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AbitibiBowater will continue day-to-day operations during restructuring
April 17, 2009 By Pulp & Paper Canada
AbitibiBowater has filed for creditor protection, concluding there are no other viable alternatives to refinance it…
AbitibiBowater has filed for creditor protection, concluding there are no other viable alternatives to refinance its debt. The newsprint maker says DIP financing and continuation of existing receivables securitization program will allow the company to meet its current operating needs, but it has suspended incentive compensation and a newspaper in Newfoundland is reporting that former employees of the Grand Falls mill will not be receiving their severance packages.
AbitibiBowater plans to use this process to “deal decisively” with its debt burden.
A financing arrangement with Fairfax Financial Holdings Limited and Avenue Management LLC will allow the Company to meet current operating needs, including wages, benefits, and other operating expenses.
“The steps we are taking today and the vote of confidence given to us by our restructuring financial partners will enable us to protect the value of the business for our many loyal employees, customers, suppliers and other stakeholders,” said David J. Paterson, president and CEO, announcing the creditor protection on April 16.
AbitibiBowater produces a wide range of newsprint, commercial printing papers, market pulp and wood products.
AbitibiBowater employs 10,000 in Canada, has 14 pulp and paper mills, and operates 28 forest products plants.
According to The Advertiser, a newspaper based in Grand Falls-Windsor, Nfld., former employees of AbitibiBowater’s Grand Falls mill were supposed to receive their severance packages the same day the company announced it was filing for creditor protection.
“Unfortunately, the company will not be making any severance payments at this time,” Jean-Philippe Cote, AbitibiBowater’s director of Public Affairs and Government Relations, told The Advertiser in a telephone interview. “We regret we have to take this action.”
However, he added, workers’ pensions will not be affected.
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