Fitch Downgrades AbitibiBowater

By: Fitch Ratings cut AbitibiBowater Inc.'s rating deeper into junk territory on Thursday, saying the newsprint maker faces an industry in decline.

Fitch Ratings cut AbitibiBowater's "B-" issuer-default rating to "CCC."

Based in Montreal, AbitibiBowater makes newsprint and paper for newspapers. Fitch said demand for newsprint shrank almost 12 percent last year as more consumers read their news online.

Demand for newsprint is contracting faster than AbitibiBowater can shut down production, Fitch said.

"There seems to be no foreseeable bottom to newsprint demand in the near future," Fitch said.

Raising prices will help, but cannot stem the "long-term structural shift from printed to electronic media," Fitch said.

Against the backdrop of a struggling industry, AbitibiBowater's liquidity has become a concern, Fitch said. The company owes $1.1 billion under a credit line, and will have to repay the principal on $350 million in bonds this year.

Borrowing money has become tougher because of unsettled financial markets, and Fitch said the company may have trouble refinancing its debt.

Shares of AbitibiBowater added $1.23, or 7.6 percent, to $17.40 in midday trading. The stock has ranged from $14.13 to $37.45 over the past year.