North America’s biggest newsprint manufacturer AbitibiBowater files for bankruptcy
17 Apr 2009
AbitibiBowater Inc., North America's biggest newsprint maker, sought bankruptcy protection after US lenders refused to accept a proposed debt restructuring.
AbitibiBowater had assets of $9.9 billion and debt of $8.78 billion on 30 September 2008, according to a Chapter 11 petition filed today in US Bankruptcy Court in Wilmington, Delaware. Thirty-one affiliates also entered bankruptcy. The Montreal-based company plans to seek court protection in Canada tomorrow.
''Today's announced decisions ensure business continuity for AbitibiBowater and were made only after all other viable options to recapitalize our long-term debt were exhausted,'' CEO David Paterson said in a statement.
Company operations will continue as normal during its restructuring, spokesman Seth Kursman said, adding that overseas facilities are not affected by the bankruptcy filings. No layoffs, closures or pay cuts were announced with the bankruptcy, Kursman added, though such moves may be forthcoming as the restructuring progresses.
AbitibiBowater said it and its subsidiaries would also seek creditor protection under the Companies' Creditors Arrangement Act (CCAA) in Canada. The company intends to file in Canada on 17 April.
AbitibiBowater, created in 2007 in a combination of US-based Bowater and Canada's Abitibi-Consolidated, also said it arranged with Fairfax Financial Holdings Ltd. and Avenue Management LLC for debtor-in-possession financing of about $200 million.
Besides the global recession, the pulp and paper maker faced a perilous global credit environment plus the recent expropriation of a $300 million asset by a Canadian province. On top of those challenges, it has faced collapsing demand for its newsprint as advertisers abandon newspapers for the Internet.
In the US, newspapers have been cutting back on newsprint usage in response to rising prices, primarily by trimming the width of their pages. Declines in advertising and circulation have also resulted in fewer pages printed overall. In addition, dozens of newspapers have eliminated one or more of their print publication days.