AbitibiBowater Seeks Protection from Creditors

Thursday, April 16, 2009 08:57 AM

Prince George, B.C.- AbitibiBowater Inc. has announced that it and certain of its U.S. and Canadian subsidiaries have filed for protection from creditors in the U.S. under Chapter 11 of the U.S. Bankruptcy Code . As well, AbitibiBowater and certain of its Canadian subsidiaries will file for similar creditor protection under the Companies' Creditors Arrangement Act ("CCAA") in Canada tomorrow.

AbitibiBowater's subsidiaries located outside the United States and Canada have not commenced Chapter 11, CCAA or similar proceedings.

Day-to-day operations to continue during restructuring process.

The company has concluded that there are no viable alternatives to its previously announced proposed refinancing of its Bowater and Abitibi-Consolidated subsidiaries, and as a result, has determined that the best course of action is to pursue its overall restructuring under Court supervision in the United States and Canada. Concurrently with its CCAA filing, the Abitibi-Consolidated subsidiary will request the termination of its previously announced recapitalization transaction under the Canada Business Corporations Act.

AbitibiBowater plans to use this process to deal decisively with its debt burden for the benefit of all stakeholders.

"Today's announced decisions ensure business continuity for AbitibiBowater and were made only after all other viable options to recapitalize our long-term debt were exhausted," stated David J. Paterson, President and Chief Executive Officer. "The steps we are taking today and the vote of confidence given to us by our restructuring financial partners will enable us to protect the value of the business for our many loyal employees, customers, suppliers and other stakeholders."

"Over many months, we undertook an exhaustive examination of the Company's recapitalization options," said Dick Evans, Chairman of the Board of Directors. "The Board and management believe the actions initiated today will allow the Company to make the necessary changes to ensure the long-term viability of the Company within a process that ensures fair and equitable treatment for all stakeholders, while allowing it to continue to meet the needs of its customers."

The Company has also announced that it has entered into a financing commitment with Fairfax Financial Holdings Limited and Avenue Management LLC for debtor-in-possession (DIP) financing totaling approximately $200 million for certain of its Bowater subsidiaries. In addition, its Abitibi-Consolidated subsidiary has entered into an amendment providing for the continuation of its existing securitization program for its accounts receivable, in the approximate amount of $210 million. These arrangements are subject to approval of the Courts in both the United States and Canada and will allow the Company to meet current operating needs, including wages, benefits and other operating expenses. Additional financing options are currently under consideration.

Both the Toronto Stock Exchange and the New York Stock Exchange stopped trading of the company's shares this morning just before the bankruptcy announcement.

The stock closed yesterday in Toronto at 61 cents. It has fallen 55% since January and had a one-year high of $15.15 and a low of 38 cents.

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Posted on Thursday, April 16, 2009 08:57 AM in News by 250 News

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Comments

Posted by: CaringSoul on April 16 2009 9:56 AM

Sigh! It is really hard to believe that we are in an upward swing in the economy when huge businesses like this are in trouble. :{

Posted by: Windigo on April 16 2009 11:23 AM

This company was and still is a very poor corporate citizen for the community of Mackenzie. They care not for the Canadian communities in which they operated, but instead focus on the rape the forest to make a profit mentality that other companies like Canfor and West Fraser continue to follow. All these companies have seen are $ signs when they look at B.C. Forests, especially the Mackenzie TSA.
It was just a matter of time before AbitibiBowater went bankrupt, it's just to bad this did not happen sooner. The people of Mackenzie should be very happy that this occurred, perhaps now a more community friendly operator will buy up these assets and try to run them. I have a feeling that the Mackenzie assets are already spoken for, when things settle down I believe that the Mackenzie assets will be sold very quickly. The only questions I have in this whole scenario is will all three of the mills operate again or will the assets be bought just to secure fiber for other operators such as Prince George, Fort Saint James, Vanderhoof or Quesnel mills? Perhaps our political reps can answer to this question.
I say good bye to this Corporation and all the people who managed it, and welcome to the new opportunities, as good or bad as these new opportunities may be....change is required

Posted by: Palopu on April 16 2009 12:01 PM

CaringSoul. There is absolutely nothing happening in the North American Continent, that would indicate that the economy is in an upward swing.

If anything it still continues to spiral down, and I wouldnt expect any upward trends until late 2009 early 2010 at best.

Hang on to your hat, and save your money.

Posted by: CaringSoul on April 16 2009 12:42 PM

Our politicians keep saying the oposite was my point actually. :} And I agree fully with what you said.

Posted by: Andyfreeze on April 16 2009 1:01 PM

I also agree Palopu!
The biggest and most dangerous mistake people can make right now is to believe the political spin.
The politicians would like us to forget about what is really happening and start spending our money.
Bad idea just yet, and I think the shoe will drop again!

Posted by: mythoughts on April 16 2009 2:51 PM

Geez Windigo, this is so sad, not good. I feel so bad for all the employees who will lose their jobs. And what about the rest of the people & businesses in the communities that rely on the employees to spend. This not only affects the employees, but everyone else too. Also, you are right Palopu. 2009 is going to be worse than 2008. We've been told at work to not spend any money at all. More job cuts and wage reductions are coming too. Your going to see lots of mill curtailments this year too and possibly more shift reductions. Hang onto your money. I am.

Posted by: Born in BC on April 16 2009 2:59 PM

"but instead focus on the rape the forest to make a profit mentality that other companies like Canfor and West Fraser continue to follow."

These companies job is to make a profit. Its the BC Govs job to ensure proper compensation of TFL through stumpage.

Why should corporations be about people when people arent about people. We all walk by poor homeless people all the time. Few of us give time or money to try to fix the problem. Why on earth should we expect corporations to do more. Corporations are made up of people, not the other way around. The blame for all the problems of the world falls on the people.

Posted by: hammmy on April 16 2009 6:34 PM

When everyone's wages gets lowered then we will see an upswing in the economy...you'll see!

Posted by: socredible on April 17 2009 7:53 AM

What good will 'saving' your 'money' do you when there's nothing being made to buy with it? A country's real wealth is measured by what it 'spends', not by what it 'saves'.

And how, pray tell, Hammy, can there be an "upswing in the economy" "when everyone's wages gets lowered"?

Your wages have to fully liquidate PAST production costs and generate a profit for the producers. From which 'profit' they will amortize their Bank loans. These costs are incapable of being lowered ~ they've already been incurred. The 'money' has already been spent into the economy, and now must be recovered in 'prices' if the firms are to be allowed to continue and receive further bank credit to fund their ongoing operations.

No spending = no profit, no profit = non-repayment of Bank credit issued, non-repayment of Bank credit issued = no further Bank credit issue, no further Bank credit issue = no further production, no further production = no further incomes, no incomes = no spending, and on and on. It isn't the 'money' that's important, it's what we are able to BUY with the 'money'.

Lowering wages simply adds to the overall problem so far as you and I and everyone else is concerned.

Don't be deluded into thinking that lower wages will make us more competitive globally. And that we'll be able to 'capture' some foreign market, and this will lead us back to prosperity. That's just shifting the problem elsewhere in a rapidly shrinking 'globalised' world. Not solving it.