AbitibiBowater files Chapter 11 bankruptcy

AbitibiBowater Inc. announced that it and certain of its United States and Canadian subsidiaries have filed voluntary petitions in the United States under Chapter 11 of the United States Bankruptcy Code.

As well, AbitibiBowater and certain of its Canadian subsidiaries will seek creditor protection under the Companies’ Creditors Arrangement Act (CCAA) in Canada. AbitibiBowater’s subsidiaries located outside the United States and Canada have not commenced Chapter 11, CCAA or similar proceedings.

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. The Company’s normal day-to-day operations will continue during the restructuring process.

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.

“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.