AbitibiBowater Gets Good News in Ottawa and Wilmington

By: E&P Staff

U.S. bankruptcy court in Delaware has approved AbitibBowater’s $1.35 billion financing plan, which the Montreal-based newsprint manufacturing giant expects will enable it to exit bankruptcy in mid-October, about a year-and-a-half after it petitioned for a Chapter 13 reorganization.

Reuters reported that Judge Kevn Carey also approved the company’s request to file under seal the fees it will pay to borrow money, in order to protect negotiation of terms for that borrowing — needed to help pay secured, prebankruptcy debt.

Earlier this week, the Canadian government reached agreement to pay AbitibiBowater, upon its restructuring, C$130 million (Canadian) for provincial expropriation of its assets in Newfoundland and Labrador. The government called the sum the fair market value of the assets. AbitibiBowater irrevocably withdrew its claim.

That claim originally had been for C$500 million under a provision of the North American Free Trade Agreement. NAFTA’s Chapter 11 allows foreign companies to seek compensation from countries where they can demonstrate unfair and discriminatory action by a government. National governments are responsible for state or provincial government action.

Although headquartered in Canada, the forest-products company is incorporated in Delaware, and, since its merger with Bowater, has a substantial presence in the United States.

Newfoundland took over AbitibiBowater’s timber and water rights and its hydroelectric assets in the province in 2008 in response to a company mill closure that left 800 workers unemployed.

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