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AbitibiBowater said since it could not find viable alternatives to its previously announced proposed refinancing of its Bowater and Abitibi-Consolidated subsidiaries, it has decided to go in for an overall restructuring under Court supervision in the United States and Canada.
Concurrent to the filing, the Abitibi-Consolidated subsidiary will request the termination of its previously announced recapitalization transaction under the Canada Business Corporations Act. Media reports indicated AbitibiBowater with debt of about $8.78 billion, and assets of $9.9 billion per the filing in U.S. Bankruptcy Court in Wilmington, Delaware.
AbitibiBowater, founded in 2007, said its normal day-to-day operations would continue during the restructuring process. The company's subsidiaries located outside United States and Canada has not yet filed any Chapter 11 or similar petition.
David Paterson, President and Chief Executive Officer said, "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."
AbitibiBowater has entered into a financing commitment with Fairfax Financial Holdings Ltd. and Avenue Management LLC for debtor-in-possession financing totaling $200 million. Operating needs of the company, including salary and other expenses, would be met by means of the continuation of its existing securitization program for its accounts receivable, in the approximate amount of $210 million, facilitated through an amendment entered into by Abitibi-Consolidated subsidiary.
Consistent with the Chapter 11 filing, the TSX has suspended trading of listed securities of AbitibiBowater and exchangeable shares of AbitibiBowater Canada Inc. The securities will now be subject to the Expedited Review Process.
The drive to help the company out of the debt was started in February 20, 2009, with the selling of its private timberlands in Québec, Canada, for C$70 million in cash. The company had also signed a non-binding agreement in principle with Hydro-Quebec for the sale of its 60% interest in the hydroelectric facility located on the Manicouagan River, for gross proceeds of C$615 million.
On March 16, 2009, AbitibiBowater said it has identified a new investor to provide a backstop commitment of $100 million related to its previously announced recapitalization efforts. The company was also in active discussion with lenders and debt holders of its Bowater Inc. subsidiary to restructure Bowater's debt and implement alternatives for maintaining adequate liquidity levels.
In the second quarter, AbitibiBowater reported a loss that widened to $251 million or $4.36 per share, even as sales increased to $1.7 billion from a year ago.
ABH last traded at $0.53, on April 15, 2009, on a volume of 0.46 million shares. In the last 52-week period, the stock traded in the range of $0.24 to $14.89, on a three-month average volume of 0.57 million shares.
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