Restructuring Efforts Have Transformed the Company
MONTREAL, Dec. 9 /PRNewswire-FirstCall/ - AbitibiBowater is pleased to announce that it has successfully completed its reorganization and has emerged from creditor protection under the Companies' Creditors Protection Act (or "CCAA") in Canada and chapter 11 of the U.S. Bankruptcy Code (or "chapter 11").
"Through our restructuring efforts, we have transformed this organization and given AbitibiBowater a new future - one driven by a Company-wide commitment to profitability and sustainability," stated David J. Paterson, President and Chief Executive Officer. "By strengthening our competitiveness and dramatically improving our financial position, AbitibiBowater has become one of the lowest cost forest products companies in North America. We are now a leaner, more flexible organization with a balanced product portfolio, better able to create value for our stakeholders while responding to the challenges of a tough industry with ongoing market volatility."
Emergence from creditor protection represents the culmination of efforts that were undertaken shortly after the combination of Abitibi-Consolidated Inc. and Bowater Incorporated in order to address fundamental changes in the marketplace. Since 2007, the Company has restructured itself both financially and operationally in a way that has dramatically lowered its breakeven point, having:
- Streamlined its asset profile to top-performing facilities, closing or idling 3.4 million metric tons of paper capacity on an annual basis. This represents capacity reductions of 41% for newsprint and 32% for commercial printing papers. Wood products capacity was reduced by 21% over the same period. - Balanced its portfolio of products, reducing exposure to any one grade. New production capacities on an annual basis are - newsprint: 3.3 million metric tons, commercial printing papers: 2.5 million metric tons, pulp: 1.1 million metric tons and wood products: 2.2 billion board feet. - Developed a flexible mill portfolio with a mix of U.S., Canadian and international mills located strategically to efficiently serve our customers, supporting low-cost, on-time delivery and providing a natural currency hedge as well as the ability to adapt to changing market dynamics. - Completed a strategic review and sold non-core assets and land holdings for total aggregate proceeds of over $940 million. - Reduced its debt burden by 88% from $6.8 billion to $850 million, excluding approximately $239 million in non-recourse joint-venture debt for ACH Limited Partnership. This Company is currently in the process of evaluating the potential sale of ACH. - Eliminated $880 million of annual fixed costs, from $1,353 million to $473 million. - Realized over $375 million in annualized synergies from manufacturing efficiencies and SG&A reductions as well as procurement and logistics initiatives. - Entered into agreements with provincial authorities in Ontario and Quebec, reducing annual pension fund contributions by approximately $200 million. These reductions have been made while registered pension plans continue to pay 100% of obligations to retirees and beneficiaries. The Company will gradually move towards normalized solvency funding over a 10-year period. - Completed other initiatives that have materially improved AbitibiBowater's financial position, including: the repudiation or renegotiation of unfavorable contracts, creating savings of over $78 million and the settlement of a North American Free Trade Agreement (NAFTA) claim of C$130 million for the expropriation of Company assets in Newfoundland and Labrador.
In noting the importance of this occasion, Alain Grandmont, Executive Vice President, Human Resources and Supply Chain, stated: "It brings me great pride in sharing this defining moment in AbitibiBowater's history with our employees, union leadership, customers, business partners and supporters, without whom this day would not have been possible. In the long process of our turnaround, all of us have made sacrifices to place this organization in the much stronger position it now enjoys. AbitibiBowater values and appreciates the commitment all have shown in helping us reach this point."
"The restructuring process has tested the strength of our relations with our employees, unions, business partners and the communities where we live and do business. We will work hard to renew positive relationships and build goodwill through a commitment to be profitable as well as environmentally and socially responsible," said Pierre Rougeau, Executive Vice President, Operations and Sales.
"Our continuing investments in sustainable forest management, renewable energy projects and reducing our environmental footprint reflect AbitibiBowater's commitment to be an environmental supplier of choice," added Yves Laflamme, Senior Vice President, Wood Products. "Moving forward, we remain committed to providing exceptional value to our customers by delivering diversified, innovative products and services that support our customer needs."
The path for AbitibiBowater to emerge from creditor protection was set in motion following the entry of a confirmation order for the Company's chapter 11 plan of reorganization by the U.S. Bankruptcy Court for the District of Delaware and the sanction of the Company's CCAA plan of reorganization by the Quebec Superior Court on November 23 and September 23, 2010, respectively. AbitibiBowater has closed $1,450 million in exit financing facilities that will be used to repay remaining debtor-in-possession credit facilities, honor obligations to secured creditors, make other payments required upon exit from creditor protection, and increase its already strong liquidity position. On or about December 17, 2010, the Company will make certain initial distributions to unsecured creditors in the form of new shares of AbitibiBowater common stock in payment of allowed creditor claims. Subject to official notice of issuance, the new shares will be listed on the New York Stock Exchange (the "NYSE") and the Toronto Stock Exchange (the "TSX"). Trading on the NYSE and TSX is expected to begin on December 10, 2010 on a "when issued" basis under the symbol "ABH WI", and "regular way" trading is anticipated to begin on December 20, 2010, the date of the initial distribution to unsecured creditors, under the symbol "ABH".
"Our emergence from creditor protection marks the beginning of a new AbitibiBowater. We are committed to building on our sound foundation by improving our business mix, reducing costs and providing high-quality products. I am confident that the financial and operating restructuring we have completed provides the framework for future success," added William G. Harvey, Executive Vice President and Chief Financial Officer.
More information regarding AbitibiBowater's completion of the reorganization and financial restructuring process is available through www.abitibibowater.com/emergence.
AbitibiBowater is a global leader in the forest products industry, producing a diverse range of products, including newsprint, commercial printing and packaging papers, market pulp and wood products. The Company owns or operates 18 pulp and paper mills and 24 wood products facilities located in the United States, Canada and South Korea. Marketing its products in more than 70 countries, AbitibiBowater is also among the largest recyclers of old newspapers and magazines in North America, and has third-party certified 100% of its managed woodlands to sustainable forest management standards.
Statements in this press release that are not reported financial results or other historical information of AbitibiBowater are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. They include, for example, statements relating to our: post-emergence financial condition, competitive position, efforts to improve our business mix, reduce costs and increase revenues and profitability, including our cost reduction initiatives regarding selling, general and administrative expenses; business outlook; curtailment of production of certain of our products; assessment of market conditions; 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," "will," "may," "expect," "believe," "anticipate," "attempt" and other terms with similar meaning indicating possible future events or potential impact on our business or AbitibiBowater's shareholders.
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. The potential risks and uncertainties that could cause our actual financial condition, results of operations and future performance to differ materially from those expressed or implied in this press release include: risks and uncertainties associated with the creditor protection proceedings, including limitations against debtors in connection therewith, the values, if any, that will be assigned to our various pre-petition liabilities and securities and the plans of reorganization, as further described in our quarterly report on Form 10-Q filed with the United States Securities and Exchange Commission ("SEC") on November 15, 2010; growth in alternative media that would further reduce the demand for print media and our products; the ability of our customers to afford to pay for our products; general industry, economic and market conditions, including the new residential construction market in the U.S.; our capital intensive operations and the adequacy of our capital resources; our ability to obtain permits to operate our facilities and continue to remain in compliance with environmental laws and regulations; strikes and other labor-related supply chain disruptions that may impact our ability to operate our facilities; fluctuations in foreign currency exchange rates, especially those relative to the U.S. dollar and the Canadian dollar; our significant degree of leverage, underfunding of our pension plans and concerns about our financial viability; the prices and terms under which we would be able to sell assets; the success of our implementation of additional measures to enhance our operating efficiency and productivity; the costs of raw materials such as energy, chemicals and fiber; the possibility that we could lose any or all of our equity interest in Augusta Newsprint Company; the post-emergence impact of the creditor protection proceedings on our operations, including the impact on our ability to negotiate favorable terms with suppliers, customers, counterparties and others; and other risk factors described in our quarterly report on Form 10-Q filed with the SEC on November 15, 2010.
All forward-looking statements in this press release are expressly qualified by the cautionary statements contained or referred to in this section and in our other filings with the SEC and the Canadian securities regulatory authorities. We disclaim any obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
SOURCE ABITIBIBOWATER INC. - ENGLISH