AbitibiBowater granted court OK to enter exit financing agreements

By Caroline Salls

Pittsburgh, Aug. 24 - AbitibiBowater Inc. received court approval to enter into exit financing agreements for a $750 million notes offering and of a commitment for a four-year $600 million senior secured asset-based credit facility, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, AbitibiBowater's plan of reorganization includes a $500 million rights offering to unsecured creditors, and it has a firm commitment to backstop that rights offering.

In addition, the company's plan of reorganization calls for exit financing in the form of an asset-based facility and a notes offering or new credit facility.

The company said it wants to launch the $750 million notes offering portion of the exit financing immediately and have the notes issuance funded before plan confirmation to take maximum advantage of current favorable market conditions.

In order to fund the notes before confirmation, AbitibiBowater said it will form a new non-debtor company, which will, in turn, form non-debtor company ABI Escrow Corp.

ABI Escrow will enter into the initial notes agreements. On the plan of reorganization effective date, ABI Escrow will merge into one of the reorganized debtors, which will assume the ongoing liability for the new notes.

The notes proceeds will be released from escrow on the effective date.

In addition, AbitibiBowater said it has reached an agreement in principle, on an uncommitted basis, with financial institutions that will serve as joint bookrunners, joint lead underwriters, joint lead initial purchasers and/or joint lead placement agents.

If the notes offering cannot be completed, AbitibiBowater said it will enter into a $750 million term loan, which would be funded on the plan effective date.

Under the commitment letter for the asset-based facility, Citigroup Global Markets Inc., Barclays Bank plc and J.P. Morgan Securities Inc. have each agreed to provide $100 million of the financing. The remaining $300 million will be arranged through a syndicate of lenders.

Citibank NA will be the administrative agent.

Judge Kevin J. Carey said Tuesday's order does not authorize the company to borrow any funds under the exit financing arrangements, which are subject to plan confirmation.

AbitibiBowater, a Montreal-based producer of newsprint, commercial printing papers, market pulp and wood products, filed for bankruptcy on April 16, 2009. Its Chapter 11 case number is 09-11296.

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