AB PROTECTION COULD END
AbitibiBowater Inc. could exit creditor and bankruptcy protection as early as October 1 with the approval this week of a “backstop commitment agreement” by the U.S. Bankruptcy Court fo the District of Delaware.
On May 24, 2010, the Company had announced that it had secured a backstop commitment from certain unsecured noteholders for a rights offering of up to $500 million. In this rights offering, AbitibiBowater would offer new convertible notes with a seven-year maturity from the date of closing to eligible unsecured creditors. Upon the effective date of the plan, the notes would be obtained upon exercise of the rights and convertible into common stock of the emerged company.
"We are pleased with today's court approval which supports our exit financing efforts, said David J. Paterson, AbitibiBowater’s President and Chief Executive Officer in a company issued news release. “This is another important step forward as we look ahead to the Company's ultimate emergence from credit protection scheduled for early this Fall. The Company expects to emerge with a significantly improved financial position, resulting from its efforts to reduce costs, lower debt and mitigate the impact of ongoing market and currency fluctuations."
The release also stated that before emerging from creditor protection, the Company must obtain adequate exit financing and complete efforts to address labor costs and pension issues, as well as satisfy other conditions set forth in the plans of reorganization. AbitibiBowater has commenced a process to obtain an exit financing package that will provide sufficient capital for the emerged company to manage business operations and execute its plans.
Ultimately, the Company's plans of reorganization will require creditor approval and confirmation by the courts.
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