AbitibiBowater files for bankruptcy protection
NEW YORK - Newsprint maker AbitibiBowater Inc. on Thursday filed for bankruptcy court protection in Canada and the U.S. after deciding there was no other way it could deal with its more than $6 billion debt.
Company operations will continue as normal during its restructuring, spokesman Seth Kursman said in a telephone interview, 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, created in 2007 in a combination of U.S.-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.
"The company concluded that there are no viable alternatives to its previously announced proposed refinancing … and as a result has determined that the best course of action is to pursue its overall restructuring under Court supervision in the United States and Canada," AbitibiBowater said in a statement.
Early Thursday morning the New York Stock Exchange and Toronto Stock Exchange, having been alerted by the company to its bankruptcy filings, halted trading in the stock, which closed Wednesday at 53 cents.
In the past 52 weeks, shares have ranged from 24 cents to $14.89. The company's current market capitalization is $30.5 million.
Besides the global recession, the pulp and paper maker faced a subzero 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 U.S., 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, while the Rocky Mountain News in Denver shut completely in February after failing to find a buyer.
By last month these challenges prompted AbitibiBowater to advise, in a U.S. regulatory filing, that its "liquidity position is currently severely constrained."
Efforts to avoid bankruptcy included selling hundreds of millions in assets, laying off workers and attempting to refinance its massive debt.
However, earlier this month it terminated a $1.8 billion refinancing effort to exchange existing debt for new debt; the exchange offer's deadline had been extended several times.
A service of the Associated Press(AP)