AbitibiBowater, Inc. (fka ABWTQ)

[Pitt77]

AbitibiBowater still awaiting restructuring OK after court hearing adjourns

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Thursday, 18 November 2010 - 3:41pm
By Ross Marowits THE CANADIAN PRESS

MONTREAL — Insolvent newsprint giant AbitibiBowater’s restructuring plan still awaits U.S. Bankruptcy Court approval after Thursday’s hearing was adjourned until next week.
A telephone hearing with lawyers for the Montreal-based company and a number of creditors is scheduled to resume Tuesday.
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AbitibiBowater spokesman Seth Kursman said it’s unknown when the judge will finally rule on the plan.
“We continue to make progress and still anticipate emerging this fall a stronger, more sustainable company,” Kursman said in an email.
Creditor Aurelius Capital Management told the court that some of its objections to a revised plan have been resolved.
Court approval has taken longer than had been forecast.
The American court began to examine the restructuring plan on Sept. 24, a day after the Quebec Superior Court gave its blessing.
The Delaware-based judge has to weigh the Montreal-based company’s desire to re-emerge as a lower-cost forestry products producer against the objections of some creditors.
The judge has also received written submissions from AbitibiBowater shareholders and others accusing the company of undervaluing assets, withholding recoveries from asset sales and pushing an overly generous management compensation plan.
“Confirming this plan will set a precedent for other companies to treat shareholders in this manner, which may very well undermine the confidence people have in this process,” wrote Dr. Henry Romero in a letter to the judge.
A Texas shareholder accused management of enriching itself by several hundred million dollars while ignoring the interests of ordinary stakeholders.
“We have placed our lives, our savings and support into this company over the years only to seem them blithely toss us to the side without even talking to us,” he wrote.
The proposed incentive plan would pay out millions of dollars to senior executives, with CEO David Paterson receiving the largest payout.
AbitibiBowater filed for protection in April 2009, some two years after it was formed from the 2007 merger of Canadian and U.S. newsprint companies.
The long restructuring process has cost AbitibiBowater hundreds of millions in professional fees for lawyers, accountants and others.
In the third quarter, its lost US$829 million as restructuring costs more than doubled to $731 million from a year ago.
A majority of AbitibiBowater’s creditors in Canada and the United States approved the restructuring plan in September, but Bowater Canada Finance Corp., a special purpose subsidiary with no operating assets, failed to win approval and may be excluded from the restructuring.
The company has sold about $1 billion worth of non-core assets, including a power generating facility in Quebec, and idled or permanently closed several paper mills.
AbitibiBowater said it hopes to earn more than US$1.5 billion in net profits over the next four years as it emerges as a lower-cost producer better able to absorb market and currency fluctuations.
The company has cut 6,000 jobs and dramatically reduced its paper and wood capacity by shutting down mills as it prepares to exit creditor protection. As of the end of March, it employed about 11,900 people, mostly in Ontario and Quebec.
AbitibiBowater produces newsprint, commercial printing papers, market pulp and wood products at 23 pulp and paper mills and 30 wood products operations in the United States, Canada, the United Kingdom and South Korea
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