ABH (TSX, NYSE) US$
MONTREAL, April 1 /PRNewswire-FirstCall/ -- AbitibiBowater Inc. announced today that it has successfully completed a series of previously announced financing transactions designed to address upcoming debt maturities and general liquidity needs, principally at its Abitibi-Consolidated Inc. ("Abitibi") subsidiary. The transactions included:
- A private placement, by Abitibi-Consolidated Company of Canada
("ACCC"), a wholly-owned subsidiary of Abitibi, of US$413,000,000 of
13.75% senior secured notes due 2011;
- A US$400,000,000 364-day senior secured term loan to ACCC;
- A private placement of US$350,000,000 of 8% convertible notes, due
2013, issued by AbitibiBowater; and
- A private exchange offer whereby ACCC exchanged a combination of new
senior unsecured notes and cash for an aggregate of approximately
US$453,000,000 of outstanding notes issued by Abitibi, ACCC and
Abitibi-Consolidated Finance L.P. ("ACF"), a wholly-owned subsidiary of
Abitibi.
In the private placement of senior secured notes, ACCC issued US $413,000,000 principal amount of 13.75% notes due 2011. The notes are guaranteed by Abitibi and certain of its subsidiaries, and are secured by mortgages on certain pulp and paper mills owned by, and security interests in and pledges of certain other assets of, ACCC and the guarantors.
ACCC entered into a Credit and Guaranty Agreement (the "Credit Agreement") among ACCC, Abitibi, certain of Abitibi's subsidiaries and affiliates, and a syndicate of lenders. Goldman Sachs Credit Partners L.P. is serving as syndication agent, documentation agent, administrative agent and collateral agent under the Credit Agreement. The Credit Agreement provides for a US$400,000,000 senior secured term loan (the "Term Loan") with a term of 364 days and a coupon of LIBOR + 800 basis points, with a 3.5% LIBOR floor. ACCC is required to repay US$50 million of the Term Loan with certain proceeds from the previously announced sale of its Snowflake, Arizona newsprint mill as well as a portion of the cash, if any, reserved but unused in connection with the exchange offer by ACCC.
Simultaneously with these transactions, AbitibiBowater consummated the sale of US$350,000,000 of 8% convertible notes due 2013 to Fairfax Financial Holdings Limited and certain of its designated subsidiaries. The convertible notes bear interest at a rate of 8% per annum (10% per annum if AbitibiBowater elects to pay interest through the issuance of additional convertible notes as "pay in kind") and are fully and unconditionally guaranteed by Bowater Incorporated, a wholly-owned subsidiary of AbitibiBowater. The notes are convertible into shares of AbitibiBowater common stock at an initial conversion price of US$10.00 per share.
The Company also announced that, as a result of the consummation of the above transactions, the financing condition had been satisfied in connection with ACCC's private offer to exchange a combination of cash and new 15.5% unsecured notes, due 2010, issued by ACCC (the "Exchange Notes") for three series of outstanding notes: (i) up to US$195,612,000 principal amount of 6.95% senior notes due April 1, 2008, issued by Abitibi, (ii) up to US $150,000,000 principal amount of 5.25% senior notes due June 20, 2008, issued by ACCC, and (iii) up to US$150,000,000 principal amount of 7.875% senior notes due August 1, 2009, issued by ACF. The Company had previously waived the minimum tender condition with respect to the exchange offer and, as of March 31, 2008, had received tenders for approximately 89% of the 6.95% notes, 92% of the 5.25% notes, and approximately 95% of the 7.875% notes. The exchange offer remains open until 12:00 midnight New York City time, on April 4, 2008. The exchange offers are being made upon the terms and conditions set forth in the Second Amended and Restated Offering Circular and Consent Solicitation Statement (the "Offering Circular") dated March 18, 2008, as supplemented, and the related Letter of Transmittal and Consent. Further details about the terms and conditions of the exchange offer are set forth in the Offering Circular.
The senior secured notes, the Term Loan, the convertible notes and the exchange offer form the basis of the Company's previously announced refinancing plan.
"Our efforts to complete the necessary refinancing were complex in light of the current turmoil in the credit markets," stated Executive Chairman John W. Weaver. "We took a comprehensive approach to the task, having developed a refinancing plan that went beyond our immediate maturities. We are pleased to have this project behind us and look forward with optimism to the future."
In commenting on today's announcement and upcoming developments, President and Chief Executive Officer David J. Paterson stated, "We have accomplished much during our first six months as AbitibiBowater. We continue to reach out to a range of stakeholders as we actively prepare for the second phase of our strategic review. We remain committed to taking concrete steps to return AbitibiBowater to profitability and position the Company to emerge as the great turnaround story of the industry."
None of the senior secured notes, the convertible notes or the Exchange Notes have been or will be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption to the registration requirements.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering, solicitation or sale would be unlawful.
About AbitibiBowater
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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. Following the required divestiture agreed to with the U.S. Department of Justice, AbitibiBowater will own or operate 27 pulp and paper facilities and 35 wood products facilities located in the United States, Canada, the United Kingdom and South Korea. Marketing its products in more than 90 countries, AbitibiBowater is also among the world's largest recyclers of newspapers and magazines, and has more third-party certified sustainable forestland 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 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 Abitibi-Consolidated's refinancing plans and its future impact, the terms of the exchange offer and the timeframe for its completion and future operating results. Forward-looking statements may be identified by the use of forward-looking terminology such as the words "expect," "plans," "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 U.S. credit markets generally, and worsening industry conditions. 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 AbitibiBowater's Annual Report on Form 10-K for the year ended December 31, 2007, under the caption "Risk Factors." All forward-looking statements in this news release are expressly qualified by information contained in AbitibiBowater's filings with the SEC and the Canadian securities regulatory authorities. AbitibiBowater disclaims any obligation to update or revise any forward-looking information.
ABITIBIBOWATER INC. - ENGLISH
