U.S. Courts Approve AbitibiBowater's Backstop Commitment Agreement
June 28, 2010 (Press Release) - AbitibiBowater Inc. [on June 25] announced that, in connection with its creditor protection proceedings and exit financing efforts, the Company has obtained approval of a backstop commitment agreement by the U.S. Bankruptcy Court for the District of Delaware. On May 24, 2010, the Company had announced that it had secured a backstop commitment from certain unsecured noteholders for a rights offering of up to $500 million. In this rights offering, AbitibiBowater would offer new convertible notes with a seven-year maturity from the date of closing to eligible unsecured creditors. Upon the effective date of the plan, the notes would be obtained upon exercise of the rights and convertible into common stock of the emerged company.
"We are pleased with today's court approval which supports our exit financing efforts. This is another important step forward as we look ahead to the Company's ultimate emergence from credit protection scheduled for early this Fall," stated David J. Paterson, President and Chief Executive Officer. "The Company expects to emerge with a significantly improved financial position, resulting from its efforts to reduce costs, lower debt and mitigate the impact of ongoing market and currency fluctuations."
Before emerging from creditor protection, the Company must obtain adequate exit financing and complete efforts to address labor costs and pension issues, as well as satisfy other conditions set forth in the plans of reorganization. AbitibiBowater has commenced a process to obtain an exit financing package that will provide sufficient capital for the emerged company to manage business operations and execute its plans.
Ultimately, the Company's plans of reorganization will require creditor approval and confirmation by the courts. Affected unsecured creditors who are entitled to vote will receive the court-approved disclosure and voting materials, which are expected to be mailed in July subject to court approvals.
AbitibiBowater produces a wide range of newsprint, commercial printing and packaging papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 21 pulp and paper facilities and 24 wood products facilities located in the United States, Canada and South Korea. Marketing its products in more than 90 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has third-party certified 100% of its managed woodlands to sustainable forest management standards.
SOURCE: AbitibiBowater Inc.