ABH (TSX, NYSE)
    US$

    MONTREAL, March 24 /CNW Telbec/ - AbitibiBowater Inc. announced today
that it has entered into a definitive agreement with Fairfax Financial
Holdings Limited (TSX and NYSE: FFH) for an investment by Fairfax and its
designated subsidiaries in AbitibiBowater of US$350 million in the form of
unregistered convertible debentures. This transaction, which is part of the
Company's previously announced US$1.4 billion refinancing plan, is expected to
address upcoming debt maturities and general liquidity needs of its
Abitibi-Consolidated Inc. subsidiary. There is no financing condition to the
obligations of Fairfax to fund the transaction.
    The US$350 million of convertible debentures is convertible into
AbitibiBowater common shares at US$10.00 per share, carries an 8% cash coupon,
has an ability for the Company to pay interest in the form of additional
"pay-in-kind" debentures at a rate of 10%, and has a subsidiary guarantee. The
debentures have a maturity of 5 years and are non-callable.
    The transaction, which is scheduled to close on March 31, 2008, is
subject to certain conditions, including the receipt of various lender
consents and the closing of the other components of the Company's
US$1.4 billion refinancing plan. Under the Fairfax Purchase Agreement, Fairfax
will have the right to appoint two directors to the Board of Directors of the
Company.
    In connection with the approval of the Fairfax transaction by the Board
of Directors of AbitibiBowater, and pursuant to an exception provided by the
New York Stock Exchange stockholder approval policy, the Audit Committee of
AbitibiBowater determined that a delay in the transaction in order to secure
stockholder approval of the issuance of the convertible debentures, given the
pending maturities of Abitibi-Consolidated's April 1 and June 20, 2008 senior
notes, as well as the current state of the credit and capital markets, could
seriously jeopardize the financial viability of AbitibiBowater. Accordingly,
AbitibiBowater's Board of Directors and Audit Committee expressly approved the
Company's decision not to seek stockholder approval of the issuance of the
convertible debentures to Fairfax. The New York Stock Exchange has accepted
AbitibiBowater's reliance on the exception and the Company, in reliance upon
this exception, is mailing a letter to all stockholders notifying them of its
intention to issue the convertible debentures without their prior approval.
    For AbitibiBowater, Troutman Sanders LLP acted as legal advisor to the
Company and Cravath, Swaine & Moore LLP acted as legal advisor to the
Company's independent directors. On behalf of Fairfax, Shearman & Sterling LLP
and Torys LLP acted as co-legal advisors.

    This press release is neither an offer to purchase nor a solicitation of
an offer to sell any securities. The convertible debentures have not been and
may not be registered under the Securities Act of 1933 and, as such, may not
be offered or sold in the United States absent registration or an applicable
exemption from registration requirements.

    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. Following the required
divestiture agreed to with the U.S. Department of Justice, AbitibiBowater will
own or operate 27 pulp and paper facilities and 35 wood products facilities
located in the United States, Canada, the United Kingdom and South Korea.
Marketing its products in more than 90 countries, AbitibiBowater is also among
the world's largest recyclers of newspapers and magazines, and has more
third-party certified sustainable forest land than any other company in the
world. AbitibiBowater's shares trade under the stock symbol ABH on both the
New York Stock Exchange and the Toronto Stock Exchange.

    About Fairfax

    Fairfax Financial Holdings Limited is a financial services holding
company which, through its subsidiaries, is engaged in property and casualty
insurance and reinsurance and investment management.


    Forward-Looking Statements

    Statements in this report 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 the Company's anticipated timetable for closing
the sale of its convertible debentures to Fairfax and its future plans
regarding continued refinancing relating to a previously announced debt
exchange offer, a potential senior secured term loan and the possible issuance
of senior secured notes by its Abitibi-Consolidated subsidiary.
Forward-looking statements may be identified by the use of forward-looking
terminology such as the words "will" and "expect" and other terms with similar
meaning indicating possible future events or potential impact on the business
or other stakeholders of the Company 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 the Company and Abitibi-Consolidated or at all, the condition
of the U.S. credit and capital markets generally, worsening industry
conditions and the ability to meet the required closing conditions set forth
in the convertible debenture purchase agreement, including, but not limited
to, approvals by the Company's various lenders and the successful closing of
the other components of the Company's US$1.4 billion refinancing. If
Abitibi-Consolidated is unable to repay, refinance or restructure its
near-term debt maturities on or before their maturities, Abitibi-Consolidated
would be in default under the indentures relating to those notes and may be
compelled to seek bankruptcy protection under applicable law, which may
negatively impact or disrupt the operations of AbitibiBowater and its other
principal subsidiary, Bowater Incorporated.
    Additional factors are detailed from time to time in the Company's
filings with the Securities and Exchange Commission (SEC) and the Canadian
securities regulatory authorities, including those factors contained in the
Company's Annual Report on Form 10-K, as amended, for year ended December 31,
2007, each under the caption "Risk Factors." All forward-looking statements in
this report are expressly qualified by information contained in the Company's
filings with the SEC and the Canadian securities regulatory authorities. The
Company disclaims any obligation to update or revise any forward-looking
information.