US$
ABH (NYSE, TSX)
- New investor commits to backstop up to US$100 million of concurrent
offering
- Support of unsecured noteholders increases to approximately 39% of
outstanding principal amount
- Meetings of affected noteholders and lenders to be held April 30thMONTREAL, March 16 /CNW Telbec/ - AbitibiBowater Inc. ("AbitibiBowater"
or the "Company") announced that, further to its previously announced
recapitalization transaction (the "Recapitalization"), a new investor has
agreed to provide a backstop commitment of $100 million. In consideration for
this backstop commitment, the new investor will receive up to $111.1 million
of AbitibiBowater's 12.5% First Lien Notes due 2014 and up to 63.5 million
Series D Warrants to purchase one share of AbitibiBowater Common Stock per
warrant at $1.25 per share. The amount of the backstop commitment that is
funded by the new investor will depend upon the extent to which unsecured
noteholders participate in the Concurrent Offering. The backstop party will
also receive a backstop commitment fee in an amount of $50 of First Lien Notes
and 53.895 Series A Warrants, 53.895 Series B Warrants and 53.895 Series C
Warrants for each $1,000 committed only in the event the Recapitalization is
completed. The backstop commitment was made as part of and pursuant to the
terms of AbitibiBowater's previously announced Concurrent Offering made in
connection with the Recapitalization. As previously announced, certain
investors have provided binding commitments to subscribe for $150 million of
the Concurrent Offering therefore a total of $250 million of the $350 million
Concurrent Offering has been committed.
In addition, additional noteholders holding approximately $164 million in
eligible unsecured notes issued by Abitibi-Consolidated and its subsidiaries,
as applicable (approximately 5.6% of the total outstanding) have agreed to
vote in favor of the Recapitalization, bringing the total support to
approximately $1.2 billion (or 39% of the total outstanding). AbitibiBowater
will continue to solicit additional support for the Recapitalization from
affected noteholders and lenders.
AbitibiBowater also announced that the Commercial Division of the
Superior Court of Québec in Montréal has granted an interim court order under
the Canada Business Corporations Act in connection with the Recapitalization
and:- has called the respective meetings of the affected unsecured notes,
secured notes and lenders for April 30, 2009 in Montréal; and
- has set April 1, 2009 as the record date to determine the affected
stakeholders who are entitled:
i) to receive notice of the meetings;
ii) to vote at the meetings; and
iii) to participate in the Concurrent Offering.
Holders of affected unsecured notes, secured notes and lenders who are not
holders of record on April 1, 2009 will not be entitled to receive notice of
or vote in the meetings or participate in the Concurrent Offering.
At the meetings, holders of the three classes of affected stakeholders
listed below will be asked to vote on the Plan of Arrangement relating to the
Recapitalization:
- holders of unsecured notes (listed below at outstanding amounts) which
include:
- $8M 7.875% Notes due August 1, 2009;
- $293M 15.5% Notes due July 15, 2010;
- $395M 8.55% Notes due August 1, 2010;
- $200M 7.75% Notes due June 15, 2011;
- $200M Floating Rate Notes due June 15, 2011;
- $350M 6.00% Notes due June 20, 2013;
- $450M 8.375% Notes due April 1, 2015;
- $100M 7.40% Debentures due April 1, 2018;
- $250M 7.50% Debentures due April 1, 2028;
- $250M 8.50% Debentures due August 1, 2029;
- $450M 8.85% Debentures due April 1, 2030;
- holders of the $413M 13.75% Senior Secured Notes due 2011; and
- affected lenders under the $347M Senior Term Loan due 2009.The resolutions of affected unsecured notes, secured notes and lenders
shall be considered to be approved by the affirmative vote of not less than
two-thirds of the votes cast on each resolution. However, the final order from
the Court to proceed with the implementation of the Plan of Arrangement may be
sought whether or not the arrangement resolutions are adopted.
The interim order obtained from the Superior Court of Québec includes a
stay of proceedings in favor of Abitibi-Consolidated and certain of its
affiliates. This will help provide Abitibi-Consolidated with the opportunity
to present the Recapitalization to its affected creditors and for the Court to
consider whether it should be approved at a hearing scheduled to be held on
May 5, 2009 in Montréal.
Certain amounts of principal and interest on Abitibi-Consolidated's
affected unsecured notes, secured notes and term loan will be due before the
meetings of noteholders and lenders. These amounts will not be paid as
scheduled and will, if the Plan of Arrangement is approved and implemented, be
addressed in accordance with the terms of the Plan of Arrangement.
Restated Summary of Key Terms
-----------------------------
A restated summary of the key terms of the Recapitalization is attached
to this press release.
Further Information
-------------------
Details of the Recapitalization will be provided in an information
circular expected to be sent to noteholders, secured noteholders and lenders
in early April 2009. We expect to supplement information in the circular
relating to the meetings to be held in connection with the Recapitalization
and otherwise to communicate information relating thereto by way of news
release, mailing or otherwise.
Further information about the Recapitalization will be available on the
U.S. Securities and Exchange Commission Website (www.sec.gov) under our
Company's name and on www.abitibibowater.com.
About AbitibiBowater
--------------------
AbitibiBowater produces a wide range of newsprint, commercial printing
papers, market pulp and wood products. It is the eighth largest publicly
traded pulp and paper manufacturer in the world. AbitibiBowater owns or
operates 24 pulp and paper facilities and 30 wood products facilities located
in the United States, Canada, the United Kingdom and South Korea. Marketing
its products in more than 90 countries, the Company is also among the world's
largest recyclers of old newspapers and magazines, and has third-party
certified 100% of its managed woodlands to sustainable forest management
standards. AbitibiBowater's shares trade under the stock symbol ABH on both
the New York Stock Exchange and the Toronto Stock Exchange.
Forward-Looking Statements
--------------------------
Statements in this press release that are not reported financial results
or other historical information are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. They include,
for example, statements about AbitibiBowater's refinancing plans, the terms
and expected effects of the Recapitalization, our ability to secure additional
support agreements, to secure additional commitments or backstops in
connection with the Concurrent Offering, our ability to complete the
Recapitalization and the timeframe for its completion. Forward-looking
statements may be identified by the use of forward-looking terminology such as
the words "expect," "plan," "intend," "may," "will," and other terms with
similar meaning indicating possible future events or potential impact on the
business or other stakeholders of AbitibiBowater and its subsidiaries.
The reader is cautioned not to place undue reliance on these
forward-looking statements, which are not guarantees of future performance.
These statements are based on management's current assumptions, beliefs and
expectations, all of which involve a number of business risks and
uncertainties that could cause actual results to differ materially. These
risks and uncertainties include, but are not limited to, the ability to obtain
additional new financing on terms satisfactory to AbitibiBowater and
Abitibi-Consolidated or at all, the condition of the credit markets generally
and worsening economic and industry conditions and the ability of
AbitibiBowater and Abitibi-Consolidated to secure additional support
agreements, additional financing commitments or backstops and the requirement
for approvals and the satisfaction of other conditions in order to complete
the Recapitalization. Additional factors are detailed from time to time in
AbitibiBowater's and Abitibi-Consolidated's filings with the Securities and
Exchange Commission (SEC), including those factors contained in
AbitibiBowater's Current Report on Form 8-K filed on February 9, 2009. All
forward-looking statements in this news release are expressly qualified by
information contained in AbitibiBowater's and Abitibi-Consolidated's filings
with the SEC. AbitibiBowater disclaims any obligation to update or revise any
forward-looking information except as required by law.Key Terms of the Recapitalization
---------------------------------
(Restated as of March 16, 2009)
If completed as contemplated, the Recapitalization will result in a number
of significant changes to the capital structure of AbitibiBowater Inc.
("AbitibiBowater") and Abitibi-Consolidated Inc. ("Abitibi-Consolidated") and
its subsidiaries ("Abitibi").
Meetings of Affected Noteholders and Lenders
- The Commercial Division of the Superior Court of Québec in Montréal has
called the respective meetings of the Noteholders, the Secured
Noteholders and lenders under the Term Loan Facility for April 30,
2009. The meetings will be held at the Fairmont Queen Elizabeth Hotel,
900 René-Lévesque Blvd. West, in Montréal.
- The Court has set April 1, 2009 as the record date for entitlement to
notice for the meetings and to vote thereat and to participate in the
Concurrent Offering.
- At the meetings, holders of the affected unsecured notes, holders of
the affected secured notes and affected lenders will be asked to vote
on the Plan of Arrangement relating to the Recapitalization. The
resolutions of affected unsecured notes, secured notes and lenders
shall be considered to be approved by the affirmative vote of not less
than two-thirds of the votes cast on each resolution. However, the
final order from the Court to proceed with the implementation of the
Plan of Arrangement may be sought by Abitibi whether or not the
arrangement resolutions are adopted.
Trade Creditors, Customers and Employees Unaffected
- AbitibiBowater's obligations to trade creditors, customers and
employees (including any pension plan entitlement), will remain
unaffected by the Recapitalization.
Treatment of Existing Unsecured Notes
- The following unsecured notes of Abitibi-Consolidated (the "Abitibi
Notes") will be affected by the Recapitalization: 7.875% notes due
2009; 15.50% notes due 2010; 8.55% notes due 2010; 7.75% notes due
2011; Floating rate notes due 2011;6.0% notes due 2013; 8.375% notes
due 2015; 7.4% debentures due 2018; 7.5% debentures due 2028; 8.5%
debentures due 2029; and 8.85% debentures due 2030.
- Each holder of Abitibi Notes (a "Noteholder" and collectively, the
"Noteholders") will receive, in exchange for the Abitibi Notes, the
following:
- Such Noteholder's pro rata share of approximately $321 million of
12.5% first lien notes due March 31, 2014 (the "First Lien Notes"),
being $75 in principal amount of the First Lien Notes for each $1,000
principal amount of Abitibi Notes exchanged and transferred, except
that any Noteholder of 15.50% notes due 2010 (the "July 2010 Notes")
will receive an additional $100 in principal amount of First Lien
Notes for each $1,000 principal amount of July 2010 Notes exchanged
and transferred.
- Such Noteholder's pro rata share of approximately $810 million of 11%
second lien notes due June 30, 2014 (the "Second Lien Notes") being
$270 in principal amount of Second Lien Notes for each $1,000
principal amount of Abitibi Notes exchanged and transferred, except
that any Noteholder of July 2010 Notes will receive an additional $50
in principal amount of Second Lien Notes for each $1,000 principal
amount of the July 2010 Notes exchanged and transferred.
- Such Noteholder's pro rata share of approximately 86.7 million shares
of AbitibiBowater Common Stock (the "Common Shares"), being
29.422 Common Shares for each $1,000 principal amount of Abitibi
Notes exchanged and transferred.
- Such Noteholder's pro rata share of a series of warrants to purchase
approximately 76.9 million Warrant Shares at an exercise price equal
to $1.00 per Warrant Share with a term of 18 months (the "Series A
Warrants") being 26.107 Series A Warrants for each $1,000 principal
amount of Abitibi Notes exchanged and transferred;
- A "Warrant Share" means, prior to the required increase of
AbitibiBowater's authorized Common Shares, a Depositary Share (as
defined below) or, as of and from the date of such increase of
AbitibiBowater's authorized Common Shares, Common Shares, issuable
upon the exercise of the Warrants (as defined below).
- Such Noteholder's pro rata share of a series of warrants to purchase
approximately 76.9 million Warrant Shares at an exercise price equal
to $1.25 per Warrant Share with a term of 2.5 years (the "Series B
Warrants") being 26.107 Series B Warrants for each $1,000 principal
amount of Abitibi Notes exchanged and transferred.
- Such Noteholder's pro rata share of a series of warrants to purchase
approximately 76.9 million Warrant Shares at an exercise price equal
to $1.50 per Warrant Share with a term of 5 years (the "Series C
Warrants") being 26.107 Series C Warrants for each $1,000 principal
amount of Abitibi Notes exchanged and transferred.
- The ability for Qualifying Noteholders to participate in the
Concurrent Offering, as such term is defined below, in accordance
with its terms and conditions.
- Abitibi-Consolidated will issue First Lien Notes to Noteholders on
account of any accrued and unpaid interest under the Abitibi Notes up
to and including April 1, 2009 on a dollar for dollar basis.
- As part of the Recapitalization, Abitibi-Consolidated will offer
$388.9 million aggregate principal amount of First Lien Notes and
warrants to purchase approximately 222.2 million Warrant Shares at an
exercise price equal to $1.25 per Warrant Share with a term of 5 years
(the "Series D Warrants" and collectively with the Series A Warrants,
Series B Warrants and Series C Warrants, the "Warrants") for an
aggregate purchase price of approximately $350 million (the "Concurrent
Offering"). Qualifying Noteholders will be entitled to participate in
the Concurrent Offering in respect of up to an aggregate purchase price
of approximately $100 million of First Lien Notes. Subject to
proration, for each $1,000 principal amount of Abitibi Notes held on
the claims measurement date, Qualifying Noteholders shall be entitled
to submit $33.95 in cash and shall receive $37.72 of First Lien Notes
and 21.553 Series D Warrants.
- "Qualifying Noteholders" means a Noteholder who, if domiciled in the
United States is a Qualified Institutional Buyer (as determined under
U.S. securities laws) or if domiciled in Canada is an accredited
investor (as determined under Canadian securities laws), or is
otherwise qualified to participate in the Concurrent Offering in
accordance with applicable laws.
Description of the Preferred Shares
- AbitibiBowater will establish a new series of preferred stock (the
"Preferred Shares"). Each Preferred Share will initially represent
(with an appropriate liquidation preference, to the extent required by
Delaware law) the economic and voting equivalent of 1,000 Common
Shares. AbitibiBowater shall arrange for the issuance of depositary
shares in respect of the Preferred Shares (the "Depositary Shares"),
with each Depositary Share representing one one-thousandth of a
Preferred Share. Until there is a sufficient number of authorized
Common Shares, each Warrant will be exercisable for one Depositary
Share. Once the authorized capital of AbitibiBowater has been increased
to a sufficient number of Common Shares as is required in respect of
the Warrants and New Convertible Notes (as defined below), the Warrants
shall automatically become exercisable for Common Shares and any
outstanding Depositary Shares issued pursuant to previously exercised
Warrants shall automatically be converted, on a one-for-one basis
(except under certain circumstances), for Common Shares.
Description of the New Notes
- The New Notes will be issued by Abitibi-Consolidated or by a successor
corporation to Abitibi-Consolidated formed under the Canada Business
Corporations Act in an aggregate principal amount of approximately
$1,550 million.
- The First Lien Notes and Second Lien Notes will mature on March 31,
2014 and June 30, 2014, respectively. Interest will accrue on the First
Lien Notes and on the Second Lien Notes at the rate of 12.5% per annum
and 11% per annum respectively and be payable semi-annually in arrears
on March 31 and September 30, respectively of each year, starting on
September 30, 2009.
- The New Notes will be guaranteed by AbitibiBowater US Holding LLC, a
subsidiary of AbitibiBowater, Donohue Corp., a subsidiary of
AbitibiBowater US Holding LLC, and by certain other wholly-owned
subsidiaries of Abitibi-Consolidated or AbitibiBowater US Holding LLC
(the "Guarantors").
- The New Notes and the guarantees in respect thereof will be senior
secured obligations of Abitibi-Consolidated and the Guarantors,
respectively.
- Each Guarantor will irrevocably and unconditionally guarantee on a
senior secured basis the performance and punctual payment of all
obligations of Abitibi-Consolidated under the New Notes and the
indenture relating thereto. The First Lien Notes and Second Lien Notes
will respectively have a first and second priority lien on
substantially all of the assets of Abitibi-Consolidated and the
Guarantors other than those assets securing the Amended Term Loan, as
defined below, and will respectively have second and third priority
lien on the collateral securing the Amended Term Loan.
- The Indenture for the New Notes will contain certain covenants relating
to, among other things, restricted payments, asset sales, use of
proceeds from asset sales, dividends and other distributions, issuance
of stock, indebtedness, liens, transactions with affiliates, and
fundamental changes including mergers, consolidation and liquidation.
Support Agreement
- Noteholders holding approximately 39% of the aggregate principal amount
of all Noteholders' claims in respect of the Abitibi Notes (the
"Consenting Noteholders") have each executed a support agreement (the
"Support Agreement") whereby they have agreed to vote in favor of and
support the Recapitalization and the Plan of Arrangement at the
Noteholders' meeting.
- The Support Agreement shall terminate upon the date of the earliest to
occur of the following (i) the failure to file the Plan of Arrangement
with the Court on or before May 31, 2009; (ii) the implementation of
the Plan of Arrangement; (iii) the date on which AbitibiBowater or
Abitibi-Consolidated enter into a written agreement with respect to an
alternative transaction; (iv) written notice from the Consenting
Noteholder to Abitibi, in the event of a breach by AbitibiBowater and
Abitibi-Consolidated of any representation, warranty, covenant or other
material obligation provided for in the Support Agreement or any other
material agreement directly relating to the Recapitalization which
breach is not cured within five (5) days after such Consenting
Noteholders have notified AbitibiBowater and Abitibi-Consolidated of
their intent to terminate the Support Agreement; (v) the date upon
which the Consenting Noteholders' initial commitment agreement
terminates; (vi) the commencement of a voluntary or involuntary case or
proceeding by or against AbitibiBowater and Abitibi-Consolidated and
(vii) June 30, 2009.
Backstop and Firm Commitment Agreements
- Certain current Noteholders have provided binding commitments to
subscribe for an aggregate of $150 million of First Lien Notes as part
of the Concurrent Offering (the "Aggregate Initial Commitments"). In
consideration for their Aggregate Initial Commitments, these investors
will receive consideration equal to $50 of First Lien Notes and
53.895 Series A Warrants, 53.895 Series B Warrants and 53.895 Series C
Warrants for each $1,000 of committed amounts.
- A new investor has agreed to provide a backstop commitment of
$100 million. In consideration for this backstop commitment, the new
investor will receive up to $111.1 million of AbitibiBowater's 12.5%
First Lien Notes due 2014 and up to 63.5 million Series D Warrants to
purchase one share of AbitibiBowater Common Stock per warrant at
$1.25 per share. The amount of the backstop commitment that is funded
by the new investor will depend upon the extent to which unsecured
noteholders participate in the Concurrent Offering. The backstop party
will also receive a backstop commitment fee in an amount of $50 of
First Lien Notes and 53.895 Series A Warrants, 53.895 Series B Warrants
and 53.895 Series C Warrants for each $1,000 committed only in the
event the Recapitalization is completed.
- Any Qualifying Noteholder that commits to fund up to a specified amount
of the Concurrent Offering (a "Backstop Party") will receive a backstop
commitment fee in an amount of $50 of First Lien Notes and 53.895
Series A Warrants, 53.895 Series B Warrants and 53.895 Series C
Warrants for each $1,000 committed only in the event the
Recapitalization is completed; provided, however, that Abitibi shall
have no obligation to pay such fee in the event such Backstop Party
fails to fund its pro rata share of the Aggregated Backstop Call Amount
(as defined below) as and when required (unless no amount is called by
Abitibi).
- At least two (2) business days before the final order is issued by the
Québec Superior Court in respect of the Recapitalization transaction,
Abitibi shall provide a written notice (the "Funding Notice") to each
Backstop Party setting forth the following:
- the aggregate backstop call amount, which amount is equal to
$350 million, less the amount obtained by adding the Aggregate
Initial Commitments to the amount of the Concurrent Offering
subscribed by the Qualifying Noteholders (the "Aggregate Backstop
Call Amount");
- such Backstop Party's pro rata share of the Aggregate Backstop Call
Amount; and
- instructions to each Backstop Party to wire its pro rata share of the
Aggregate Backstop Call Amount in an escrow account on or before the
Backstop Commitment Call Date, which shall not be earlier than
two (2) business days following the date of the Funding Notice (the
"Backstop Commitment Call Date").
- No later than the Backstop Commitment Call Date, each Backstop Party
shall execute and deliver an escrow agreement and wire each Backstop
Party's pro rata portion of the Aggregate Backstop Call Amount (plus
any wire transfer fees) to an escrow account.
- In the event the Support Agreement is terminated in accordance with its
terms, the Backstop Agreements shall become void and there will be no
liability on the part of any party to any Backstop Agreement and its
respective partners, officers, directors or stockholders, subject to
certain exceptions.
- In the event that a Backstop Party defaults on its obligation to fund
it's pro rata share of the Aggregate Backstop Call Amount, Abitibi
shall have the right to offer such Backstop Party's commitment position
to other parties subject to certain conditions.
Treatment of Secured Noteholders
- The full outstanding principal amount then due in respect of the 13.75%
secured notes due 2011 (the "Secured Notes"), together with accrued and
unpaid interest thereunder up to and including the Closing Date, will
be paid in cash, in full and final settlement of the Secured Notes.
Treatment of Lenders
- Interest accrued but not paid as well as a portion of the principal
outstanding under the term loan facility due March 30, 2009 (the "Term
Loan Facility") will be paid such that the principal amount outstanding
will be reduced to $200 million. The Term Loan Facility will also be
replaced to, among other things, change the interest rate to LIBOR +
600 basis points and the maturity date to March 31, 2012 (the "Amended
Term Loan").
- The security currently securing the obligations under the Term Loan
Facility and the guarantees granted in respect thereof will remain
unchanged and will secure and guarantee the obligations under the
Amended Term Loan.
Conditions to the Recapitalization
- The Recapitalization is subject to customary closing conditions, and
the following additional conditions, among others:
- the Superior Court of Québec in Montréal shall have granted the final
order;
- no Material Adverse Effect shall have occurred since the effective
date of the Support Agreements. "Material Adverse Effect" means a
material adverse change in the business operations of Abitibi and
Donohue Corp. and its subsidiaries (taken as a whole) or the
financial condition of the Company on a consolidated basis or of
Abitibi and Donohue Corp. and its subsidiaries (taken as a whole)
subject to certain exceptions;
- all required material approvals, material consents and material
waivers of third parties to the consummation of the Recapitalization
shall have been obtained;
- the completion of the sale of the 60% interest in Manicouagan Power
Company resulting in gross proceeds of Can.$615 million;
- completion of the previously announced exchange offers, note offering
and private placement of AbitibiBowater's subsidiaries, Bowater
Incorporated, Bowater Canada Finance Corporation and Bowater Finance
II LLC;
- the closing of the Concurrent Offering resulting in gross proceeds of
$350 million; and
- the completion of the amendment of the convertible notes of
AbitibiBowater, into $190 million of new convertible notes of
AbitibiBowater which shall be convertible for AbitibiBowater's Common
Shares at a price of $1.75 per share and which shall mature on
September 30, 2014 (the "New Convertible Notes").
