Noteholder group forms to discuss Abitibi-Consolidated exchange offers

By Jennifer Chiou

New York, March 12 - Abitibi-Consolidated Inc. announced that a majority noteholder group represented by Bracewell & Giuliani LLP and Goodmans LLP has formed to discuss the company's exchange offers and consent solicitations for its 6.95% notes due April 1, 2008, 5¼% notes due June 20, 2008 and 7 7/8% notes due Aug. 1, 2009.

On March 7, AbitibiBowater Inc. announced a $1.4 billion refinancing plan, which includes new bank and bond debt and addresses the upcoming maturities and general liquidity needs of Abitibi-Consolidated.

The plan also includes $200 million to $300 million of new equity or equity-linked securities to be issued by AbitibiBowater.

Holders are being offered the new senior unsecured exchange notes as well as cash.

As previously announced, the refinancing includes about $400 million of senior secured notes or term loan due 2011, secured by fixed assets, and a $400 million to $500 million 364-day senior secured term loan, secured by working capital and other assets.

In addition, the refinancing includes $200 million to $300 million of senior unsecured exchange notes due 2010, which are part of the $500 million exchange offer for the near-term maturity notes.

Goldman Sachs & Co. is leading the exchange offer.

AbitibiBowater is also seeking an amendment to the existing Bowater Inc. revolver to allow for, among other things, the potential issuance of new AbitibiBowater equity-linked securities and a delay or modification to Bowater's planned separation of its Catawba, S.C., coated paper facility.

The company also announced on March 7 that the sale of Abitibi-Consolidated's Snowflake, Ariz., mill, originally announced in February, is expected to close in mid-April. The sale is expected to generate proceeds of $161 million.

Those who are qualified institutional buyers, institutional accredited investors or Regulation S investors interested in participating in the noteholder group's discussions should contact the U.S. counsel, Evan Flaschen, at Bracewell & Giuliani (860 256-8537, evan.flaschen@bgllp.com) or the Canadian counsel, Rob Chadwick, at Goodmans (416 597-4285, rchadwick@goodmans.ca.).

AbitibiBowater also noted that it is actively exploring other non-core asset sales to generate additional liquidity and further enhance its financial flexibility.

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

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