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AbitibiBowater Emerges from Bankruptcy

December 9, 2010
MONTREAL—Dec. 9, 2010—AbitibiBowater is pleased to announce that it has successfully completed its reorganization and has emerged from creditor protection under the Companies’ Creditors Protection Act (or “CCAA”) in Canada and Chapter 11 of the U.S. Bankruptcy Code (or “Chapter 11”).

“Through our restructuring efforts, we have transformed this organization and given AbitibiBowater a new future—one driven by a company-wide commitment to profitability and sustainability,” stated David J. Paterson, President and CEO. “By strengthening our competitiveness and dramatically improving our financial position, AbitibiBowater has become one of the lowest cost forest products companies in North America. We are now a leaner, more flexible organization with a balanced product portfolio, better able to create value for our stakeholders while responding to the challenges of a tough industry with ongoing market volatility.”

Emergence from creditor protection represents the culmination of efforts that were undertaken shortly after the combination of Abitibi-Consolidated Inc. and Bowater Inc. in order to address fundamental changes in the marketplace. Since 2007, the company has restructured itself both financially and operationally in a way that has dramatically lowered its breakeven point, having:

• Streamlined its asset profile to top-performing facilities, closing or idling 3.4 million metric tons of paper capacity on an annual basis. This represents capacity reductions of 41 percent for newsprint and 32 percent for commercial printing papers. Wood products capacity was reduced by 21 percent over the same period.

• Balanced its portfolio of products, reducing exposure to any one grade. New production capacities on an annual basis are - newsprint: 3.3 million metric tons, commercial printing papers: 2.5 million metric tons, pulp: 1.1 million metric tons and wood products: 2.2 billion board feet.

• Developed a flexible mill portfolio with a mix of U.S., Canadian and international mills located strategically to efficiently serve our customers, supporting low-cost, on-time delivery and providing a natural currency hedge as well as the ability to adapt to changing market dynamics.

• Completed a strategic review and sold non-core assets and land holdings for total aggregate proceeds of over $940 million.

• Reduced its debt burden by 88 percent from $6.8 billion to $850 million, excluding approximately $239 million in non-recourse joint-venture debt for ACH Limited Partnership. This Company is currently in the process of evaluating the potential sale of ACH.

• Eliminated $880 million of annual fixed costs, from $1,353 million to $473 million.

• Realized over $375 million in annualized synergies from manufacturing efficiencies and SG&A reductions as well as procurement and logistics initiatives.
 

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