AbitibiBowater Announces Signing of C$615 Million Agreement in Principle for the Sale of Interest in Manicouagan Hydroelectric Facility
ABH (NYSE, TSX)
MONTREAL, March 13 /CNW Telbec/ - AbitibiBowater Inc. today announced it
has signed a non-binding agreement in principle with Hydro-Québec for the sale
of its 60 percent interest in the hydroelectric facility located on the
Manicouagan River (the "Facility"), for gross proceeds of C$615 million. Both
parties have committed to an expedited timeline, consistent with the Company's
comprehensive recapitalization plan also announced today. Due diligence for
this transaction is currently under way.
The Facility, located in Quebec, Canada, was established in 1949 and has
the capacity to generate approximately 335 MW of electricity. AbitibiBowater,
through its Abitibi-Consolidated Company of Canada subsidiary, owns a 60
percent interest in the Facility.
"This transaction is a key step in AbitibiBowater's overall plan to
ensure greater liquidity and financial flexibility," stated David J. Paterson,
President and Chief Executive Officer. "Deleveraging the Company's balance
sheet is important to all AbitibiBowater stakeholders."
The non-binding proposal for the sale of AbitibiBowater's 60 percent
interest in the Facility is subject to certain terms and conditions,
including, but not limited to, satisfactory due diligence, obtaining the
required consents and approvals, the execution of definitive agreements
(including a long-term power supply agreement for AbitibiBowater's
Baie-Comeau, Quebec paper mill) and other customary conditions. No assurances
can be provided as to when or if definitive agreements will be executed.
The proposal does not include the sale of the Baie-Comeau mill, nor does
it in any way impact other Company hydroelectric facilities. Since last year,
significant progress has been made in lowering the Baie-Comeau mill's
operating costs and improving its highly competitive cost position. Given this
transaction, the Company is committed to undertake new investment
opportunities at the site. AbitibiBowater has and will continue to keep
workers and local communities informed about the sale of its interest in the
Facility as the process advances.
The Company owns additional hydro assets, including an installed share of
capacity of 162.5 MW in the province of Quebec.
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.
Statements in this news 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 the gross proceeds of the transaction for the
Company, reaching a definitive agreement in the first quarter of 2009, the
impact of the sale on our operations, our operating costs, new investment
opportunities, communication with workers and local communities and our
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," "may," "expect," "believe," and other terms with
similar meaning indicating possible future events or potential impact on the
business or stockholders of AbitibiBowater.
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
finalize the proposal on terms satisfactory to the Company within the
announced time frame, the prices under which the Company would be able to sell
the assets, the potential impact of the sale of the Company's interest in the
Facility on mill operations, our ability to decrease operating costs and take
advantage of new investment opportunities, our ability to continue to keep
workers and local communities informed about the sale and industry conditions
generally. Additional factors are detailed from time to time in
AbitibiBowater'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/A for the year ended
December 31, 2007, filed with the SEC on March 20, 2008, and the Company's
Quarterly Report on Form 10-Q for the period ended September 30, 2008, filed
with the SEC on November 14, under the caption "Risk Factors" in each
respective report. All forward-looking statements in this news release are
expressly qualified by information contained in the Company's filings with the
SEC and the Canadian securities regulatory authorities. AbitibiBowater
disclaims any obligation to update or revise any forward-looking information.