MONTREAL,
Feb. 11, 2011
(PRNewswire-FirstCall) -
AbitibiBowater announced it has signed a binding agreement for the sale of its 75% indirect interest in ACH Limited Partnership ("ACH LP") to a consortium formed by a major Canadian institutional investor and a private Canadian renewable energy company (the "Consortium"). ACH LP was established in April 2007 to hold hydroelectric generating assets in Ontario, Canada by the Company's Abitibi-Consolidated Company of Canada subsidiary (now AbiBow Canada Inc.). As part of the transaction, the Caisse de dépôt et placement du Québec has agreed to sell its 25% interest in ACH LP, taking into consideration AbiBow Canada's drag-along right contained in ACH LP's governing agreements between the Caisse and AbiBow Canada.
Cash proceeds for AbitibiBowater's 75% indirect interest will be approximately C$300 million and will be used to reduce the Company's debt, to enhance liquidity and for general corporate purposes. As part of the transaction, ACH LP will maintain its outstanding debt with the Caisse with a face value of C$250 million. The agreement values the hydro assets, which have a combined capacity of approximately 131 MW, at approximately C$640 million.
"We are looking forward to the completion of this transaction. Our intention is to immediately apply $100 million of the proceeds from this sale to reduce Company debt," stated Richard Garneau, President and Chief Executive Officer of AbitibiBowater. "We intend to protect the cost structure of the Iroquois Falls and Fort Frances mills and remain committed to reducing costs."
The closing of the transaction is subject to certain terms and conditions, including, but not limited to, obtaining required consents and approvals and other customary conditions. Closing is expected to occur within the next 60 days. Following the completion of the transaction, ACH LP will continue to supply electricity to AbiBow Canada Inc.'s Fort Frances and Iroquois Falls pulp and paper mills under the terms of a long-term power purchase agreement.
CIBC World Markets Inc. acted as financial advisor and Davies Ward Phillips & Vineberg LLP and McCarthy Tétrault LLP acted as legal advisors to AbitibiBowater.
About AbitibiBowater
AbitibiBowater is a global leader in the forest products industry, producing a diverse range of products, including newsprint, commercial printing and packaging papers, market pulp and wood products. The Company owns or operates 18 pulp and paper mills and 24 wood products facilities located in the United States, Canada and South Korea. Marketing its products in more than 70 countries, AbitibiBowater is also among the largest recyclers of old newspapers and magazines in North America, and has third-party certified 100% of its managed woodlands to sustainable forest management standards. AbitibiBowater's shares trade under the stock symbol ABH on both the New York Stock Exchange and the Toronto Stock Exchange.
