News Releases

    • AbitibiBowater supplements its recapitalization announcement
      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").
      For further information:
      For further information: Investors: Duane Owens, Vice President,
      Finance, (864) 282-9488; Media and Others: Seth Kursman, Vice President,
      Communications and Government Affairs, (514) 394-2398,
      seth.kursman@abitibibowater.com; Noteholders/Lenders: BMO Capital Markets,
      Financial Advisor, (416) 359-5142, (866) 326-1045