AbitibiBowater wraps offer to exchange three notes series

By Jennifer Chiou

New York, April 7 - AbitibiBowater Inc. announced the completion of Abitibi-Consolidated Co. of Canada's offer to issue a combination of cash and new 15½% senior notes due 2010 in exchange for three series of notes.

Notes eligible for exchange under the offer were the $195.61 million of 6.95% senior notes due 2008 of Abitibi-Consolidated Inc., a wholly owned subsidiary of Abitibi-Consolidated Co. of Canada; the $150 million of 5¼% senior notes due 2008 of Abitibi-Consolidated Co. of Canada, a wholly owned subsidiary of Abitibi-Consolidated Inc.; and the $150 million of 7 7/8% senior notes due 2009 of Abitibi-Consolidated Finance LP, also a wholly owned subsidiary of Abitibi-Consolidated Inc.

The exchange offer began on March 10 and ended at 11:59 p.m. ET on April 4.

At the end of the offer, holders had tendered 89.4% of the 6.95% notes, 92.1% of the 5¼% notes and 94.8% of the 7 7/8% notes.

As of March 31, holders had tendered roughly 89% of the 6.95% notes, 92% of the 5¼% notes and 95% of the 7 7/8% notes.

As a result, the company issued $292.9 million of 15.5% senior notes due 2010 and paid $217.7 million in cash, including payment of accrued interest.

On April 1, the company said the financing condition had been satisfied.

AbitibiBowater sold $350 million of 8% convertible notes due 2013 in a private placement, and Abitibi-Consolidated Co. of Canada received a $500 million 364-day senior secured term loan and sold $413 million of 13¾% senior secured notes due 2011 in a private placement.

Those who tendered their securities for exchange prior to 5 p.m. ET on March 31 also received additional cash payments in lieu of a portion of the new notes.

For each $1,000 principal amount of old notes exchanged before the early deadline, the company issued $550 of new notes and $550 in cash for the 6.95% notes and 5¼% notes and $850 of new notes and $250 in cash for the 7 7/8% notes.

The offer was amended on March 19 to increase the payout and to increase the coupon on the new notes to 15½% from 15%. Before the change, the company was going to pay $500 of new notes and $500 in cash for the 6.95% notes and 5¼% notes and $750 of new notes and $250 in cash for the 7 7/8% notes.

For each $1,000 principal amount of old notes exchanged after the early deadline, the company issued $600 of new notes and $400 in cash for the 6.95% notes and 5¼% notes, and $850 of new notes and $150 in cash for the 7 7/8% notes.

The company also solicited consents to amend the supplemental indentures governing the old notes and agreement from the noteholders not to exercise any remedies under the notes or their respective supplemental indentures until April 8.

When AbitibiBowater increased the payout for the exchange offer, it also announced that the indenture of the exchanged notes will include covenants substantially similar to those contained in the indenture for Abitibi-Consolidated Co. of Canada's new 13¾% notes.

The company previously reported that an informal group of noteholders holding about $324 million total of both 2008 notes and 2009 notes negotiated and supports the terms of the revised exchange offer.

AbitibiBowater noted that the exchange offer was being made only to qualified institutional buyers and institutional accredited investors inside the United States and to certain non-U.S. investors outside the United States.

The company said the purpose of the private exchange offer was to improve its financial flexibility by extending the maturities of its overall debt and reducing the amount of its outstanding debt with maturities in 2008 and 2009.

On March 27, AbitibiBowater waived the minimum tender condition for the exchange offer. When the offer began, the company said it was seeking tenders from holders of at least 90% of the notes, and this condition was later lowered to 75%.

AbitibiBowater is a Montreal-based producer of newsprint and commercial printing papers, market pulp and wood products.

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