AbitibiBowater waives minimum tender condition in exchange offer for three notes series

By Jennifer Chiou

New York, March 27 - AbitibiBowater Inc. announced the preliminary results and also waived the minimum tender condition in the private offer in which Abitibi-Consolidated Co. of Canada will issue a combination of cash and new 15½% senior notes due 2010 in exchange for any and all of three series of notes.

The withdrawal deadline was 5 p.m. ET on March 27, pushed back from March 26.

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.

As of the withdrawal deadline, the company had received tenders for exchange from holders of 89.3% of the 6.95% notes, 91.8% of the 5¼% notes and 93.2% of the 7 7/8% notes.

Previously, the company was offering new 15% notes due 2010. The coupon was increased on March 19.

The company already 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. Bracewell & Giuliani LLP and Goodmans LLP acted as special counsel to the noteholders.

Those who tender their securities for exchange prior to 5 p.m. ET on March 31, extended from March 26, will also receive 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 said it will issue $550 of new notes and $550 in cash for the 6.95% notes and the 5¼% notes - up from $500 of new notes and $500 in cash - and $850 of new notes and $250 in cash for the 7 7/8% notes - up from $750 of new notes and $250 in cash.

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 changes also provide 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 senior secured notes being offered in a concurrent private offering.

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 midnight ET on April 4.

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.

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 previously said that it is seeking tenders from holders of at least 75%, down from 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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