Abitibi-Consolidated, Bowater merger to be decided July 26

By Lisa Kerner

Charlotte, N.C., June 13 - Abitibi-Consolidated Inc. and Bowater Inc. will both hold shareholder meetings on July 26 for the purpose of voting on the companies' proposed merger, a company news release stated.

The special meeting of Abitibi-Consolidated shareholders will be held at 10 a.m. ET in Montreal, and the Bowater special meeting will be held at 10 a.m. ET in Atlanta.

Bowater Canada Inc., an exchangeable share Canadian public subsidiary of Bowater, will also hold a special meeting of shareholders on July 25 to approve certain amendments and facilitate the merger.

Under the merger agreement, each common share of Abitibi-Consolidated will be exchanged for 0.06261 of a common share of AbitibiBowater Inc. and each Bowater common share will be exchanged for 0.52 of a common share of AbitibiBowater. A $28 million termination fee is included in the agreement.

AbitibiBowater will be based in Montreal, with regional manufacturing and sales offices in Greenville, S.C. Its stock will be listed on the New York and Toronto stock exchanges, according to a previous news release.

Former Abitibi-Consolidated shareholders will own 48% of the combined company, and former Bowater shareholders will own 52% of AbitibiBowater.

The merger, slated to close in the third quarter of 2007, is expected to create the third-largest publicly traded paper and forest products company in the United States with pro forma annual revenues of about $7.9 billion. AbitibiBowater's product lines will include newsprint, uncoated and coated mechanical papers, market pulp and wood products.

Abitibi-Consolidated's chief executive officer John Weaver will be executive chairman of the new company, and Bowater president and chief executive officer David J. Paterson will serve in the same capacities at the new company.

In addition, AbitibiBowater's board will consist of seven members each from Abitibi-Consolidated and Bowater.

On May 8, Abitibi-Consolidated and Bowater amended their Jan. 29 agreement so that the combination remains tax deferred for U.S. resident holders of Abitibi-Consolidated shares.

The amendment limits the number of exchangeable shares that may be issued to an amount that, when combined with exchangeable shares currently issued to Bowater Canada exchangeable shareholders, is less than 20% of the total voting power of the newly formed company.

Based in Montreal, Abitibi-Consolidated provides newsprint, commercial printing papers and wood products. Bowater produces coated and specialty papers and newsprint in Greenville, S.C.

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