It could be one of the biggest life preservers ever tossed to rescue a company from drowning in the oceans of bureaucracy.
AbitibiBowater, former owners of the closed Grand Falls-Windsor (Newfoundland & Labrador) paper mill, is looking to borrow US$1.35 billion to exit bankruptcy and creditor protection in October.
The company, the world’s largest producer of newsprint, plans to repay debt through a combination of cash on hand, $500 million worth of equity to general unsecured creditors and exit financing from either a notes offering or new credit facility to secured creditors.
A $750-million note offering is the preferred option because of favourable market conditions in the high-yield debt markets.
“There’s nothing new there,” said Jean-Philippe Cote, director of public affairs and government relations with AbitibiBowater. “It’s always been part of our restructuring efforts or tools, that we have to have an exit financing component to it.
“There’s nothing new there. It’s always been part of our restructuring efforts or tools, that we have to have an exit financing component to it. - Jean-Philippe Cote
“It’s always been publicly stated that exit financing is part of the restructuring plan to successfully emerge. We’re still aiming at emerging (from bankruptcy protection) in the fall.”
“The debtors currently believe that the notes offering will provide them with the best financing terms and greatest operational flexibility upon their emergence from Chapter 11,” said a motion filed Friday in U.S. Bankruptcy Court in Delaware.
However, the company may decide to raise funds through a secured term loan credit facility, depending on market uncertainties.
The company has been under court protection from creditors since April 2009. Creditors will vote on AbitibiBowater’s restructuring plan Sept. 14.