Resolute Forest Products
AbitibiBowater announces second phase of comprehensive recapitalization proposal
US$
    ABH (NYSE, TSX)

    - Net debt to be reduced by $2.4 billion
    - Annual interest expense to be reduced by $162 million
    - $350 million in new funds to be raised with new debt not maturing until
      2014
    - Business continuity for employees, trade creditors and customers
    - Pre-offer support of approximately 34% of existing note holders
    - Implementation of recapitalization expected to occur by early May
      2009MONTREAL, March 13 /CNW Telbec/ - AbitibiBowater Inc. ("AbitibiBowater"
or the "Company") announced today a second phase of its comprehensive
recapitalization proposal (the "Recapitalization") with respect to its
Abitibi-Consolidated Inc. subsidiary. The Recapitalization aims to reduce the
Company's debt burden and enhances liquidity.
    The Recapitalization of Abitibi-Consolidated will provide a stronger
financial base for the execution of AbitibiBowater's operating strategy and
enhance the long-term value of the Company.
    All obligations to trade creditors and to employees, including under the
Company's pension and benefit plans, are unaffected by the Recapitalization
and this transaction will ensure business continuity for them as well as for
customers.
    Noteholders holding in excess of approximately $1 billion of outstanding
Abitibi Notes (defined below) (approximately 34% of the total outstanding)
have agreed to vote in favor of the Recapitalization. AbitibiBowater will
solicit additional support for the Recapitalization from other noteholders,
from its secured noteholders and from its lenders.
    "This Recapitalization is another important step in AbitibiBowater's
ongoing efforts to deleverage the Company and refinance its current debt
obligations," stated David J. Paterson, President and Chief Executive Officer.
"The transaction offers substantial benefits to AbitibiBowater, increasing its
financial stability while also reducing the Company's annual interest costs
and improving overall liquidity."
    AbitibiBowater's Board of Directors has determined that the
Recapitalization is in the Company's best interests and its stakeholders,
given, among other reasons, that it will reduce net debt by approximately $2.4
billion, and significantly improves AbitibiBowater's capital structure.
    The Board of Directors relied on many factors in arriving at its
determination, including recommendations by Company Management.
AbitibiBowater's financial advisor, BMO Capital Markets has provided an
opinion to the Board of Directors in connection with the transaction.
    "With this comprehensive Recapitalization, AbitibiBowater is
significantly reducing its debt levels and improving its liquidity," said Dick
Evans, Chairman of the Board of Directors. "The Board and management believe
this solution creates a stronger Company in the interest of all stakeholders,
and allows the Company to move forward with confidence to meet the needs of
its customers."The Recapitalization includes the following key elements:

    - The conversion of $2.9 billion of eligible unsecured notes issued by
      Abitibi-Consolidated (the "Abitibi Notes") into (i) New Notes
      consisting of approximately $321 million aggregate principal amount of
      12.5% First Lien Notes due March 31, 2014 and approximately
      $810 million aggregate principal amount of 11% Second Lien Notes due
      June 30, 2014, (ii) approximately 86.7 million shares of AbitibiBowater
      Common Stock and (iii) an aggregate of approximately 230.7 million
      Warrants (divided among Series A Warrants, Series B Warrants and Series
      C Warrants) to purchase one share of AbitibiBowater Common Stock per
      warrant at an exercise price equal to, respectively, $1.00, $1.25 and
      $1.50 per share.
    - A Concurrent Offering of approximately $389 million of First Lien Notes
      and 222.2 million Series D Warrants to purchase one share of
      AbitibiBowater Common Stock per warrant at $1.25 per share, for an
      aggregate purchase price of approximately $350 million. Certain
      investors have provided binding commitments to subscribe for
      $150 million thereof. AbitibiBowater and Abitibi-Consolidated are in
      advanced discussions to secure additional commitments. Qualifying
      noteholders may participate in the Concurrent Offering for an aggregate
      purchase price of up to $100 million of additional First Lien Notes.
      The uncommitted portion of the Concurrent Offering may be backstopped
      as permitted by market conditions. There can be no assurance that
      AbitibiBowater and Abitibi-Consolidated will enter into any such
      additional commitments or backstops.
    - The repayment in full of the Company's $413 million 13.75% Secured
      Notes due 2011, and any accrued and unpaid interest thereon.
    - Interest accrued but not paid as well as a portion of the principal
      outstanding under the existing term loan facility due March 30, 2009
      will be repaid cash such that the principal amount outstanding will be
      reduced to $200 million and the maturity date shall be extended to
      March 31, 2012.
    - The Commercial Division of the Superior Court of Québec in Montréal
      will be asked to grant an interim order under the Canada Business
      Corporations Act (CBCA) in connection with the Recapitalization,
      including calling meetings of the affected noteholders and lenders.
    - The Recapitalization is conditional upon, among other things:
      - final Court approval;
      - the completion of the sale of the Company's 60 percent interest in
        Manicouagan Power Company (for which it announced today its
        acceptance of a non-binding proposal from Hydro-Québec which could
        result in gross proceeds of C$615 million);
      - the completion of the previously announced exchange offers, notes
        offering and private placement by 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;
      - the completion of the amendment of the convertible notes of
        AbitibiBowater, into $190.0 million of new convertible notes of
        AbitibiBowater which shall be convertible for AbitibiBowater's Common
        Shares at a price of $1.75 per share.
    - If approved, implementation of the Recapitalization is expected to
      occur by early May, 2009.

    Effect on Affected Noteholders and Lenders
    ------------------------------------------

    If the Recapitalization is completed, affected noteholders and lenders
will be affected as described below.
    Abitibi Notes: Noteholders will receive, for each $1,000 principal amount
of Abitibi Notes, the principal amount of New Notes, and numbers of Common
Shares and Warrants as shown in the table below:

    -------------------------------------------------------------------------
                  Principal  Principal
                     Amount     Amount
                         of         of
                      First     Second
                       Lien       Lien  Common  Series A  Series B  Series C
    Eligible notes    Notes      Notes  Shares  Warrants  Warrants  Warrants
    -------------------------------------------------------------------------
    7.875% Notes
     due 2009           $75       $270  29.422    26.107    26.107    26.107
    -------------------------------------------------------------------------
    15.50% Notes
     due 2010          $175       $320  29.422    26.107    26.107    26.107
    -------------------------------------------------------------------------
    8.55% Notes
     due 2010           $75       $270  29.422    26.107    26.107    26.107
    -------------------------------------------------------------------------
    7.75% Notes
     due 2011           $75       $270  29.422    26.107    26.107    26.107
    -------------------------------------------------------------------------
    Floating
     Rate Notes
     due 2011           $75       $270  29.422    26.107    26.107    26.107
    -------------------------------------------------------------------------
    6.0% Notes
     due 2013           $75       $270  29.422    26.107    26.107    26.107
    -------------------------------------------------------------------------
    8.375% Notes
     due 2015           $75       $270  29.422    26.107    26.107    26.107
    -------------------------------------------------------------------------
    7.4% Debentures
     due 2018           $75       $270  29.422    26.107    26.107    26.107
    -------------------------------------------------------------------------
    7.5% Debentures
     due 2028           $75       $270  29.422    26.107    26.107    26.107
    -------------------------------------------------------------------------
    8.5% Debentures
     due 2029           $75       $270  29.422    26.107    26.107    26.107
    -------------------------------------------------------------------------
    8.85% Debentures
     due 2030           $75       $270  29.422    26.107    26.107    26.107
    -------------------------------------------------------------------------

    Accrued and unpaid interest up to April 1, 2009 shall be satisfied through
the issuance of First Lien Notes.
    In addition, in the Concurrent Offering for each $1,000 principal amount
of Abitibi Notes held on the specified claims measurement date, qualifying
noteholders shall be entitled to (but shall not have the obligation to) submit
$33.95 in cash in consideration for $37.72 of additional First Lien Notes and
21.553 Series D Warrants to purchase one AbitibiBowater Common Share per
warrant at exercise price of $1.25 per share.
    Term Loan Facility: Interest accrued but not paid, as well as a portion of
the principal outstanding under the term loan facility due March 30, 2009 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.
    Secured Notes: The Secured Notes, and any accrued and unpaid interest
thereon, shall be repaid in full in cash.

    Meetings of Noteholders and Lenders
    -----------------------------------

    The Commercial Division of the Superior Court of Québec in Montréal will
be asked to call meetings of the holders of Abitibi Notes, holders of Secured
Notes and lenders under the Senior Term Loan Facility respectively to obtain
their approvals for the Recapitalization under the CBCA. Details of the
Recapitalization will be provided in an information circular expected to be
sent to noteholders, secured noteholders and lenders by early April 2009, and
the meetings are expected to be held at the Fairmont Queen Elizabeth Hotel,
900 Rene-Levesque Blvd West Montréal, QC H3B 4A5, Canada on or about April 30,
2009.

    Issuance of Common Shares and Warrants and Related Stock Exchange Matters
    -------------------------------------------------------------------------

    In connection with the Recapitalization, and as detailed above,
AbitibiBowater intends to issue Common Shares and warrants convertible into
Common Shares that would, on a fully-diluted basis, constitute in excess of
90% of the currently outstanding Common Shares. As such, the transaction and
such issuance would normally require approval of the AbitibiBowater
stockholders according to the Shareholder Approval Policy of the New York
Stock Exchange (the "NYSE"). However, in connection with the approval of the
Recapitalization, and pursuant to an exception provided by the NYSE's
Shareholder Approval Policy, the Board of Directors and Audit Committee of
AbitibiBowater determined that the delay in the Recapitalization that would be
caused if AbitibiBowater were to secure stockholder approval prior to the
launch and publication of the Recapitalization, given the pending maturities
of Abitibi-Consolidated's debt instruments, severe constraints on
Abitibi-Consolidated's liquidity, and the current state of the credit and
capital markets, would seriously jeopardize AbitibiBowater's financial
viability. Accordingly, AbitibiBowater's Board of Directors and Audit
Committee, pursuant to an exception provided by the NYSE Shareholder Approval
Policy, expressly approved AbitibiBowater's omission to seek stockholder
approval of the Recapitalization that would otherwise have been required. The
NYSE has accepted AbitibiBowater's application of the exception. In reliance
on the exception and in accordance with NYSE policy, AbitibiBowater is mailing
a letter to all its stockholders notifying them of its intention to issue the
Common Shares and warrants convertible into Common Shares without seeking
their approval. AbitibiBowater also intends to rely on an exemption from the
Toronto Stock Exchange stockholder approval requirements, permitted by Section
602(g) of the TSX Company Manual, by relying on such exception of the NYSE,
AbitibiBowater's principal trading exchange.

    Summary of Key Terms
    --------------------

    A summary of the key terms of the Recapitalization is attached to this
press release.

    Further Information
    -------------------

    Further information about the Recapitalization will be available on the
U.S. Securities and Exchange Commission Website (www.sec.gov) under our
company name and on www.abitibibowater.com.
    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.

    Securities Law Matters
    ----------------------

    This press release is neither an offer to purchase nor a solicitation of
an offer to sell any securities. One or more classes of new securities to be
offered as part of the Recapitalization have not been and may not be
registered under the Securities Exchange 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. 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 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 financing
commitments or backstops. 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
                      ---------------------------------

    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").

    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:
      i.    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.
      ii.   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.
      iii.  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.
      iv.   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).
      v.    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;
      vi.   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;
      vii.  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 exerciseable 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 34% 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.
    - 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:
      i.    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");
      ii.   such Backstop Party's pro rata share of the Aggregate Backstop
            Call Amount; and
      iii.  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:
      i.    the Recapitalization must be approved by the Noteholders, the
            secured noteholders and the lenders;
      ii.   the Superior Court of Québec in Montréal shall have granted the
            final order;
      iii.  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;
      iv.   all required material approvals, material consents and material
            waivers of third parties to the consummation of the
            Recapitalization shall have been obtained;
      v.    the completion of the sale of the 60 percent interest in
            Manicouagan Power Company resulting in gross proceeds of
            $615,000,000 Canadian dollars;
      vi.   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;
      vii.  the closing of the Concurrent Offering resulting in gross
            proceeds of $350 million; and
      viii. the completion of the amendment of the convertible notes of
            AbitibiBowater, into $190.0 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: Jean-Philippe Côté, Director,
Public Affairs and Government Relations, (514) 394-2386,
jean-philippe.cote@abitibibowater.com; Noteholders/Lenders: BMO Capital
Markets, Financial Advisor, (416) 359-5142, (866) 326-1045