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AbitibiBowater Announces Successful Completion of Refinancing Transactions
Montreal, Quebec, Canada, 01 April 2008 -- /CNW Telbec/ -- AbitibiBowater Inc. has successfully completed a series of previously announced financing transactions designed to address upcoming debt maturities and general liquidity needs, principally at its Abitibi-Consolidated Inc. subsidiary. The transactions included:

* A private placement, by Abitibi-Consolidated Company of Canada (ACCC), a wholly-owned subsidiary of Abitibi, of USD 413,000,000 of 13.75% senior secured notes due 2011;

* A USD 400,000,000 364-day senior secured term loan to ACCC;

* A private placement of USD 350,000,000 of 8% convertible notes, due 2013, issued by AbitibiBowater; and

* A private exchange offer whereby ACCC exchanged a combination of new senior unsecured notes and cash for an aggregate of approximately USD 453,000,000 of outstanding notes issued by Abitibi, ACCC, and Abitibi-Consolidated Finance L.P. (ACF), a wholly-owned subsidiary of Abitibi.

In the private placement of senior secured notes, ACCC issued USD 413,000,000 principal amount of 13.75% notes due 2011. The notes are guaranteed by Abitibi and certain of its subsidiaries, and are secured by mortgages on certain pulp and paper mills owned by, and security interests in and pledges of certain other assets of, ACCC and the guarantors.

ACCC entered into a credit and guaranty agreement among ACCC, Abitibi, certain of Abitibi's subsidiaries and affiliates, and a syndicate of lenders. Goldman Sachs Credit Partners L.P. is serving as syndication agent, documentation agent, administrative agent, and collateral agent under the credit agreement. The credit agreement provides for a USD 400,000,000 senior secured term loan with a term of 364 days and a coupon of LIBOR + 800 basis points, with a 3.5% LIBOR floor.

ACCC is required to repay USD 50 million of the term loan with certain proceeds from the previously announced sale of its Snowflake, Arizona, newsprint mill and a portion of the cash, if any, reserved but unused in connection with the exchange offer by ACCC.

Simultaneously with these transactions, AbitibiBowater sold USD 350,000,000 of 8% convertible notes due 2013 to Fairfax Financial Holdings Limited and certain of its designated subsidiaries. The convertible notes bear interest at a rate of 8% per annum (10% per annum if AbitibiBowater elects to pay interest through the issuance of additional convertible notes as "pay in kind") and are fully and unconditionally guaranteed by Bowater Incorporated, a wholly-owned subsidiary of AbitibiBowater. The notes are convertible into shares of AbitibiBowater common stock at an initial conversion price of USD 10.00 per share.

The company also announced that, through these transactions, the financing condition had been satisfied in connection with ACCC's private offer to exchange a combination of cash and new 15.5% unsecured notes, due 2010, issued by ACCC (the exchange notes) for three series of outstanding notes: (i) up to USD 195,612,000 principal amount of 6.95% senior notes due 01 April 2008, issued by Abitibi; (ii) up to USD 150,000,000 principal amount of 5.25% senior notes due 20 June 2008, issued by ACCC; and (iii) up to USD 150,000,000 principal amount of 7.875% senior notes due 01 August 2009, issued by ACF.

The company had previously waived the minimum tender condition with respect to the exchange offer and, as of 31 March 2008, had received tenders for approximately 89% of the 6.95% notes, 92% of the 5.25% notes, and approximately 95% of the 7.875% notes. The exchange offer remains open until midnight Eastern Time, on 04 April 2008. The exchange offers are being made upon the terms and conditions set forth in the Second Amended and Restated Offering Circular and Consent Solicitation Statementdated 18 March 2008, as supplemented, and the related Letter of Transmittal and Consent. Further details about the terms and conditions of the exchange offer are set forth in the Offering Circular.

The senior secured notes, the term loan, the convertible notes, and the exchange offer form the basis of the company's previously announced refinancing plan.

"Our efforts to complete the necessary refinancing were complex in light of the current turmoil in the credit markets," said John W. Weaver, executive chairman. "We took a comprehensive approach to the task, having developed a refinancing plan that went beyond our immediate maturities. We are pleased to have this project behind us and look forward with optimism to the future."

None of the senior secured notes, the convertible notes, or the exchange notes have been or will be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption to the registration requirements.

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. Following the required divestiture agreed to with the U.S. Department of Justice, AbitibiBowater will own or operate 27 pulp and paper facilities and 35 wood products facilities 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 newspapers and magazines, and has more third-party certified sustainable forestland 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.

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