AbitibiBowater emerges from creditor protection

Dec 09, 2010. /Lesprom Network/. AbitibiBowater announced that it has successfully completed its reorganization and has emerged from creditor protection under the Companies' Creditors Protection Act (or "CCAA") in Canada and chapter 11 of the U.S. Bankruptcy Code (or "chapter 11"). "Through our restructuring efforts, we have transformed this organization and given AbitibiBowater a new future - one driven by a company-wide commitment to profitability and sustainability," stated David J. Paterson, President and CEO hief Executive Officer. "By strengthening our competitiveness and dramatically improving our financial position, AbitibiBowater has become one of the lowest cost forest products companies in North America. We are now a leaner, more flexible organization with a balanced product portfolio, better able to create value for our stakeholders while responding to the challenges of a tough industry with ongoing market volatility." Emergence from creditor protection represents the culmination of efforts that were undertaken shortly after the combination of Abitibi-Consolidated Inc. and Bowater Incorporated in order to address fundamental changes in the marketplace. Since 2007, the Company has restructured itself both financially and operationally in a way that has dramatically lowered its breakeven point, having: - Streamlined its asset profile to top-performing facilities, closing or idling 3.4 million metric tons of paper capacity on an annual basis. This represents capacity reductions of 41% for newsprint and 32% for commercial printing papers. Wood products capacity was reduced by 21% over the same period. - Balanced its portfolio of products, reducing exposure to any one grade. New production capacities on an annual basis are - newsprint: 3.3 million metric tons, commercial printing papers: 2.5 million metric tons, pulp: 1.1 million metric tons and wood products: 2.2 billion board feet. - Developed a flexible mill portfolio with a mix of U.S., Canadian and international mills located strategically to efficiently serve customers, supporting low-cost, on-time delivery and providing a natural currency hedge as well as the ability to adapt to changing market dynamics. - Completed a strategic review and sold non-core assets and land holdings for total aggregate proceeds of over $940 million. - Reduced its debt burden by 88% from $6.8 billion to $850 million, excluding approximately $239 million in non-recourse joint-venture debt for ACH Limited Partnership. This company is currently in the process of evaluating the potential sale of ACH. - Eliminated $880 million of annual fixed costs, from $1,353 million to $473 million. - Realized over $375 million in annualized synergies from manufacturing efficiencies and SG&A reductions as well as procurement and logistics initiatives. - Entered into agreements with provincial authorities in Ontario and Quebec, reducing annual pension fund contributions by approximately $200 million. These reductions have been made while registered pension plans continue to pay 100% of obligations to retirees and beneficiaries. The company will gradually move towards normalized solvency funding over a 10-year period. - Completed other initiatives that have materially improved AbitibiBowater's financial position, including: the repudiation or renegotiation of unfavorable contracts, creating savings of over $78 million and the settlement of a North American Free Trade Agreement (NAFTA) claim of C$130 million for the expropriation of Company assets in Newfoundland and Labrador. The path for AbitibiBowater to emerge from creditor protection was set in motion following the entry of a confirmation order for the company's chapter 11 plan of reorganization by the U.S. Bankruptcy Court for the District of Delaware and the sanction of the Company's CCAA plan of reorganization by the Quebec Superior Court on November 23 and September 23, 2010, respectively. AbitibiBowater has closed $1,450 million in exit financing facilities that will be used to repay remaining debtor-in-possession credit facilities, honor obligations to secured creditors, make other payments required upon exit from creditor protection, and increase its already strong liquidity position. On or about December 17, 2010, the company will make certain initial distributions to unsecured creditors in the form of new shares of AbitibiBowater common stock in payment of allowed creditor claims. "Our emergence from creditor protection marks the beginning of a new AbitibiBowater. We are committed to building on our sound foundation by improving our business mix, reducing costs and providing high-quality products. I am confident that the financial and operating restructuring we have completed provides the framework for future success," added William G. Harvey, Executive Vice President and CFO. AbitibiBowater is a global leader in the forest products industry, producing a diverse range of products, including newsprint, commercial printing and packaging papers, market pulp and wood products.