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AbitibiBowater Inc.
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Montreal, Quebec, Canada, 09 February 2009 -- /PRNewswire/ - AbitibiBowater Inc. announced today the commencement of private offers to exchange certain outstanding series of unsecured notes issued by its Bowater Incorporated subsidiary (or by a subsidiary of Bowater), in a private placement, for New Notes described below. The eligible series of Existing Notes consist of:
  • 9.00% Debentures due 2009 (the 2009 Notes);
  • Floating Rate Senior Notes due 2010 (the 2010 Notes);
  • 7.95% Notes due 2011 issued by Bowater Canada Finance Corporation, a wholly-owned subsidiary of Bowater (the 2011 Notes);
  • 9.50% Debentures due 2012 (the 2012 Notes);
  • 6.50% Notes due 2013 (the 2013 Notes); and
  • 9.375% Debentures due 2021 (the 2021 Notes).
The Exchange Notes will be issued by Bowater Finance II LLC (Bowater Finance), an indirect wholly owned subsidiary of AbitibiBowater, and will consist of:
  • 10.00% Second Lien Notes due January 31, 2012, and
  • 10.50% Third Lien Notes due March 31, 2012.
The Exchange Offers are being made only to qualified institutional buyers inside the United States and to certain non-U.S. investors outside the United States.

The company is also soliciting consents to amend the indentures governing the Existing Notes to eliminate the covenants in such indentures relating to liens, secured debt, and sale/leaseback transactions.

The Exchange Offers and Consent Solicitation will expire at 11:59 p.m., Eastern Time, on 09 March 9, 2009, unless extended. Tendered Existing Notes may be validly withdrawn at any time before the expiration date, but not thereafter.

Concurrently with the Exchange Offers and the Consent Solicitation, Bowater Finance is offering to eligible holders of Existing Notes, in a Concurrent Notes Offering, new 15.50% First Lien Notes due 15 November 2011 (the First Lien Notes, and together with the Exchange Notes, the New Notes). Holders of Existing Notes that tender some or all of their Existing Notes in the Exchange Offers will have the right, but not the obligation, to subscribe for a portion of the First Lien Notes being offered in the Concurrent Notes Offering.

Holders who subscribe for First Lien Notes in the Concurrent Notes Offering will receive consideration consisting of an additional principal amount of Exchange Notes for their Existing Notes tendered and accepted in the Exchange Offers and a subscription fee payable in an additional principal amount of First Lien Notes. The maximum aggregate subscription amount for First Lien Notes that will be accepted in the Concurrent Notes Offering (i.e., cash proceeds to the issuer) is CAD 211.2 million.

Separately, Bowater Finance has entered into a note purchase agreement with a private institutional investor pursuant to which the investor has agreed to purchase, on a private placement basis, CAD 80 million principal amount of First Lien Notes for a purchase price of CAD 80 million. Such offer is a separate private placement of First Lien Notes to the institutional investor in addition to the Concurrent Notes Offering, and will be made contemporaneous with and contingent upon the Exchange Offers and the Concurrent Notes Offering.

Net cash proceeds from the Concurrent Notes Offering and the additional private placement will be used to repay amounts outstanding under Bowater's bank credit facilities.

For each CAD 1000 principal amount of Existing Notes validly tendered (and not validly withdrawn) and accepted for exchange and for which the holder elects to subscribe for First Lien Notes in the Concurrent Notes Offering (a Subscribing Tender), such holder will receive the principal amount and form of Exchange Notes shown in the table below.

SUBSCRIBING TENDERS
-------------------------------------------------------------------------

EXISTING NOTES PRINCIPAL AMOUNT OF FORM OF
TENDERED EXCHANGE NOTES EXCHANGE NOTES(1)
----------------------- ----------------------- -----------------------
2009 Notes CAD 800 Second Lien Notes
2010 Notes CAD 700 Third Lien Notes
2011 Notes CAD 650 Third Lien Notes
2012 Notes CAD 600 Third Lien Notes
2013 Notes CAD 575 Third Lien Notes
2021 Notes CAD 550 Third Lien Notes

(1) Not including First Lien Notes subscribed for in Concurrent Notes
Offering.

For each CAD 1000 principal amount of Existing Notes validly tendered (and not validly withdrawn) and accepted for exchange and for which the holder does not elect to subscribe for First Lien Notes in the Concurrent Notes Offering (a Non-Subscribing Tender), such holder will receive the principal amount and form of Exchange Notes shown in the table below.

NON-SUBSCRIBING TENDERS
-------------------------------------------------------------------------

EXISTING NOTES PRINCIPAL AMOUNT OF FORM OF
TENDERED EXCHANGE NOTES EXCHANGE NOTES
----------------------- ----------------------- -----------------------
2009 Notes CAD 750 Third Lien Notes
2010 Notes CAD 650 Third Lien Notes
2011 Notes CAD 600 Third Lien Notes
2012 Notes CAD 550 Third Lien Notes
2013 Notes CAD 525 Third Lien Notes
2021 Notes CAD 500 Third Lien Notes

The Exchange Offers are conditioned upon, among other things, there being validly tendered and not validly withdrawn on or before the Expiration Date, greater than 97% in aggregate principal amount of 2009 Notes and 2010 Notes, and greater than 50% in aggregate principal amount of 2011, 2012, 2013, and 2021 Notes. However, this condition may be waived by Bowater Finance under certain circumstances. In addition, Bowater Finance has the right to terminate or withdraw any of the Exchange Offers at any time and for any reason, including if any of the conditions is not satisfied.

The New Notes will be senior secured obligations of Bowater Finance, and will be guaranteed by AbitibiBowater, Bowater, Bowater Newsprint South LLC (Newsprint South), a wholly owned subsidiary of AbitibiBowater, and by certain other subsidiaries of Bowater and Newsprint South.

Except as provided, the New Notes have not been and will not be registered under the Securities Act of 1933 or any state securities laws, may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements, and will therefore be subject to substantial restrictions on transfer. Bowater Finance will enter into a registration rights agreement pursuant to which it will agree to file an exchange offer registration statement with the Securities and Exchange Commission with respect to the New Notes.

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, AbitibiBowater is also among the world's largest recyclers of old newspapers and magazines, and has third-party certified 100% of its managed woodlands to sustainable forest management standards. AbitibiBowater's shares trade under the stock symbol ABH on both the New York Stock Exchange and the Toronto Stock Exchange.
 


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