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More on AbitibiBowater Bankruptcy from AP

Magazine article Editor & Publisher

More on AbitibiBowater Bankruptcy from AP

Article excerpt

Newsprint maker AbitibiBowater Inc. on Thursday filed for bankruptcy court protection after deciding there was no other way it could deal with its debt of more than $6 billion.

AbitibiBowater, created in 2007 in a combination of U.S.-based Bowater and Canada's Abitibi-Consolidated, has faced collapsing demand for its newsprint as advertisers abandon newspapers for the Internet.

In the U.S., newspapers have been cutting back on newsprint usage in response to rising prices, primarily by trimming the width of their pages. Declines in advertising and circulation have also resulted in fewer pages printed overall. In addition, dozens of newspapers have eliminated one or more of their print publication days, while the Rocky Mountain News in Denver shut completely in February after failing to find a buyer.

Besides the global recession, the pulp and paper maker faced a subzero global credit environment plus the recent expropriation of a $300 million asset by a Canadian province.

By last month these challenges prompted AbitibiBowater to advise, in a U.S. regulatory filing, that its "liquidity position is currently severely constrained."

Efforts to avoid bankruptcy included selling hundreds of millions in assets, laying off workers and attempting to refinance its massive debt.

However, earlier this month it terminated a $1.8 billion refinancing effort to exchange existing debt for new debt. The exchange offer's deadline had been extended several times.

"The company concluded that there are no viable alternatives to its previously announced proposed refinancing . …

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