Newsprint company attempts to restructure debt
Posted by Emily Dilling on March 23, 2009 at 6:46 AM
Newsprint firm AbitibiBowater is making efforts to avoid bankruptcy due to the falling price of newsprint, reports The New York Times. A failure to reach an agreement with the company's bondholders could result in the company having to file for bankruptcy protection.
In 2008, newsprint consumption dropped by an average of 14 percent, with daily newspapers seeing a 16 percent decline in readership. The decrease in demand has left AbitibiBowater in a difficult position regarding its substantial debt - most of which was accrued when Abitibi Consolidated, of Montreal, and Bowater, of Greenville, South Carolina, merged in 2007.
In 2008, newsprint consumption dropped by an average of 14 percent, with daily newspapers seeing a 16 percent decline in readership. The decrease in demand has left AbitibiBowater in a difficult position regarding its substantial debt - most of which was accrued when Abitibi Consolidated, of Montreal, and Bowater, of Greenville, South Carolina, merged in 2007.
Last month, the company proposed two bond-exchange offers that would trim its debt by US$2.4 billion. The offers would require current holders of approximately $250 million in AbitibiBowater bonds to invest additional capital in order to gain new, secured debt in the company. Deadlines for these offers have been extended twice.
A source said several investors, including Steelhead Partners, have consented to providing the company with hundreds of millions of dollars to aid restructuring efforts.
Negotiations with investors such as Citigroup, which hold about $40 million of bonds due in 2009, continue to deal with issues of protection and participation in the newsprint company's plans to steer clear of filing for bankruptcy.
Shares in AbitibiBowater closed at 54 cents on Thursday, marking a 92.5 percent drop in the last year.
A source said several investors, including Steelhead Partners, have consented to providing the company with hundreds of millions of dollars to aid restructuring efforts.
Negotiations with investors such as Citigroup, which hold about $40 million of bonds due in 2009, continue to deal with issues of protection and participation in the newsprint company's plans to steer clear of filing for bankruptcy.
Shares in AbitibiBowater closed at 54 cents on Thursday, marking a 92.5 percent drop in the last year.
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