NEW YORK, Aug 21 - DBRS is confirming the rating of Abitibi-Consolidated Inc. (Toronto:A.TO - news) (``Abitibi'' or ``the Company'') at BBB (low) with a Stable trend. This rating action reflects the Company's strong market position and continued benefits being realized associated with the April 2000 acquisition of Donohue Inc. Abitibi's track record of weak profitability was helped by the merger. Increasing paper prices for the 12 months to June 30, 2001 drove earnings while weak lumber markets until Q2 2001 and softening pulp markets in the first half of 2001 precluded further gains. The good earnings enabled Abitibi to generate solid cash flow during the period. This has helped the Company to strengthen coverage ratios that had been on a downward trend until the Donohue merger. While interest and debt coverage ratios benefited from the combination that was immediately accretive to earnings, leverage jumped to 66.5%* as at June 30, 2000, excessive for a cyclical forest products company. Free cash flow used for debt reduction has since allowed Abitibi to reduce debt in the capital structure to 61.8% at June 30, 2001. This is still very high for the industry. Cost reductions, especially from synergies and high cost capacity closures, helped margins while high energy costs and a slowing economy hindered them. Abitibi should continue to benefit from its leadership position as the global production leader in newsprint, the gains from the Donohue acquisition, and its secure supply of wood fibre. Continued challenges faced by the Company include high debt levels and the focus on one cyclical product line. A severe drop in advertising lineage has led to a drop in newsprint demand in the most recent quarter. This slump is not expected to end until at least the fourth quarter and will pressure cash flows over the next several months. Lumber accounted for only 11% of sales revenues in 2000, therefore duties on Canadian lumber exports to the U.S. are expected to have only a mild effect on the Company. * DBRS recognizes that the reverse takeover accounting methodology used artificially inflates the leverage.