Bowater buys back 10 5/8% notes and some 9%, floating-rate notes

By Angela McDaniels

Seattle, Nov. 15 - Bowater Inc. has repurchased $112.8 million of its notes at a cost of $120.5 million during the year to date, according to a 10-Q report filed with the Securities and Exchange Commission on Tuesday.

The repurchases included:

• $15.6 million of its $250 million floating-rate notes due 2010 at 101.4% of par for a total of $15.8 million in August;

• $1.9 million of its $250 million 9% notes due 2009 at 103.7% of par for a total of $2.0 million in September; and

• the $95.3 million outstanding face value of its series A 10 5/8% notes due 2010 at 107.8% of par for a total of $102.7 million. Bowater said this repurchased debt had a book carrying value of $108.2 million and was made up of the $95.3 million face value, plus $12.9 million related to the revaluation of series A debt from the acquisition of Avenor Inc. in 1998.

In conjunction with the repurchase of the floating-rate notes and 9% notes, the company recorded charges of roughly $0.5 million for premiums, fees and unamortized deferred financing fees in the third quarter.

In relation to the repurchase of the 10 5/8% notes, Bowater expects to record premium charges of $7.4 million, charges of about $0.1 million for unamortized deferred financing fees and a gain on the extinguishment of debt of $12.9 million associated with the revaluation of the debt in the fourth quarter. Therefore, the net impact for the repurchase of the 10 5/8% notes will be a net gain of $5.4 million.

The repurchases reduced Bowater's long-term debt to $506.0 million from $631.7 million.

Bowater is based in Greenville, S.C., and produces newsprint and coated mechanical papers.

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