AbitibiBowater files for bankruptcy protection
Forestry giant AbitibiBowater filed for bankruptcy protection in the United States on Thursday, saying it saw no other viable alternatives.
The company made its filing under Chapter 11 of the U.S. Bankruptcy Code in a Delaware court.
A company spokesman would not say whether the filing could lead to plant closures and layoffs down the line.
"I can't speculate on the future certainly we'll be putting together a plan to restructure the company and make it stronger," said Seth Kursman, AbitibiBowater's vice-president of communications.
"Speculating what that's going to mean for any given facility … would be unfair," Kursman said.
Dave Coles, the president of the Communications, Energy and Paperworkers Union, said his focus is on ensuring that pensions and benefits for current employees and retirees are protected.
"Then the next issue is to ensure that we save and maintain as many jobs and communities that is at all possible across Canada," Coles said.
AbitibiBowater has been in negotiations with its creditors over the past several months regarding billions of dollars in debt. The company has been trying to renegotiate about $2.9 billion in the debts of its Canadian division, Abitibi-Consolidated, and $1.8 billion US of a U.S. division, Bowater Inc.
- Canada's forest products industry has been shrinking since 2003, closing 207 mills and shedding 38,000 jobs.
- The collapse of U.S. home-building last year cut the price of lumber almost 40 per cent between January 2006 and October 2008.
- Pulp shipments in December 2008 were down 9.5 per cent from the year earlier, and prices fell 20 per cent.
- In its 2008 Global Forest and Paper Industry Net Earnings Summary, PricewaterhouseCoopers found 14 of the 15 Canadian companies in the survey lost money in the quarter ending September 2008.
- The industry employs 300,000 Canadians and supports more than 300 communities.
- It accounts for more than two per cent of Canada's annual GDP.
- Exports fell to $25.6 billion in 2008 from $34.5 billion in 2003.
Sources: Forest Products Association of Canada, Statistics Canada
The company said it plans to "deal decisively" with its debt burden, adding that its normal day-to-day operations will continue during the restructuring process.
"Today's announced decisions ensure business continuity for AbitibiBowater and were made only after all other viable options to recapitalize our long-term debt were exhausted," said David Paterson, the company's president and chief executive officer.
$200M in financing offered
Fairfax Financial Holdings Ltd. and Avenue Management LLC have offered approximately $200 million US in financing for some of the company's Bowater subsidiaries.
Abitibi-Consolidated has also agreed to a continuation of its existing securitization program for its accounts receivable, worth roughly $210 million.
The Toronto Stock Exchange and the New York Stock Exchange halted trading of the company's shares on Thursday morning prior to the bankruptcy announcement. The stock last traded in Toronto on Wednesday at 61 cents. It has a one-year high of $15.15 and a low of 38 cents.
TMX Group, which operates the Toronto exchange, said the common shares of AbitibiBowater and exchangeable shares of AbitibiBowater Canada Inc., which trade under the ticker symbol AXB, were being put under review for a possible delisting.
AbitibiBowater said it is the eighth-largest publicly traded pulp and paper manufacturer in the world. The company owns or operates 23 pulp and paper facilities and 30 wood products facilities in Canada, the United States, the United Kingdom and South Korea.
In February of this year, AbitibiBowater shut down its paper mill in Grand Falls-Windsor, ending a century of operations in central Newfoundland.
Former workers at the mill are worried they'll lose thousands of dollars that are owed to them in severance pay. The CEP has said in the past that it will go to court if it comes to that.
A spokesman said the severance payments are on hold for the time being.
Gary Healey, a national representative for CEP, which represents the Grand Falls-Windsor workers, said while the situation was unfortunate, the union wasn't surprised by the news.
"I think we all had a sense that Abitibi could be filing for bankruptcy at any time, but we were hoping that it would be at a much later date ... and we were actually hoping that it wouldn't happen at all," he said.
"I'll be meeting with the local presidents and getting up some updates on what's happening on the ground and then we'll be making some decisions on what to do on a go-forward basis."
Healey said the discussions will include what, if anything, the Newfoundland and Labrador government can do to help the former mill workers get through this difficult time.
The company had previously closed its eight Canadian pulp mills in 2007, including operations in Mackenzie, B.C., Quebec and New Brunswick.
With files from The Canadian Press