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AbitibiBowater Emerges From Creditor Protection

Montreal, Quebec, Canada, 09 December 2010 -- AbitibiBowater is pleased to announce that it has successfully completed its reorganization and has emerged from creditor protection under the Companies’ Creditors Protection Act (CCAA) in Canada and Chapter 11 of the U.S. Bankruptcy Code.

“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,” said 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 to address fundamental changes in the marketplace. Since 2007, the company has restructured itself  financially and operationally in ways that have dramatically lowered its breakeven point, in the following ways:

  • 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 more than CAD 940 million.
  • Reduced its debt burden by 88% from CAD 6.8 billion to CAD 850 million, excluding approximately CAD 239 million in nonrecourse joint-venture debt for ACH Limited Partnership. This company is currently in the process of evaluating the potential sale of ACH.
  • Eliminated CAD 880 million of annual fixed costs, from CAD 1.353 billion to CAD 473 million.
  • Realized more than CAD 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 CAD 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 more than USD 78 million and the settlement of a North American Free Trade Agreement (NAFTA) claim of CAD 130 million for the expropriation of company assets in Newfoundland and Labrador.

“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.

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 23 November and 23 September 2010, respectively. AbitibiBowater has closed CAD 1.45 billion 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 17 December 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 (NYSE) and the Toronto Stock Exchange (TSX). Trading on the NYSE and TSX is expected to begin on 10 December 2010, on a “when issued” basis under the symbol “ABH WI,” and regular trading is anticipated to begin on 20 December 2010, the date of the initial distribution to unsecured creditors, under the symbol “ABH.”

More information regarding AbitibiBowater’s completion of the reorganization and financial restructuring process is available at 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 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.

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