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AbitibiBowater Announces Sweeping Refinancing Plan

March 10, 2008 (Press Release) - AbitibiBowater on Firday said that it has developed a refinancing plan to address upcoming debt maturities and general liquidity needs of its Abitibi-Consolidated Inc. subsidiary. AbitibiBowater expects that this refinancing plan will adequately address its upcoming liquidity needs at Abitibi-Consolidated and will provide sufficient financial flexibility to realize the benefits associated with an improving business and operating environment. The refinancing plan of approximately US$1.4 billion consists of:

  • US$200-300 million of new senior unsecured exchange notes of Abitibi- Consolidated Inc. due 2010,
  • US$400-500 million of new 364-day senior secured term loan of Abitibi-Consolidated Inc. secured by working capital and other assets,
  • Approximately US$400 million of new senior secured notes or a term loan due 2011 of Abitibi-Consolidated Inc. secured by fixed assets, and
  • US$200-300 million of new equity or equity-linked securities of AbitibiBowater Inc.

AbitibiBowater's subsidiary, Abitibi-Consolidated, intends to promptly commence an exchange offer targeting approximately US$500 million of its near term maturities. This combination of new financings and exchange notes is aimed at retiring the 6.95% Notes of Abitibi-Consolidated due April 1, 2008, the 5.25% Notes of Abitibi-Consolidated Company of Canada due June 20, 2008 and the 7.875% Notes of Abitibi-Consolidated due August 1, 2009. Under the terms of the exchange offer, holders will be offered a combination of cash and new senior unsecured exchange notes of Abitibi-Consolidated due 2010. As part of the transaction, certain credit facilities of Abitibi-Consolidated and its subsidiaries are expected to be refinanced.

With respect to its proposed 364-day term loan, Abitibi-Consolidated will commence the marketing of the new loan and will be meeting with potential lenders in New York City next week.

As part of its refinancing plan, AbitibiBowater will be seeking an amendment to the existing revolving credit facility of its Bowater Incorporated subsidiary to allow for, among other things, the potential issuance of new equity-linked securities of AbitibiBowater and a delay or modification to Bowater's planned separation of its Catawba, South Carolina coated paper facility. In this regard, AbitibiBowater no longer expects its Bowater subsidiary to pursue a secured debt financing against the Catawba facility at the present time.

The sale of Abitibi-Consolidated's Snowflake, Arizona mill, originally announced in February, is currently expected to close in mid-April. The sale is expected to result in US$161 million of cash proceeds. AbitibiBowater believes the sale of its Snowflake mill marks an important step in its efforts to achieve its previously announced target of US$500 million in asset sales. In addition, AbitibiBowater confirmed today that it is actively exploring other non-core asset sales to generate additional liquidity and further enhance its financial flexibility.

There can be no assurance that the refinancing plan described in this press release will be executed in the amounts and in the timeframe required to address Abitibi-Consolidated's needs, if at all. The current state of the credit and capital markets may create a significant impediment to Abitibi-Consolidated's financing efforts as well as the overall financing efforts of its parent, AbitibiBowater. If Abitibi-Consolidated is unable to refinance or restructure its near-term debt maturities that are targeted by the refinancing plan described in this press release on or before their maturities, Abitibi-Consolidated would be in default under the indentures relating to those notes and may be compelled to seek bankruptcy protection under applicable law, which may negatively impact or disrupt the operations of AbitibiBowater and its other principal subsidiary, Bowater Incorporated.

SOURCE: AbitibiBowater Inc.




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