AbitibiBowater thinks green on growth
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By Tom Hals
WILMINGTON, Delaware | Tue Nov 23, 2010 11:36pm IST
(Reuters) - David Paterson wants to use the bankruptcy do-over for AbitibiBowater Inc to lead the world's largest newsprint maker to greener pastures, including green energy.
The company's chief executive said that, when AbitibiBowater emerges from bankruptcy in a few weeks, he will present to the new board plans for transforming the company away from one tied to the ailing newspaper industry.
That may include "substantial" investments aimed at expanding the company's energy production.
"There's a lot of opportunity we've identified to sell biomass or other green energies," Paterson told Reuters in a telephone interview. "We will try to find ways to become a green energy seller."
A Delaware bankruptcy court confirmed the company's plan of reorganization on Monday which transferred equity to bondholders in return for wiping away billions of dollars in debt.
Existing shares will be wiped out.
The Montreal-based company, which is Canada's largest employer in forest products, is expected to emerge from bankruptcy by the end of the year.
Transforming a pulp-and-paper mill operator to a green energy producer is not as radical as it sounds.
The company already owns or has a stake in hydroelectric operations that generate 300 megawatts of power, enough to power about 200,000 homes. In addition, six of the company's seven North American cogeneration power plants were generating green energy from carbon-neutral biomass.
The company also generates power from methane captured from landfills and black liquor, a byproduct of in manufacturing wood pulp. For now, this energy is supporting the company's mills, but Paterson said AbitibiBowater could make investments to change that.
"We're hoping to convince the new board that those are good investments and we can get going with them," Paterson said.
The Canadian government has thrown its support behind green energy production by pulp producers that can expand their co-generation capacity, giving AbitibiBowater an added incentive to expand its energy operations.
Paterson plans to direct the company away from its reliance on newsprint toward coated and specialty papers with a higher barrier to entry.
"We can either keep shrinking the company as the market shrinks or invest to make other grades that don't have the same demand characteristics as newsprint," said Paterson.
Paterson, who led Bowater into the 2007 merger with Abitibi Consolidated and then led the merged company into bankruptcy in 2009, also plans to focus on expanding international sales to growing markets.
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