AbitibiBowater shares climb on restructuring

Shares of AbitibiBowater Inc. surged on Friday, one day after thecompany announced an extensive restructuring that includes the closure of eight Canadian money-losing mills.

On the New York Stock Exchange, the stock was up $3.69 US, or more than 19 per ccent, at $22.46 US.On the TSX,it rose $3.30 to $22.05.

Analyst reaction to the restructuring was mixed.

BMO Capital Markets raised its price target on the stock to $15 US from $12 US, and increased its rating on the stock to "outperform" from "sector perform." RBC Capital Markets also increased its rating to "outperform."

However, Raymond James cut its rating to "underperform" from "market perform."

After the close of markets on Thursday, AbitibiBowater announced a massive reduction in its newsprint production capacity.

The list of closures and idlings includes:

• The permanent closure of the Belgo (Shawinigan, Que.) and Dalhousie (New Brunswick) mills.
• The indefinite idling of the Donnacona (Quebec) and Mackenzie (British Columbia) paper mills.
• The idling of two Mackenzie sawmills that support the Mackenzie paper operation.

AbitibiBowater did not detail jobs cuts, but the Communication, Energy and Paperworkers Union estimated at least 1,000 workers would be affected. Other estimates ranged up to 2,600 jobs lost.

The company will also permanently close the already idled Fort William paper mill in Thunder Bay, Ont., and the Lufkin paper mill in Texas. The No. 3 paper machine at the Gatineau, Que., facility, which had also been previously idled, will be shuttered for good.

Thecompany alsowantsto reopen its Canadian union contractsto cut its costs. Salaried employees will also be asked to takecuts.