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Abitibi-Consolidated and Bowater amend combination agreement


May 15, 2007
By Pulp & Paper Canada

Greenville, SC — Abitibi-Consolidated and Bowater announced that they have amended the combination agreement signe…

Greenville, SC — Abitibi-Consolidated and Bowater announced that they have amended the combination agreement signed on January 29, 2007 pursuant to which Abitibi-Consolidated and Bowater agreed to combine their companies in an all-stock merger of equals. The purpose of the amendment is to ensure that the combination remains tax deferred for U.S. resident holders of Abitibi-Consolidated shares.
As amended, the combination agreement limits the number of exchangeable shares that may be issued to an amount that, when combined with exchangeable shares currently issued to holders of exchangeable shares of a Canadian subsidiary of Bowater, is less than 20% of the total voting power of AbitibiBowater. In the event that eligible Abitibi-Consolidated shareholders elect to receive more exchangeable shares than are available pursuant to the limit, the remainder of their shares will be exchanged for shares of AbitibiBowater common stock, pro rata to their shareholdings.
Based on publicly available information regarding the current shareholdings of Abitibi-Consolidated, Abitibi-Consolidated and Bowater believe that it is unlikely that eligible Canadian shareholders of Abitibi-Consolidated will be limited in their ability to receive exchangeable shares and to benefit from a tax deferral for Canadian income tax purposes.

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