By: E&P Staff Citing very low demand, AbitibiBowater began a shutdown of its 400,000-metric-ton-per-year Thorold, Ont., recycled newsprint mill on Saturday, affecting approximately 250 members of the paperworkers union.
Operations are slated to restart March 31.
Shortly before the shut-down, AbitibiBowater began a second phase in recapitalizing Abitibi-Consolidated Inc., with the aim of cutting debt by $2.4 billion. The newsprint giant will convert $2.9 billion of unsecured notes into new notes, common stock and warrants. The company will make an offering of $389 million in first-lien notes and 222.2 million series D warrants.
At the same time, Abitibi-Bowater will repay the company's $413 million 13.75% secured notes due in 2011 and sell a majority stake in Manicouagan Power Co. to Hydro-Quebec for nearly $483 million.
In December, the Newfoundland government turned over to a crown corporation a hydroelectric plant that had powered AbitibiBowater's Grand Falls-Windsor newsprint mill that the company had shuttered and then closed down in early February. The company, which paid $100,000 for the plant's use under a lease arrangement, valued the arrangement's timber rights and hydroelectric assets at $300 million (Canadian).
The CBC reported that the provincial government's transfer of the plant to a public corporation makes it untaxable, and that AbitibiBowater may challenge to move under NAFTA rules.
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