AbitibiBowater emerges from creditor protection
Friday, December 10, 2010
Press release from the issuing company
Montreal - AbitibiBowater is pleased to announce 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 Chief 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 our 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.
In noting the importance of this occasion, Alain Grandmont, Executive Vice President, Human Resources and Supply Chain, stated: "It brings me great pride in sharing this defining moment in AbitibiBowater's history with our employees, union leadership, customers, business partners and supporters, without whom this day would not have been possible. In the long process of our turnaround, all of us have made sacrifices to place this organization in the much stronger position it now enjoys. AbitibiBowater values and appreciates the commitment all have shown in helping us reach this point."
"The restructuring process has tested the strength of our relations with our employees, unions, business partners and the communities where we live and do business. We will work hard to renew positive relationships and build goodwill through a commitment to be profitable as well as environmentally and socially responsible," said Pierre Rougeau, Executive Vice President, Operations and Sales.
"Our continuing investments in sustainable forest management, renewable energy projects and reducing our environmental footprint reflect AbitibiBowater's commitment to be an environmental supplier of choice," added Yves Laflamme, Senior Vice President, Wood Products. "Moving forward, we remain committed to providing exceptional value to our customers by delivering diversified, innovative products and services that support our customer needs."
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. Subject to official notice of issuance, the new shares will be listed on the New York Stock Exchange (the "NYSE") and the Toronto Stock Exchange (the "TSX"). Trading on the NYSE and TSX is expected to begin on December 10, 2010 on a "when issued" basis under the symbol "ABH WI", and "regular way" trading is anticipated to begin on December 20, 2010, the date of the initial distribution to unsecured creditors, under the symbol "ABH".
"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 Chief Financial Officer.
To post a comment Log In or Become a Member, doing so is simple and free