Montreal, Quebec, Canada, 22 December 2008 -- /PRNewswire/ -- ABH (NYSE, TSX) -- AbitibiBowater Inc. today announced it has accepted a proposal for the sale of its equity interest in ACH Limited Partnership to a major industrial energy producer. ACH Limited Partnership was established to hold hydroelectric generating assets in Ontario, Canada, by the company's Abitibi-Consolidated Company of Canada subsidiary in April 2007. The company owns a 75% equity interest in ACH Limited Partnership.
The proposal values the hydro assets, which have a combined capacity of 136.8 MW, at CAD 540 million. The resulting gross proceeds (excluding expenses) for AbitibiBowater would be CAD 197.5 million. As part of the transaction, the buyer would also assume CAD 250 million of ACH Limited Partnership's term debt.
"The signing of this proposal marks continued progress with our deleveraging initiatives," stated David J. Paterson, president and chief executive officer of AbitibiBowater. "We look forward to continued deleveraging progress as we implement additional measures to improve our free cash flow generation."
The nonbinding proposal for the sale of the hydroelectric generating assets in Ontario is subject to due diligence, among other terms and conditions. While AbitibiBowater expects that a definitive agreement will be reached in the first quarter of 2009, no assurances can be provided as to when or if a definitive agreement will be executed.
The proposal does not include the sale of the Iroquois Falls or Fort Frances, Ontario, mills. AbitibiBowater is pleased with the efforts both mills have made since the merger in lowering their costs. The mills remain competitive and the company continues to look for investment opportunities to ensure that they remain competitive. AbitibiBowater is committed to keeping workers and local communities informed about the sale of ACH Limited Partnership as the process advances.
AbitibiBowater owns additional hydro assets, including an installed share of capacity of 363 MW in Quebec.
AbitibiBowater Inc. today also announced that it is reaffirming its guidance of significant improvement in fourth quarter financial performance. The company expects its fourth quarter operating income, excluding gains on asset sales, impairments, and mill closure and other related charges, to be in the range of CAD 65-95 million compared with a CAD 9 million loss for the third quarter of 2008. The company also expects its earnings before interest, taxes, depreciation, and gains on asset sales, impairments, and mill closure and other related charges (adjusted EBITDA) to be in the range of CAD 245-275 million for the fourth quarter of 2008. For the third quarter of 2008, adjusted EBITDA was CAD 175 million.
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 in the United States, Canada, the United Kingdom, and South Korea. Marketing its products in more than 90 countries, the company is also among the world's largest recyclers of old newspapers and magazines, and has more third-party certified sustainable forest land 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.