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AbitibiBowater shuts down four mills, idles three


December 4, 2007
By Pulp & Paper Canada

Montreal, QC — AbitibiBowater has announced the permanent closure of their Belgo mill in Shawinigan, QC and the mi…

Montreal, QC — AbitibiBowater has announced the permanent closure of their Belgo mill in Shawinigan, QC and the mill in Dalhousie, NB. Mills in Donnacona, QC and Mackenzie, BC will be indefinitely idled. Two Mackenzie sawmills directly supporting the Mackenzie paper operation will also be indefinitely idled. The previously idled Fort William mill in Thunder Bay, ON and the Lufkin, TX paper mill will also be permanently closed, as well as PM3 at the Gatineau, QC facility.

These actions are part of Phase 1 of AbitibiBowater’s plan to improve profitability, and will reduce newsprint and commercial printing papers production capacity by approximately 1 million metric tons per year during the first quarter of 2008. The Board of Directors has also suspended the dividend to shareholders. Targeted synergies stemming from the merger have been increased to $375 million.

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AbitibiBowater has targeted $500 million from asset sales, including non-core facilities, U.S. timberlands and the newsprint mill at Snowflake, AZ, which must be divested according to the agreement reached with the U.S. Department of Justice for approval of the Abitibi-Consolidated/Bowater merger.

The company is asking its Canadian union partners to reopen current labour agreements and explore ways to reduce overall labour costs and provide enhanced flexibility in the workplace. The salaried workforce will be impacted by on-going benefits harmonization.

Phase 2 of AbitibiBowater’s strategy will include a comprehensive review of all aspects of the business over the next four months in an effort to further reduce costs, improve its manufacturing platform and better position the company in the global marketplace. Given the specific pressures in Eastern Canada relative to wood availability, energy and labour, the company notes that a second phase of closures could take place by mid-2008; any decisions regarding this will be confirmed in the second quarter of 2008.


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