AbitibiBowater Closes Sale of $850 Million in Senior Secured Notes

Newsprint maker AbitibiBowater Inc., headquartered in Montreal, announced Oct. 4 the closing of the sale of $850 million aggregate principal amount of 10.25% senior secured notes due 2018 in a private placement.

The notes were issued by ABI Escrow Corp., a wholly owned subsidiary of AbitibiBowater. ABI Escrow will merge with and into AbitibiBowater in connection with AbitibiBowater's and its subsidiaries' emergence from creditor protection, which is expected to occur this fall, subject to confirmation of its U.S. plan of reorganization.

Proceeds of the offering are in escrow until the effectiveness of the plans of reorganization. Net proceeds from the notes' sale will then be used to repay certain debt.

Following emergence, the notes will be senior secured obligations of AbitibiBowater, will be guaranteed by AbitibiBowater's material U.S. wholly owned subsidiaries, and will be secured by substantially all the U.S. assets of AbitibiBowater and the guarantors and the stock of certain subsidiaries.

The company said the notes will not be registered under the Securities Act or any state securities laws. They may not be offered or sold in the United States without such registration or an applicable exemption, and therefore will be subject to substantial restrictions on transfer. The offering is being made only to qualified U.S. institutional buyers and certain non-U.S. investors outside the United States.