AbitibiBowater Accepts Proposal for Its Ontario Hydro Assets
Dec. 22, 2008 (Press Release) - AbitibiBowater Inc. today announced it has accepted a proposal for the sale of its equity interest in ACH Limited Partnership to a major industrial energy producer. ACH Limited Partnership was established to hold hydro-electric generating assets in Ontario, Canada by the Company's Abitibi-Consolidated Company of Canada subsidiary in April 2007. The Company owns a 75 percent equity interest in ACH Limited Partnership.
The proposal values the hydro assets, which have a combined capacity of 136.8 MW, at C$540 million. The resulting gross proceeds (excluding expenses) for AbitibiBowater would be C$197.5 million. As part of the transaction, the buyer would also assume C$250 million of ACH Limited Partnership's term debt.
"The signing of this proposal marks continued progress with our de-leveraging initiatives," stated David J. Paterson, President and Chief Executive Officer of AbitibiBowater. "We look forward to continued de-leveraging progress as we implement additional measures to improve our free cash flow generation."
The non-binding proposal for the sale of the hydro-electric generating assets in Ontario is subject to due diligence, among other terms and conditions. While AbitibiBowater expects that a definitive agreement will be reached in the first quarter of 2009, no assurances can be provided as to when or if a definitive agreement will be executed.
The proposal does not include the sale of the Iroquois Falls or Fort Frances, Ontario mills. AbitibiBowater is pleased with the efforts both mills have made since the merger in lowering their costs. The mills remain competitive and the Company continues to look for investment opportunities to ensure that they remain competitive. AbitibiBowater is committed to keeping workers and local communities informed about the sale of ACH Limited Partnership as the process advances.
AbitibiBowater owns additional hydro assets, including an installed share of capacity of 363 MW in the Province of Quebec.
SOURCE: AbitibiBowater Inc.