News Releases

    • AbitibiBowater announces signing of proposal for sale of Ontario hydro assets and reaffirms expectation of substantial improvement in fourth quarter financial results
          ABH (NYSE, TSX)
          US $
          MONTREAL, Dec. 22 /CNW Telbec/ - AbitibiBowater Inc. today announced it
      has accepted a proposal for the sale of its equity interest in ACH Limited
      Partnership to a major industrial energy producer. ACH Limited Partnership was
      established to hold hydro-electric generating assets in Ontario, Canada by the
      Company's Abitibi-Consolidated Company of Canada subsidiary in April 2007. The
      Company owns a 75 percent equity interest in ACH Limited Partnership.
          The proposal values the hydro assets, which have a combined capacity of
      136.8 MW, at C$540 million. The resulting gross proceeds (excluding expenses)
      for AbitibiBowater would be C$197.5 million. As part of the transaction, the
      buyer would also assume C$250 million of ACH Limited Partnership's term debt.
          "The signing of this proposal marks continued progress with our
      de-leveraging initiatives," stated David J. Paterson, President and Chief
      Executive Officer of AbitibiBowater. "We look forward to continued
      de-leveraging progress as we implement additional measures to improve our free
      cash flow generation."
          The non-binding proposal for the sale of the hydro-electric generating
      assets in Ontario is subject to due diligence, among other terms and
      conditions. While AbitibiBowater expects that a definitive agreement will be
      reached in the first quarter of 2009, no assurances can be provided as to when
      or if a definitive agreement will be executed.
          The proposal does not include the sale of the Iroquois Falls or Fort
      Frances, Ontario mills. AbitibiBowater is pleased with the efforts both mills
      have made since the merger in lowering their costs. The mills remain
      competitive and the Company continues to look for investment opportunities to
      ensure that they remain competitive. AbitibiBowater is committed to keeping
      workers and local communities informed about the sale of ACH Limited
      Partnership as the process advances.
          AbitibiBowater owns additional hydro assets, including an installed share
      of capacity of 363 MW in the Province of Quebec.
          Q4 2008 Expectations
          AbitibiBowater Inc. today also announced that it is reaffirming its
      guidance of significant improvement in fourth quarter financial performance.
      The Company expects its fourth quarter operating income, excluding gains on
      asset sales, impairments and mill closure and other related charges, to be in
      the range of $65 million to $95 million compared to a $9 million loss for the
      third quarter of 2008. The Company also expects its earnings before interest,
      taxes, depreciation and gains on asset sales, impairments and mill closure and
      other related charges (Adjusted EBITDA) to be in the range of $245 million to
      $275 million for the fourth quarter of 2008. For the third quarter of 2008,
      Adjusted EBITDA was $175 million.
          "This substantial improvement in the Company's operating performance is a
      result of our employees' efforts to achieve synergies as well as reductions in
      input costs," stated Paterson. "Our input costs, particularly energy and
      fiber, have declined dramatically this quarter. We have also benefited from a
      weakening Canadian dollar. Despite lower volumes, as evidenced by our
      production curtailments, we expect a substantial improvement in financial
      performance in 2009 compared to 2008".
          Use of Non-GAAP Measures
          This press release includes references to operating income (loss) before
      special items and Adjusted EBITDA, which are not recognized measures under
      United States generally accepted accounting principles ("GAAP"). The Company
      provides these non-GAAP financial measures to assist investors in assessing
      the current performance of its core cash operations in the same manner that
      management evaluates these operations. The Company believes these measures are
      frequently used by securities analysts, investors and other interested parties
      in the evaluation of companies like AbitibiBowater, with substantial financial
      leverage. However, these non-GAAP financial measures should not be considered
      as alternatives to cash flows from operations, as measures of liquidity or as
      alternatives to operating income (loss) or net income (loss), as indicators of
      the Company's operating performance or any other measures of performance in
      accordance with GAAP. Readers are cautioned not to place undue reliance on
      these non-GAAP financial measures.
          Other companies may define operating income (loss) before special items
      and Adjusted EBITDA differently and, as a result, the Company's non-GAAP
      financial measures may not be directly comparable to those of other companies.
      The Company has determined that it is not practical to provide a
      reconciliation of the Company's forecasted operating income (loss) before
      special items and Adjusted EBITDA to the most directly comparable GAAP
      measures because certain items, such as impairments, mill closure and other
      related charges, cannot be reasonably estimated or predicted at this time.
          Operating income (loss) before special items is defined as operating
      income (loss) from the Company's consolidated statements of operations,
      excluding closure costs, impairment and other related charges, severance and
      merger-related costs, gains on dispositions of assets and other discretionary
      charges or credits. A reconciliation of third quarter operating income (loss)
      before special items to GAAP operating income (loss) is included in the
      Company's November 6, 2008 earnings release for the third quarter, available
      on the Company's website.
          Adjusted EBITDA is defined as EBITDA (net income (loss) before interest
      expense, interest income, income tax expense (benefit) and depreciation,
      amortization and cost of timber harvested) excluding gains on asset sales,
      impairments and mill closure and other related charges.
          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 25 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 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.
          Forward-Looking Statements
          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 resulting gross proceeds of the sale for the
      Company, reaching a definitive agreement in the first quarter of 2009,
      developing a plan to mitigate the impact of the sale on our operations,
      expected earnings, improvements of our operating and financial performance,
      the continued momentum in our financial performance, our efforts to reduce
      costs, increase revenues and profitability, our assessments of market
      conditions, strategies, future plans, future sales, prices for our major
      products, inventory levels, capital spending, tax rates, and our business
      outlook 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," "may," "expect," "believe," "anticipate"
      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, industry conditions
      generally and further growth in alternative media, the ability to finalize the
      ACH proposal on terms satisfactory to the Company within the announced time
      frame or at all, the prices under which the Company would be able to sell the
      assets, the ability to develop a plan to mitigate the sale of the hydro asset
      on mill operations, the impact of the global credit crisis on the Company's
      ability to meet its $1 billion debt reduction target, the Company's ability to
      divest assets on satisfactory terms, the Company's efforts to address its
      upcoming debt maturities, the Company's ability to refinance or amend the
      terms of its current indebtedness on satisfactory terms, the Company's ability
      to realize price increases, the Company's ability to obtain timely
      contributions to cost-reduction initiatives from unionized and salaried
      employees, the costs of raw materials such as energy, chemicals and fiber, the
      risk that the Company could fail to comply with NYSE continued listing
      requirements, which could result in immediate delisting of the Company's
      common stock, the risk that the Company could fail to achieve the financial
      projections set forth in this press release due to the foregoing factors and
      other unforeseen factors, and the success of the Company's continuing
      post-merger integration activities.
          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, 2008, 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.
      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,