DBRS Comments on AbitibiBowater’s Restructuring Plans

DBRS notes that AbitibiBowater Inc. (ABH or the Company) has today announced that it is evaluating new restructuring alternatives and is currently in active discussions with lenders and debt holders of its Bowater Inc. subsidiary (Bowater) to restructure Bowater’s debt and to implement alternatives for maintaining adequate liquidity levels. These developments follow the expiration and termination of Bowater’s previously announced exchange offers. Although the successful completion of the exchange offers was a condition to the completion of the previously announced $2.4 billion recapitalization effort being undertaken by ABH’s Abitibi-Consolidated Inc. subsidiary (Abitibi) under the Canada Business Corporations Act (CBCA), ABH and Abitibi currently intend to continue the Abitibi recapitalization under the CBCA process and to amend such process as necessary to take into account the developments in the Bowater refinancing. The previously announced meetings of creditors and anticipated implementation dates are expected to be postponed.

DBRS’s ratings on Bowater (C) and Bowater Canadian Forest Products Inc. (C (low)) will remain Under Review with Negative Implications until the restructuring efforts are resolved. Bowater’s Canadian bank credit facility matures in June 2009 and Bowater has approximately $248 million outstanding aggregate principal amount of 9.0% debentures that mature August 1, 2009. In the event that the debt restructuring process goes beyond the maturity dates and Bowater fails to meet its obligations, the ratings on Bowater and Bowater Canadian Forest Products Inc. will likely be downgraded to D in accordance with DBRS’s methodology.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating the Forest Products Industry, which can be found on our website under Methodologies.

This is a Corporate Rating.

The ratings are based on public information.