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, thepresident 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.

The company saidit 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 DavidPaterson, 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'sBowater subsidiaries.

Abitibi-Consolidatedhas 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 AbitibiBowaterand 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 theeighth-largest publicly traded pulp and paper manufacturer in the world.Thecompany owns or operates 23 pulp and paper facilities and 30 wood products facilities in Canada, theUnited 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, includingoperations in Mackenzie, B.C., Quebec andNew Brunswick.