Resolute Forest Products

US$
    ABWTQ (OTC)

    -   Unsecured creditors committee supports plans of reorganization
    -   Aims to emerge from creditor protection in Fall 2010
    -   Restructuring plan calls for unsecured debt to be converted to
        equity
    -   Estimated recovery rate for unsecured creditors detailed in filings
    -   Commenced process to obtain exit financing package
    -   Secured backstop commitment from certain unsecured noteholders for
        rights offering of up to $500 million along with a commitment to
        support the restructuring process

MONTREAL, May 24 /CNW Telbec/ - AbitibiBowater Inc. ("AbitibiBowater" or the "Company") today announced that the Company and certain of its U.S. and Canadian subsidiaries, currently under creditor protection, have filed with the U.S. Bankruptcy Court for the District of Delaware amendments to AbitibiBowater's plans of reorganization as well as related disclosure documents. Amendments to its plans of reorganization and related disclosure documents will also be filed with the Québec Superior Court in Canada. The unsecured creditors committee supports the plans. With these developments, AbitibiBowater is aiming to emerge from creditor protection in the fall of 2010.

These filings provide details on the treatment of creditor claims for the proposed plans of reorganization. If and when the plans are approved by the courts and creditors, the Company expects to emerge with a significantly improved financial position, resulting from its efforts to reduce costs, lower debt and mitigate the impact of ongoing market and currency fluctuations. The court-filed documents will be made available at www.abitibibowater.com/restructuring once filings have been made in courts in both the U.S. and Canada.

"The filing of these amendments to our plans of reorganization and related disclosures is an important milestone on the path towards emergence," stated David J. Paterson, President and Chief Executive Officer. "Our significant progress to date in restructuring AbitibiBowater is a testament to the resolve and dedication of our employees and business partners. Working collaboratively, we are facing our challenges and developing solutions to transform the Company. Our goal is to build an organization with a leaner financial model, a low-cost and flexible operating platform, and a diverse and innovative mix of products, capable of nimbly reacting to industry dynamics."

Recovery for Creditors

The filings provide greater specificity regarding recoveries by unsecured creditors, while maintaining the classifications for all Company creditors as proposed in the May 4, 2010, draft framework for the plans of reorganization. The plans of reorganization specify that non-disputed pre-petition secured, administrative and priority claims would be paid in full in cash, or satisfied as otherwise agreed, at emergence. The plans of reorganization also provide that the Company's current common stock will be cancelled and holders will receive no recoveries, while unsecured claims would receive a pro rata share of equity in the reorganized company upon emergence, subject to certain conditions. A convenience class for unsecured claims has also been established. Estimates of recoveries for unsecured creditors are detailed in the filings. Final recoveries for unsecured creditors are subject to change as a result of any future amendments to the plans of reorganization, including dilution from a potential rights offering, a management incentive program, or additional claims or adjustments to claims that may be recognized at a later date.

Restructuring Efforts

Since the time of the combination of Abitibi-Consolidated Inc. and Bowater Incorporated in 2007 and throughout AbitibiBowater's creditor protection proceedings, the Company has undertaken sustained and significant actions to restructure and improve long-term profitability. Strategic actions to enhance the Company's value include: significant closures of non-profitable capacity; the monetization of non-core assets; and various austerity measures and spending cuts, including a significant reduction in the Company's workforce.

AbitibiBowater has streamlined its asset portfolio to focus on top-performing facilities by closing or idling 3.4 million metric tons of paper capacity, moving from an overall production capacity of 10.4 million metric tons to 7 million metric tons, since 2007. During this period, the Company has also sold aggregate assets and land for total proceeds of over $940 million. Chief among these transactions was the sale of the Company's 60% ownership interest in Manicouagan Power Company (MPCo) for C$615 million. The MPCo transaction allowed for the repayment of one of the Company's initial debtor-in-possession (DIP) financing arrangements and the partial repayment of other secured debt.

Business Plan

AbitibiBowater plans to emerge with a strengthened financial position by building upon the meaningful headway it has made throughout its restructuring. The Company has developed a business plan, in consultation with its creditors, stakeholders and financial advisors, which forecasts improved earning margins and cash flow. These improvements will be made possible in part by Company efforts to focus its manufacturing at highly competitive operations.

The reorganized company plans to manage a more adaptive and flexible operating portfolio, designed to better capture value through market cycles and capitalize on export market opportunities. There is also potential upside, in promising growth markets, from Company innovations in new inkjet product offerings. Other prospects include current efforts to further diversify the Company's product mix by converting capacity towards other market segments. As of May 17, 2010, the Company has ceased newsprint production at its Coosa Pines (Alabama) paper mill and entered the packaging papers market with linerboard and corrugated medium as well as natural kraft and bag grades. Another example of a capacity conversion is the recent shift of 100,000 metric tons of newsprint capacity at the Company's Calhoun (Tennessee) mill to specialty grades.

Next Steps

Before emerging from creditor protection, the Company must obtain adequate exit financing and complete efforts to address labor costs and pension issues, as well as satisfy other conditions set forth in the plans of reorganization. AbitibiBowater has commenced a process to obtain an exit financing package that will provide sufficient capital for the emerged company to manage business operations and execute its plans. In connection with this exit financing, the Company has secured a backstop commitment from certain unsecured noteholders for a rights offering of up to $500 million along with a commitment to support the restructuring process. In this rights offering, AbitibiBowater would offer new convertible notes with a seven-year maturity from the date of closing to eligible unsecured creditors. The notes would be obtained upon exercise of the rights and convertible into common stock of the emerged company. Additional information on this rights offering has been disclosed in the court filings.

Ultimately, the Company's plans of reorganization will require creditor approval and confirmation by the courts. Affected unsecured creditors who are entitled to vote will receive the court-approved disclosure and voting materials, which are expected to be mailed in July subject to court approvals. More information about AbitibiBowater's restructuring process can be found at www.abitibibowater.com or by calling toll-free 888 266-9280. International callers should dial 503 597-7698.

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 22 pulp and paper facilities and 26 wood products facilities located in the United States, Canada 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 over-the-counter on the Pink Sheets and on the OTC Bulletin Board under the stock symbol ABWTQ.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION AND USE OF THIRD-PARTY DATA

Statements in this press release that are not reported financial results or other historical information of AbitibiBowater Inc. (with its subsidiaries and affiliates, either individually or collectively, unless otherwise indicated, referred to as "AbitibiBowater," "we," "our," "us" or the "Company") are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. They include, for example, statements relating to our: creditor protection proceedings under chapter 11 of the U.S. Bankruptcy Code and the Canadian Companies' Creditors Arrangement Act; debtor in possession financing arrangements and reorganization process; ability to successfully restructure our debt and other obligations; efforts to reduce costs and increase revenues and profitability, including our cost reduction initiatives regarding selling, general and administrative expenses; business outlook; curtailment of production of certain of our products; assessment of market conditions; and ability to sell non-core assets in light of the current global economic conditions and the requirements under the creditor protection proceedings to obtain court approval for certain asset sales; and strategies for achieving our goals generally. Forward-looking statements may be identified by the use of forward-looking terminology such as the words "should," "would," "could," "will," "may," "expect," "believe," "anticipate," "attempt" and other terms with similar meaning indicating possible future events or potential impact on our business or our shareholders.

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 following: (i) risks and uncertainties relating to our creditor protection proceedings including, among other things: (a) risks associated with our ability to: continue as a going concern; stabilize the business to maximize the chances of preserving all or a portion of the enterprise; develop a comprehensive restructuring plan in an effective and timely manner; resolve ongoing issues with creditors and other third parties whose interests may differ from ours; obtain court orders or approvals with respect to motions filed from time to time, including court approvals for asset sales; obtain alternative or replacement financing to replace our debtor in possession financing arrangements and restructure our substantial indebtedness and other obligations in a manner that allows us to obtain confirmation of a plan or plans of reorganization by the courts in order to successfully exit our creditor protection proceedings, especially in light of the current decline in the global economy and credit conditions; renew or extend our current debtor in possession financing arrangements and/or accounts receivable securitization program, as the case may be, if the need to do so should arise; successfully implement a comprehensive restructuring plan and a plan or plans of reorganization; generate cash from operations and maintain cash-on-hand; operate within the restrictions and limitations of our current and any future debtor in possession financing arrangements; realize full or fair value for any assets or business we may divest as part of our comprehensive restructuring plan; attract and retain customers; maintain market share as our competitors move to capitalize on customer concerns; maintain current relationships with customers, vendors and trade creditors by actively and adequately communicating on and responding to events, media and rumors associated with the creditor protection proceedings that could adversely affect such relationships; resolve claims made against us in connection with the creditor protection proceedings for amounts not exceeding our recorded liabilities subject to compromise; prevent third parties from obtaining court orders or approvals that are contrary to our interests; and reject, repudiate or terminate certain contracts; and (b) risks and uncertainties associated with: limitations on actions against any debtor during the creditor protection proceedings and the values, if any, that will be ascribed in our creditor protection proceedings to our various pre-petition liabilities, common stock and other securities; and (ii) risks and uncertainties relating to our business including: industry conditions generally and further growth in alternative media; our capital intensive operations and the adequacy of our capital resources; the prices and terms under which we would be able to sell assets; the relative volatility of the U.S. dollar and the Canadian dollar; the costs of raw materials such as energy, chemicals and fiber; the success of our implementation of additional measures to enhance our operating efficiency and productivity; our ability to obtain fair compensation for our expropriated assets in the province of Newfoundland and Labrador, Canada and the possibility that we could lose any or all of our equity interest in Augusta Newsprint Company ("ANC"). Additional risks that could cause actual results to differ from forward-looking statements are enumerated in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2009, as amended, "Risk Factors" ("Item 1A"). We filed the Annual Report on Form 10-K with the U.S. Securities Exchange Commission (the "SEC") on March 30, 2010. All forward-looking statements in this press release are expressly qualified by the cautionary statements contained or referred to in this section and in our other filings with the SEC and the Canadian securities regulatory authorities. We disclaim any obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.