AB TO BORROW $1.35 BILLION
According to a number of major media outlets, AbitibiBowater Inc. wants to borrow US$1.35 billion in an effort to exit bankruptcy and creditor protection by October of this year.
The company plans to repay the debt in several ways, including using cash on hand, providing $500 million worth of equity in the new company to general unsecured creditors and exit financing from either a notes offering or new credit facility to secured creditors.
“Favourable market conditions that currently exist in the high yield debt markets” mean a $750 million notes offering is the preferred option.
“The debtors currently believe that the notes offering will provide (them) with the best financing terms and greatest operational flexibility upon their emergence from Chapter 11,” said a motion filed Friday in the U.S. Bankruptcy Court in Delaware.
A Canadian Press report said the company may instead raise the funds through a secured term loan credit facility if market uncertainties result in unsatisfactory terms.
The company, which has been under court protection from creditors since April 2009, has also asked the courts to allow them to seal the fee schedules for the notes offering and term loan because they contain “commercially sensitive and proprietary information.”
A hearing on the sealing of the fee schedules is scheduled for August 25 in Delaware. An asset-backed revolving loan of up to $600 million may also be in the works. September 14 will be the day creditors get to vote on the company’s restructuring plan.
AbitibiBowater has reduced its workforce by 6,000 people to 11,900 workers and has reduced its paper and wood capacity in order to exit creditor protection as a lower cost producer that can better handle market and currency fluctuations.
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