AbitibiBowater, Montreal, Que., Canada, announced that, in connection with its creditor protection proceedings and exit financing efforts, it has obtained approval of a backstop commitment agreement by the U.S. Bankruptcy Court for the District of Delaware. In May, the company reported that it had secured a backstop commitment from certain unsecured noteholders for a rights offering of up to $500 million, by which it would offer to eligible unsecured creditors new convertible notes with a seven-year maturity from the date of closing. Upon the effective date of the plan, the notes would be obtained upon exercise of the rights and convertible into common stock of the emerged company.
Before emerging from creditor protection, AbitibiBowater must obtain adequate exit financing and complete efforts to address labor costs and pension issues, as well as satisfy other conditions set forth in the plans of reorganization. AbitibiBowater has commenced a process to obtain an exit financing package that will provide sufficient capital for the emerged company to manage business operations and execute its plans.
Ultimately, the company's plan of reorganization will require creditor approval and confirmation by the courts. Affected unsecured creditors who are entitled to vote will receive the court-approved disclosure and voting materials, which are expected to be mailed this month, subject to court approvals. More information about AbitibiBowater's restructuring process is available online.
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