AbitibiBowater starts private exchange offer for three series of notes

By Jennifer Chiou

New York, March 10 - AbitibiBowater Inc. announced the start of a private offer in which Abitibi-Consolidated Co. of Canada will issue a combination of cash and new 15% senior notes due 2010 in exchange for any and all of three series of notes.

The old notes include 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 company noted that the exchange offers are 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 offers will end at 11:59 p.m. ET on April 4.

Those who tender their securities for exchange prior to 5 p.m. ET on March 26 will also receive additional cash payments in lieu of a portion of the new notes.

The company said it is also soliciting 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.

For each $1,000 principal amount of old notes exchanged before the early deadline, the company said it will issue $500 of new notes and $500 in cash for the 6.95% notes and the 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 said it will issue $600 of new notes and $400 in cash for the 6.95% notes and the 5¼% notes, and $850 of new notes and $150 in cash for the 7 7/8% notes.

The company said that the purpose of these private exchange offers is 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.

AbitibiBowater is seeking tenders from holders of at least 90% principal amount of each series of old notes.

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

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