fibre and recovered paper prices continued upward

trend

Demand for paper pulp weakened in the second half of the calendar

year

Prices for commodity dissolving declined throughout the year to

more normalized levels

Strong demand for Specialty Cellulose fuelled price increases

9 9

Significant Internal Events of 2011

Significant and ongoing health and safety improvements

Board of Directors accelerates the strategic repositioning of the

Company

Deal to sell B.C. sawmills to Canfor

Sold Smooth Rock Falls hydro dam

Sold Hardwood Flooring Division

Conditional approval of Temiscaming energy project

Construction of Matane, Tartas and Bearn energy projects

10 10

Improved Productivity - $000s Sales Per Employee

2006 2007 2008 2009 2010 2011 2012B

$327 $333 $342$315

$439$420

$465

11 11

2004 2005 2006 2007 2008 2009 2010 2011

$184$177

$153$141

$109

$88$75 $74

Consolidated SGA Expense - $ Millions

12 12

2006 2007 2008 2009 2010 2011

$135$125

$55

$35$30 $32

Annual Interest Expense - $ Millions

13 13

Debt Reduced By $220 Million

Net Debt - March 2010

Interest on Indebtedness

CAPEX EBITDA Sale of French Mills

Working Capi-tal and Other

Net Debt - Sep-tember 2011

$423

$44

$69 $191

$127

$15 $203

14 14

Strategic Capital Investments

15 15

Strategic Capital Investments

Industry/Company circumstances have led to low re-investment since 2005

Closed/divested facilities to focus capital investments

Company has developed detailed multi-year CAPEX plan for remaining facilities

High returning projects – proven technology/equipment

Two main categories:

Green Energy

Business Improvement Plan (BIP) – Cost reduction and productivity increases

Focus on Specialty Cellulose Pulp

16 16

Green Energy

Annual

Completed/Approved CAPEX Startup EBITDA $M

38 MW Biomass

Cogen - New Contract

Methane Biogas $25M /

Displace Fossil Fuel Net $1M

8 - 9 MW Biomass

Turbine - New Contract

Pending

30 - 40 MW Waste Liquor

Cogen - New Contract

Hog Boiler $13M /

Optimization - 7 MW Net $9M

Under Study

30,000 TPY Expansion

10 MW Waste Liquor Cogen

Skookumchuck BC NBSK Mill 2012-2013 $5M

Temiscaming QC Specialty Cellulose Mill $100M Dec 2015 $41M

$42MTemiscaming QC Specialty Cellulose Mill $190M

June 2012

June 2012

Dec 2013

$21M

Aug 2010 $10M

Matane QC High-Yield Pulp Mill

Tartas France Specialty Cellulose Mill

Skookumchuck BC NBSK Mill $2M

$6M

$8M

17 17

Temiscaming COGEN Project

PAYBACK - YEARS 4.0

Productivity (5,000 TPY) $6

$42

PROJECT COST

FUNDING

ANNUAL EBITDA IMPACT

$31

$85Internal Funds - Free Cash Flow

$105

Total

New Project Term Debt

Net Incremental Capex

Gross CAPEX Investment - 2012 to 2013

$170

Electricity Revenues

Cost Reduction $5

$190

Project Details – $ MillionsSpecialty Cellulose mill is currently very

profitable despite current cost structure

Three old low pressure boilers

approaching end of useful life – high

maintenance – require $20M to extend life

Cornerstone of project is “Green”

Purchase Power Agreement (PPA) with

Hydro Quebec – 50 Megawatts

Boiler/turbine to be sized to allow for a

30,000 TPY capacity expansion

Very attractive rates on project financing

Leverage/debt service will remain at very

manageable levels

18 18

Temiscaming Expansion Project

PAYBACK - YEARS 2.4

Productivity (30,000 TPY) $27

$41Total

Cost Reduction $7

PROJECT COST

FUNDING

ANNUAL EBITDA IMPACT

$7

$100Internal Funds - Free Cash Flow

CAPEX Investment - 2014 to 2015

Electricity Revenues

$100

Project Details – $ MillionsIncrease Specialty Cellulose production

by 30,000 tonnes per year and electricity

production by a further 10 Megawatts

COGEN project will ensure

boiler/turbine/PPA sized for the expansion

Replace 11 original digesters (pressure

cooking vessels) with 10 new larger

stainless steel digesters

Funding provided by COGEN cash flow

Initial incremental production to

commodity dissolving – gradual increase

to Specialty Cellulose to minimize market

impact

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Business Improvement Plan (BIP) Objectives

Enhance the existing competitive position of each operating facility

All facilities ranked by priority

Secure 1st or 2nd quartile cost position for each operating facility

Funded by operating cash flows

4 to 5 year timeline – can be accelerated if capital available

Increase enterprise value of the Company – high return projects

20 20

Strategic Capital Investments

EBITDA PAYBACK

CAPEX IMPACT YEARS

$134

$102

$236

1.5

3.1

2.2$519TOTAL

$198

Green Energy

BIP

$321

Financial Impact - $ MillionsThe $198M in BIP projects represents

83 different CAPEX investments

Low execution risk – projects relatively small

and technology proven

Very short payback – mainly cost reduction

Timing of BIP projects limited by cash flow

generation and focus on Green Energy

projects

Approximately $343M (66%) earmarked for

the Specialty Cellulose mills – goal is to

have two of the most modern facilities in the

world

Overall plan repositions the Company’s

entire cost structure

21 21

Short Term Outlook

Slow improvement in the U.S. will improve business conditions

European situation will suppress demand from this region

Asian economic growth decelerating but demand for commodities will

continue to grow

Challenging results in paper pulp sector in first half of year with recovery in

the second half

Strong Specialty Cellulose markets in 2012 with price increases

22 22

Short Term Outlook

Continued slow recovery in lumber supported by gradual improvements in

U.S. housing starts and sales to China

Stable pricing in newsprint with demand declines supported by capacity

reductions

Stable coated board prices supported by a relatively balanced market

Challenging overall results in the first half of 2012 with better results in the

second half of the year

Higher level of capital investments

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Outlook – Medium Term (3 years)

Increased capital investment - $70-80M per year excluding Temiscaming

COGEN

Continue to reposition the Company

Specialty Cellulose pulp is main driver of earnings/cash flow

Energy investments become a game-changer

BIP projects gradually increase margins as they are completed

Maintain strong balance sheet

24 24

2012 Priorities

Continued improvements in the Health & Safety performance

Generate cash flow despite challenging economic environment

Maintain liquidity

Continue the strategic repositioning of the Company

Start-up of Matane and Tartas energy projects

Begin construction of Temiscaming energy project

Maintain the Company’s sustainability profile

25 25

Michel J. Dumas Executive Vice President, Financeand Chief Financial Officer

FINANCIAL REVIEW

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2007 2008 2009 2010 2011

2,750

2,376

1,7861,877

1,743

Financial Review - 2011

Consolidated Sales - $M

7% decrease in sales

Sold two chemical pulp mills in latter

half of prior year – reduced sales by

$191M

Continued with significant production

curtailments in lumber – shipments at

57% of capacity

Sales

27 27

Financial Review - 2011

EBITDA - $M

Currency negatively impacted margins –

C$ up 5.5% vs US$

Improved profitability in Specialty

Cellulose and Chemical Pulp (+$18M)

and Paper (+$30M)

Forest Products EBITDA declined by

$36M as lumber prices were lower

High-Yield Pulp EBITDA down $51M due

to lower prices

Margins

2007 2008 2009 2010 2011-125

-100

-75

-50

-25

0

25

50

75

100

125

150

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

65

21

-108

132

95

EBITDA $ millions (left scale)

EBITDA % Sales (right scale)

28 28

Financial Review - 2011

Balance Sheet Leverage

February 2008 recapitalization “fixed” the

balance sheet

Recession led to higher leverage in 2009

– corrected in 2010

Balance sheet remains strong

Net Debt to Total Capitalization

2007 2008 2009 2010 20110%

10%

20%

30%

40%

50%

60%

70%

63%

30%

42%

28% 27%

Actual Objective < 40%

29 29

Financial Review - 2011

Liquidity - $M

Sale of two French pulp mills in Fiscal

2010 Q3 boosted liquidity

Used a portion of the proceeds in Fiscal

2010 Q4 to pay down term debt and

cover refinancing fees and costs

New ABL put in place in Fiscal 2011 Q2

increased liquidity by $55M

Liquidity

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q40

50

100

150

200

250

300

129138

270

174

139

200219

229

2010 2011

30 30

Fiscal 2012 – First Quarter

Sales of $401M

EBITDA of $12M

Net loss of $16M or $0.16 per share

December 2011 Quarterly Resuts

31 31

James V. Continenza Chairman of the Board

QUESTIONS?