---

Exhibit 99.5

Unaudited supplemental condensed consolidating financial
information of

TEMBEC INC.

Years ended September 29, 2012 and September 24, 2011



---

|TEMBEC INC.                                                     
|----------------------------------------------------------------
|SUPPLEMENTAL INFORMATION                                        
|September 29, 2012                                              
|Supplemental condensed consolidating financial
      information

The following condensed consolidating financial information is
prepared in compliance with National Instrument 51-102  Continuous
Disclosure Obligations, under Canadian securities laws.

The senior secured notes (the Notes) of Tembec Industries
Inc. (the "Subsidiary Issuer") are fully and unconditionally guaranteed on a
joint and several basis by Tembec Inc. (the "Parent Company") and most of the
Subsidiary Issuers subsidiaries located in Canada (the Guarantor
Subsidiaries). The Subsidiary Issuer and each of the Guarantor Subsidiaries are
100% owned by the Parent Company. The Notes are not guaranteed by the Companys
other subsidiaries (the Other Subsidiaries).

The following supplemental condensed consolidating financial
information sets forth, on an unconsolidated basis, the balance sheets as at
September 29, 2012, September 24, 2011 and September 26, 2010, the statements of
comprehensive earnings (loss) and the statements of cash flows for the years
ended September 29, 2012 and September 24, 2011, for the Parent Company and for
the Subsidiary Issuer. It also provides the same information on a combined basis
for the Guarantor Subsidiaries and the Other Subsidiaries.

The supplemental condensed consolidating financial information,
which has been prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board
(IASB), reflects the investments of the Parent Company in the Subsidiary Issuer
using the equity method. Investments of the Subsidiary Issuer in the Guarantor
Subsidiaries and Other Subsidiaries are also accounted for using this method. An
explanation of how the transition to IFRS has affected the reported financial
position, financial performance and cash flows of the Company is provided on
pages 9 to 14. The explanation of transition to IFRS includes reconciliations of
equity, net earnings (loss), comprehensive earnings (loss) and cash flows for
prior years reported under the previous Canadian Generally Accepted Accounting
Principles (GAAP) to those reported for those years under IFRS.

More information on the Company and its significant accounting
policies are included in the audited consolidated financial statements for the
year ended September 29, 2012.

|TEMBEC Supplemental Information for fourth quarter
      2012 | 1
|------------------------------------------------------------- | -

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|TEMBEC INC.                                                     
|----------------------------------------------------------------
|SUPPLEMENTAL INFORMATION                                        
|September 29, 2012                                              
|Supplemental condensed consolidating financial
      information

|Condensed Consolidated Balance Sheets                 |  
|----------------------------------------------------- | -
|(unaudited)(in millions of Canadian
      dollars)    |  
|                                                      |  
|                                                      |  
|                                                      |  
|                                                      |  
|ASSETS                                                |  
|Current assets:                                       |  
|Cash and cash equivalents                             | $
|Cash held in trust                                    |  
|Trade and other receivables                           |  
|Inventories                                           |  
|Prepaid expenses                                      |  
|                                                      |  
|Investments                                           |  
|Property, plant and equipment                         |  
|Biological assets                                     |  
|Employee future benefits                              |  
|Other long-term receivables                           |  
|Deferred tax
      assets                             |  
|                                                      | $
|                                                      |  
|LIABILITIES AND SHAREHOLDERS' EQUITY                  |  
|Current liabilities:                                  |  
|Operating bank loans                                  | $
|Trade, other payables and accrued charges             |  
|Interest payable                                      |  
|Income tax payable                                    |  
|Provisions                                            |  
|Current portion of long-term debt                     |  
|                                                      |  
|Long-term debt                                        |  
|Provisions                                            |  
|Employee future benefits                              |  
|Other long-term liabilities                           |  
|                                                      |  
|                                                      |  
|Shareholders' equity:                                 |  
|Share capital                                         |  
|Retained earnings (deficit)                           |  
|Accumulated other comprehensive earnings
      (loss) |  
|                                                      |  
|                                                      | $

|TEMBEC Supplemental Information for fourth quarter
      2012 | 2
|------------------------------------------------------------- | -

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|TEMBEC INC.                                                     
|----------------------------------------------------------------
|SUPPLEMENTAL INFORMATION                                        
|September 29, 2012                                              
|Supplemental condensed consolidating financial
      information

|Condensed Consolidated Balance Sheets
      (continued) |  
|------------------------------------------------------- | -
|(unaudited)(in millions of Canadian
      dollars)      |  
|                                                        |  
|                                                        |  
|                                                        |  
|                                                        |  
|ASSETS                                                  |  
|Current assets:                                         |  
|Cash and cash equivalents                               | $
|Cash held in trust                                      |  
|Trade and other receivables                             |  
|Inventories                                             |  
|Prepaid expenses                                        |  
|                                                        |  
|Investments                                             |  
|Property, plant and equipment                           |  
|Biological assets                                       |  
|Employee future benefits                                |  
|Other long-term receivables                             |  
|Deferred tax
      assets                               |  
|                                                        | $
|                                                        |  
|LIABILITIES AND SHAREHOLDERS' EQUITY                    |  
|Current liabilities:                                    |  
|Operating bank loans                                    | $
|Trade, other payables and accrued charges               |  
|Interest payable                                        |  
|Income tax payable                                      |  
|Provisions                                              |  
|Current portion of long-term debt                       |  
|                                                        |  
|Long-term debt                                          |  
|Provisions                                              |  
|Employee future benefits                                |  
|Other long-term liabilities                             |  
|                                                        |  
|                                                        |  
|Shareholders' equity:                                   |  
|Share capital                                           |  
|Retained earnings (deficit)                             |  
|Accumulated other comprehensive earnings
      (loss)   |  
|                                                        |  
|                                                        | $

|TEMBEC Supplemental Information for fourth quarter
      2012 | 3
|------------------------------------------------------------- | -

---

|TEMBEC INC.                                                     
|----------------------------------------------------------------
|SUPPLEMENTAL INFORMATION                                        
|September 29, 2012                                              
|Supplemental condensed consolidating financial
      information

|Condensed Consolidated Balance Sheets
      (continued) |  
|------------------------------------------------------- | -
|(unaudited)(in millions of Canadian
      dollars)      |  
|                                                        |  
|                                                        |  
|                                                        |  
|                                                        |  
|ASSETS                                                  |  
|Current assets:                                         |  
|Cash and cash equivalents                               | $
|Cash held in trust                                      |  
|Trade and other receivables                             |  
|Inventories                                             |  
|Prepaid expenses                                        |  
|                                                        |  
|Investments                                             |  
|Property, plant and equipment                           |  
|Biological assets                                       |  
|Employee future benefits                                |  
|Other long-term receivables                             |  
|Deferred tax
      assets                               |  
|                                                        | $
|                                                        |  
|LIABILITIES AND SHAREHOLDERS' EQUITY                    |  
|Current liabilities:                                    |  
|Operating bank loans                                    | $
|Trade, other payables and accrued charges               |  
|Interest payable                                        |  
|Income tax payable                                      |  
|Provisions                                              |  
|Current portion of long-term debt                       |  
|                                                        |  
|Long-term debt                                          |  
|Provisions                                              |  
|Employee future benefits                                |  
|Other long-term liabilities                             |  
|                                                        |  
|                                                        |  
|Shareholders' equity:                                   |  
|Share capital                                           |  
|Retained earnings (deficit)                             |  
|Accumulated other comprehensive earnings
      (loss)   |  
|                                                        |  
|                                                        | $

|TEMBEC Supplemental Information for fourth quarter
      2012 | 4
|------------------------------------------------------------- | -

---

|TEMBEC INC.                                                     
|----------------------------------------------------------------
|SUPPLEMENTAL INFORMATION                                        
|September 29, 2012                                              
|Supplemental condensed consolidating financial
      information

|Condensed Consolidated Statements of
      Comprehensive Earnings (Loss)             |  
|------------------------------------------------------------------------------------ | -
|(unaudited)(in millions of Canadian dollars,
      unless otherwise noted)           |  
|                                                                                     |  
|                                                                                     |  
|                                                                                     |  
|                                                                                     |  
|Sales                                                                                | $
|Freight and other deductions                                                         |  
|Lumber export taxes                                                                  |  
|Cost of sales (excluding depreciation and amortization)                              |  
|Selling, general and administrative                                                  |  
|Share-based compensation                                                             |  
|Depreciation and amortization                                                        |  
|Other items                                                                          |  
|Operating earnings (loss)                                                            |  
|Interest, foreign exchange and other                                                 |  
|Exchange loss (gain) on long-term debt                                               |  
|Net finance costs
      (income)                                                     |  
|Earnings (loss) before income taxes and
      share of results for equity accounting |  
|Income tax expense (recovery)                                                        |  
|Share of results for equity accounting                                               |  
|Net earnings
      (loss)                                                            |  
|Other comprehensive earnings (loss), net of
      income taxes:                      |  
|Defined benefit pension plans                                                        |  
|Other benefit plans                                                                  |  
|Foreign currency translation differences for
      foreign operations                |  
|Total comprehensive earnings (loss)                                                  | $
|Basic and diluted
      net loss in dollars per share                                |  

|TEMBEC Supplemental Information for fourth quarter
      2012 | 5
|------------------------------------------------------------- | -

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|TEMBEC INC.                                                     
|----------------------------------------------------------------
|SUPPLEMENTAL INFORMATION                                        
|September 29, 2012                                              
|Supplemental condensed consolidating financial
      information

|Condensed Consolidated Statements of
      Comprehensive Earnings (Loss) (continued) |  
|------------------------------------------------------------------------------------ | -
|(unaudited)(in millions of Canadian dollars,
      unless otherwise noted)           |  
|                                                                                     |  
|                                                                                     |  
|                                                                                     |  
|                                                                                     |  
|Sales                                                                                | $
|Freight and other deductions                                                         |  
|Lumber export taxes                                                                  |  
|Cost of sales (excluding depreciation and amortization)                              |  
|Selling, general and administrative                                                  |  
|Share-based compensation                                                             |  
|Depreciation and amortization                                                        |  
|Other items                                                                          |  
|Operating earnings (loss)                                                            |  
|Interest, foreign exchange and other                                                 |  
|Exchange loss (gain) on long-term debt                                               |  
|Net finance costs
      (income)                                                     |  
|Earnings (loss) before income taxes and
      share of results for equity accounting |  
|Income tax expense (recovery)                                                        |  
|Share of results for equity accounting                                               |  
|Net earnings
      (loss)                                                            |  
|Other comprehensive earnings (loss), net of
      income taxes:                      |  
|Defined benefit pension plans                                                        |  
|Other benefit plans                                                                  |  
|Foreign currency translation differences for
      foreign operations                |  
|Total comprehensive earnings (loss)                                                  | $
|Basic and diluted
      net loss in dollars per share                                |  

|TEMBEC Supplemental Information for fourth quarter
      2012 | 6
|------------------------------------------------------------- | -

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|TEMBEC INC.                                                     
|----------------------------------------------------------------
|SUPPLEMENTAL INFORMATION                                        
|September 29, 2012                                              
|Supplemental condensed consolidating financial
      information

|Condensed Consolidated Statements of Cash
      Flows                               |  
|----------------------------------------------------------------------------------- | -
|(unaudited)(in millions of Canadian
      dollars)                                  |  
|                                                                                    |  
|                                                                                    |  
|                                                                                    |  
|                                                                                    |  
|Cash flows from operating activities:                                               |  
|Net earnings (loss)                                                                 | $
|Adjustments for:                                                                    |  
|Depreciation and
      amortization                                                 |  
|Net
      finance costs                                                             |  
|Income tax expense
      (recovery)                                                 |  
|Income
      tax paid                                                               |  
|Excess cash
      contributions over employee future benefits expense               |  
|Provisions                                                                          |  
|Share of results for
      equity accounting                                        |  
|Impairment loss                                                                     |  
|Gain on sale of assets
      and deconsolidation of a subsidiary                    |  
|Other                                                                               |  
|                                                                                    |  
|Change in non-cash working capital:                                                 |  
|Trade and other receivables                                                         |  
|Inventories                                                                         |  
|Prepaid expenses                                                                    |  
|Trade, other payables and accrued charges                                           |  
|                                                                                    |  
|                                                                                    |  
|Cash flows from investing activities:                                               |  
|Additions to property, plant
      and equipment                                    |  
|Proceeds from sale of net assets                                                    |  
|Investments in a subsidiary                                                         |  
|Interest received                                                                   |  
|Other                                                                               |  
|                                                                                    |  
|Cash flow from financing activities:                                                |  
|Change in operating bank loans                                                      |  
|Cash held in trust                                                                  |  
|Increase in long-term debt                                                          |  
|Repayments of long-term debt                                                        |  
|Proceeds from issue of share capital                                                |  
|Interest paid                                                                       |  
|Other                                                                               |  
|                                                                                    |  
|                                                                                    |  
|Foreign exchange loss on cash and cash equivalents held in
      foreign currencies |  
|Net increase (decrease) in cash and cash equivalents                                |  
|Cash and cash equivalents, beginning of period                                      |  
|Cash and cash
      equivalents, end of period                                      | $

|TEMBEC Supplemental Information for fourth quarter
      2012 | 7
|------------------------------------------------------------- | -

---

|TEMBEC INC.                                                     
|----------------------------------------------------------------
|SUPPLEMENTAL INFORMATION                                        
|September 29, 2012                                              
|Supplemental condensed consolidating financial
      information

|Condensed Consolidated Statements of Cash
      Flows (continued)                   |  
|----------------------------------------------------------------------------------- | -
|(unaudited)(in millions of Canadian
      dollars)                                  |  
|                                                                                    |  
|                                                                                    |  
|                                                                                    |  
|                                                                                    |  
|Cash flows from operating activities:                                               |  
|Net earnings (loss)                                                                 | $
|Adjustments for:                                                                    |  
|Depreciation and
      amortization                                                 |  
|Net
      finance costs                                                             |  
|Income tax expense
      (recovery)                                                 |  
|Income
      tax paid                                                               |  
|Excess cash
      contributions over employee future benefits expense               |  
|Provisions                                                                          |  
|Share of results for
      equity accounting                                        |  
|Impairment loss                                                                     |  
|Gain on sale of assets
      and deconsolidation of a subsidiary                    |  
|Other                                                                               |  
|                                                                                    |  
|Change in non-cash working capital:                                                 |  
|Trade and other receivables                                                         |  
|Inventories                                                                         |  
|Prepaid expenses                                                                    |  
|Trade, other payables and accrued charges                                           |  
|                                                                                    |  
|                                                                                    |  
|Cash flows from investing activities:                                               |  
|Additions to property, plant
      and equipment                                    |  
|Proceeds from sale of net assets                                                    |  
|Investments in subsidiary                                                           |  
|Interest received                                                                   |  
|Other                                                                               |  
|                                                                                    |  
|Cash flow from financing activities:                                                |  
|Change in operating bank loans                                                      |  
|Cash held in trust                                                                  |  
|Increase in long-term debt                                                          |  
|Repayments of long-term debt                                                        |  
|Proceeds from issue of share capital                                                |  
|Interest paid                                                                       |  
|Other                                                                               |  
|                                                                                    |  
|                                                                                    |  
|Foreign exchange loss on cash and cash equivalents held in
      foreign currencies |  
|Net increase (decrease) in cash and cash equivalents                                |  
|Cash and cash equivalents, beginning of period                                      |  
|Cash and cash
      equivalents, end of period                                      | $

|TEMBEC Supplemental Information for fourth quarter
      2012 | 8
|------------------------------------------------------------- | -

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|TEMBEC INC.                                                     
|----------------------------------------------------------------
|SUPPLEMENTAL INFORMATION                                        
|September 29, 2012                                              
|Supplemental condensed consolidating financial
      information

Explanation of transition to IFRS

The accounting policies set out in note 3 of the Companys
audited consolidated financial statements for the year ended September 29, 2012,
have been applied in preparing supplemental condensed consolidating financial
information for the same date and for the comparative figures, except for the
use of the equity method as explain on page 1.

In preparing its opening IFRS balance sheet, the Company has
adjusted amounts reported previously in financial statements prepared in
accordance with previous Canadian GAAP. An explanation of how the transition
from previous GAAP to IFRS has affected the Companys financial position,
financial performance and cash flows is set out in the following tables and the
notes that accompany the tables.

In such tables, reclassification has been made to conform to
IAS 1  Presentation of Financial Statements,minimum disclosure
requirements. Additionally, in preparing its consolidated financial statements
in accordance with IFRS 1 - First-time Adoption of International Financial
Reporting Standards, the Company applied the mandatory exemptions and
elected to apply the following optional exemptions from full retrospective
application:

Employee benefits exemption

IFRS 1 provides the option to retrospectively apply IAS 19,
Employee Benefits, for the recognition of unamortized actuarial gains and
losses, past service costs and transitional obligations and assets or to
recognize these balances previously deferred under previous Canadian GAAP in
opening retained earnings as at September 26, 2010 (the Transition Date). The
Company has elected to recognize all unamortized cumulative actuarial losses and
past service costs at the Transition Date as an adjustment to opening retained
earnings for all of its employee future benefit plans.

Foreign currency translation differences

Retrospective application of IFRS would require the Company to
determine cumulative currency translation differences in accordance with IAS 21,
The Effects of Changes in Foreign Exchange Rates, from the date a
subsidiary or equity method investee was formed or acquired. IFRS 1 permits
cumulative translation gains and losses to be reset to zero at the Transition
Date. The Company elected to reset all cumulative translation gains and losses
to zero in opening retained earnings at its Transition Date.

Event driven fair value of property, plant and equipment as
deemed cost

IFRS 1 provides the choice of recording assets and liabilities
based on a deemed cost, which can be an event driven valuation where some or all
of the assets and liabilities were valued and recognized at fair value under
previous Canadian GAAP. As a result of the recapitalization transaction that
occurred within the Company in 2008, the Company has elected to apply this
exemption to property, plant and equipment and used such event driven fair value
measurements as deemed cost for IFRS at the date of that measurement.

Business combinations exemption

IFRS 1 provides the option to apply IFRS 3, Business
Combinations, retrospectively or prospectively - either from the Transition
Date or a particular date prior to the Transition Date. The Company has elected
to apply IFRS 3 prospectively to business combinations that occur after the
Transition Date. Accordingly, business combinations prior to this date have not
been restated.

Share-based payment transaction exemption

IFRS 1 provides an optional exemption to the application of
IFRS 2, Share-based Payment, for those share options granted subsequent
to November 7, 2002, that have fully vested as at the Transition Date and to
liabilities arising from share-based payment transactions that were settled
before the Transition Date. The Company has elected this exemption.

Borrowing costs

IFRS 1 provides the option to apply IAS 23, Borrowing
Costs, retrospectively or prospectively from the Transition Date. IAS 23
requires an entity to capitalize borrowing costs that are directly attributable
to the acquisition, construction or production of a qualifying asset as part of
the cost of that asset. A qualifying asset is an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale. The
Company elected to apply this exemption prospectively in respect of qualifying
assets for which the commencement date for capitalization was on or after the
Transition Date.

|TEMBEC Supplemental Information for fourth quarter
      2012 | 9
|------------------------------------------------------------- | -

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|TEMBEC INC.                                                     
|----------------------------------------------------------------
|SUPPLEMENTAL INFORMATION                                        
|September 29, 2012                                              
|Supplemental condensed consolidating financial
      information

|Changes in Condensed Consolidated
      Shareholders Equity under IFRS                                    | 
|---------------------------------------------------------------------------------------------------------- | 
|The effect of the IFRS adjustments on the
      condensed consolidated shareholders equity is as follows: | 
|                                                                                                           | 
|                                                                                                           | 
|                                                                                                           | 
|                                                                                                           | 
|Shareholders' equity as per previous
      Canadian GAAP                                                   | 
|                                                                                                           | 
|Biological assets                                                                                          | 
|Component accounting                                                                                       | 
|Translation of foreign operations                                                                          | 
|Site restoration                                                                                           | 
|Recognition of unamortized actuarial
      balances into equity                                            | 
|Warrants                                                                                                   | 
|Provisions                                                                                                 | 
|Deferred tax liabilities                                                                                   | 
|Share of results for equity accounting                                                                     | 
|Shareholders'
      equity as per IFRS                                                                     | 

|                                                                |  | September 26, 2010 | 
|--------------------------------------------------------------- |  | ------------------ | 
|                                                                |  |                    | 
|                                                                |  | Notes              | 
|Shareholders' equity as per previous
      Canadian GAAP        |  |                    | 
|                                                                |  |                    | 
|Biological assets                                               |  | (a)                | 
|Component accounting                                            |  | (b)                | 
|Translation of foreign operations                               |  | (c)                | 
|Site restoration                                                |  | (d)                | 
|Recognition of unamortized actuarial
      balances into equity |  | (e)                | 
|Warrants                                                        |  | (f)                | 
|Provisions                                                      |  | (g)                | 
|Deferred tax liabilities                                        |  |                    | 
|Share of results for equity accounting                          |  |                    | 
|Shareholders'
      equity as per IFRS                          |  |                    | 

|TEMBEC Supplemental Information for fourth quarter
      2012 | 10
|------------------------------------------------------------- | --

---

|TEMBEC INC.                                                     
|----------------------------------------------------------------
|SUPPLEMENTAL INFORMATION                                        
|September 29, 2012                                              
|Supplemental condensed consolidating financial
      information

|Changes in Condensed Consolidated Statements
      of Comprehensive Earnings (Loss) under IFRS                                         | 
|-------------------------------------------------------------------------------------------------------------------------------------- | 
|The effect of the IFRS adjustments on the
      condensed consolidated statement of comprehensive earnings (loss) is as
      follows: | 
|                                                                                                                                       | 
|                                                                                                                                       | 
|                                                                                                                                       | 
|                                                                                                                                       | 
|Net earnings (loss) as per previous
      Canadian GAAP                                                                                | 
|                                                                                                                                       | 
|Cost of sales                                                                                                                          | 
|Depreciation and amortization                                                                                                          | 
|Other items                                                                                                                            | 
|Interest, foreign exchange and other                                                                                                   | 
|Deferred income tax expense                                                                                                            | 
|Share
      of results for equity accounting                                                                                           | 
|Net earnings (loss) as per IFRS                                                                                                        | 
|                                                                                                                                       | 
|Basic and diluted net loss in dollars per share as per
      IFRS                                                                      | 
|                                                                                                                                       | 
|Other comprehensive earnings (loss) as per
      previous Canadian GAAP                                                                | 
|                                                                                                                                       | 
|Pension and other benefits
      plans, net of income taxes                                                                            | 
|Translation of foreign operations                                                                                                      | 
|Other comprehensive earnings (loss) as per IFRS                                                                                        | 
|                                                                                                                                       | 
|Total comprehensive earnings (loss) as per IFRS                                                                                        | 

|TEMBEC Supplemental Information for fourth quarter
      2012 | 11
|------------------------------------------------------------- | --

---

|TEMBEC INC.                                                     
|----------------------------------------------------------------
|SUPPLEMENTAL INFORMATION                                        
|September 29, 2012                                              
|Supplemental condensed consolidating financial
      information

Changes in Condensed Consolidated Statements of Cash Flows

The adoption of IFRS has had no impact on the net cash flows of
the Company. The changes made to the consolidated balance sheet and to the
consolidated statements of net earnings (loss) have resulted in
reclassifications of various amounts on the consolidated statements of cash
flows. There have been no significant changes to the net cash flows, other than
the Companys accounting policy choice to classify interest paid as financing
activity and interest received as investing activity under IFRS compared to
operating activity under previous Canadian GAAP.

|                                                                        |   | Year ended September 24, 2011 |  
|----------------------------------------------------------------------- | - | ----------------------------- | -
|                                                                        |   | Parent                        |  
|                                                                        |   | Company                       |  
|Cash flow from operating activities as per
      previous Canadian GAAP | $ | 4                             |  
|Reclassification for interest                                           |   | -                             |  
|Other                                                                   |   | -                             |  
|As per IFRS                                                             | $ | 4                             |  
|                                                                        |   |                               |  
|Cash flow from investing activities as per previous
      Canadian GAAP |   | -                             |  
|Reclassification for interest received                                  |   | -                             |  
|Other                                                                   |   | -                             |  
|As
      per IFRS                                                       | $ | -                             |  
|                                                                        |   |                               |  
|Cash flow from financing activities as per
      previous Canadian GAAP |   | (4                            | )
|Reclassification for interest paid                                      |   | -                             |  
|Other                                                                   |   | -                             |  
|As per IFRS                                                             | $ | (4                            | )

|TEMBEC Supplemental Information for fourth quarter
      2012 | 12
|------------------------------------------------------------- | --

---

|TEMBEC INC.                                                     
|----------------------------------------------------------------
|SUPPLEMENTAL INFORMATION                                        
|September 29, 2012                                              
|Supplemental condensed consolidating financial
      information

Notes to the reconciliation of equity and statement of
comprehensive earnings (loss)

The numbers provided in the following notes are presented on a
consolidated basis. The allocation of these adjustments between the Parent
Company, the Subsidiary Issuer, the Guarantor Subsidiaries and the Other
Subsidiaries are provided in the respective tables on page 10 and 11.

|(a) | Biological assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | In accordance with IAS 41, Agriculture, the
      Companys standing timber on its private timberlands is considered to be a
      biological asset that is measured at fair value less costs to sell at each
      reporting date, with changes in fair value less costs to sell recognized
      in net earnings (loss) at each period. As a result of this IFRS guidance,
      the Companys standing timber on its private timberlands has been
      separately identified on the consolidated balance sheet as biological
      assets and recorded at fair value less costs to sell.                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The effect of the above on the Companys balance sheet
      resulted in an increase in biological assets of $4 million at September
      24, 2011 (September 26, 2010 - $7 million), and resulted in a decrease of
      the deficit of $4 million (September 26, 2010 - $7 million).                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The impact on total comprehensive loss for the year ended
      September 24, 2011, increased by $3 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(b) | Component accounting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Under previous Canadian GAAP, the Company did not apply
      component accounting to the significant separable component parts of an
      item of property, plant and equipment since no guidance was provided on
      evaluating the cost of a component, replacement of a component and the
      level at which component accounting was required. Under IFRS, the major
      assets must be separated into components and the cost of replacement or
      overhaul of these components are considered to be a part of property,
      plant and equipment, and are amortized over their individual estimated
      useful lives.                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The effect of the above on the Companys balance sheet
      resulted in an increase in property, plant and equipment of $6 million at
      September 24, 2011 (September 26, 2010 - $6 million), and resulted in a
      decrease of the deficit of $6 million (September 26, 2010 - $6
      million).                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The impact on total comprehensive loss for the year ended
      September 24, 2011, was negligible.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(c) | Translation of foreign operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Under previous Canadian GAAP, non-monetary assets and
      liabilities of the foreign operations were translated to Canadian dollars
      at the historical rate relevant to the particular transaction date at
      which such assets or liabilities were originated. Under IFRS, all assets
      and liabilities of the foreign operations with functional currencies other
      than the Canadian dollar are translated to Canadian dollar at the exchange
      rate prevailing at period-end and are recognized in other comprehensive
      loss. In accordance with IFRS 1, the Company elected to reset all
      cumulative translation gains and losses to zero in opening deficit at its
      Transition Date.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The effect of the above on the Companys balance sheet
      resulted in a decrease in property, plant and equipment of $7 million at
      September 24, 2011 (September 26, 2010 - $7 million), and resulted in an
      increase of the deficit of $9 million (September 26, 2010 - $7 million)
      and an increase of accumulated other comprehensive earnings of $2 million
      (September 26, 2010 - nil).                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The impact on total comprehensive loss for the year ended
      September 24, 2011, decreased by $2 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(d) | Site restoration                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Under previous Canadian GAAP, the cost of decommissioning
      and restoration of landfill sites were part of property, plant and
      equipment and depreciated over the estimated useful life of the landfill
      site. Under IFRS, decommissioning and restoration costs incurred through
      the production of inventory are included as part of inventory
  costs.                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The effect of the above on the Companys balance sheet
      resulted in a decrease in property, plant and equipment of $1 million at
      September 24, 2011 (September 26, 2010 - $1 million), and resulted in an
      increase of the deficit of $1 million (September 26, 2010 - $1
      million).                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | For the year ended September 24, 2011, the impact on
      total comprehensive loss was negligible.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|TEMBEC Supplemental Information for fourth quarter
      2012 | 13
|------------------------------------------------------------- | --

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|TEMBEC INC.                                                     
|----------------------------------------------------------------
|SUPPLEMENTAL INFORMATION                                        
|September 29, 2012                                              
|Supplemental condensed consolidating financial
      information

Notes to the reconciliation of equity and statement of
comprehensive earnings (loss) (continued)

|(e) | Recognition of unamortized actuarial losses at date of
      transition to IFRS into equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | As permitted by previous Canadian GAAP, the Company
      measured its employee future benefits obligation for accounting purposes
      as at June 30 of each fiscal year. This was often referred as the early
      measurement date accounting policy choice. Under IAS 19 - Employee
      Benefit, the measurement date of the employee future benefits
      obligation must coincide with the fiscal year-end of the Company.
      Therefore, upon transition to IFRS, the Company measured its employee
      future benefits obligation at the date of the opening balance sheet in
      accordance with IAS 19.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | In addition, as permitted by IFRS 1 - First-time
      Adoption of International Financial Reporting Standards, management
      elected the optional exemption to recognize all unamortized cumulative
      actuarial losses at the Transition Date as an adjustment to opening
      retained earnings for all of its employee future benefit plans.                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Under IFRS, the Companys accounting policy is to
      recognize all actuarial gains and losses, arising on its defined benefit
      pension and other non-pension post retirement plans, immediately in other
      comprehensive earnings (loss).                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The cumulative effect of the above on the Company's
      balance sheet was to decrease employee future benefits assets by $15
      million at September 24, 2011 (September 26, 2010 - $6 million), and
      increase the employee future benefits liabilities by $117 million
      (September 26, 2010 - $61 million), which resulted in a corresponding
      increase to deficit of $132 million (September 26, 2010 - $67
    million).                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The impact on total comprehensive loss for the year ended
      September 24, 2011 increased by $65 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(f) | Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Under IFRS, the warrants have been classified as a
      liability because of the possibility that they may be settled in cash in
      the event of a change of control. They are recorded at fair value with
      value being adjusted every quarter.                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The effect of the above on the Companys balance sheet
      resulted in a decrease in share capital of $6 million at September 24,
      2011 (September 26, 2010 - $6 million), and resulted in an increase of the
      other long-term liabilities by a negligible amount (September 26, 2010 -
      $5 million), and a decrease of the deficit of $6 million (September 26,
      2010 - $1 million).                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Total comprehensive loss decreased by $5 million for the
      year ended September 24, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(g) | Provisions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | IAS 37  Provisions, Contingent Liabilities and
      Contingent Assets, has measurement differences when compared to
      previous Canadian GAAP. These measurement differences include the
      requirement to reflect the risks associated with the Companys provisions
      in either the cash flows or the discount rate.                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The effect of the above on the Companys balance sheet
      resulted in a decrease in long-term provisions of $2 million at September
      24, 2011 (September 26, 2010 - $2 million), and resulted in a decrease of
      the deficit of $2 million (September 26, 2010 - $2 million).                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | For the year ended September 24, 2011, the impact on
      total comprehensive loss was negligible.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(h) | Contributed surplus                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The previous Canadian GAAP requires that a future income
      tax asset that was not recognized at the date of a comprehensive
      revaluation as a result of a financial reorganization be subsequently
      recognized first as a reduction of any unamortized intangible asset and
      then in a manner consistent with the revaluation adjustment recorded at
      the date of the comprehensive revaluation. Under IFRS, this recognition of
      a future income tax asset is recorded to profit and loss.                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The effect of the above on the Companys balance sheet
      resulted in a decrease in contributed surplus of $5 million at September
      24, 2011 (September 26, 2010 - $5 million), and resulted in a decrease of
      the deficit of $5 million (September 26, 2010 - $5 million).                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | For the year ended September 24, 2011, the impact on
      total comprehensive loss was nil.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

|TEMBEC Supplemental Information for fourth quarter
      2012 | 14
|------------------------------------------------------------- | --

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