ACH was established in April 2007 by the Company's Abitibi-Consolidated Company of Canada subsidiary (now AbiBow Canada Inc.). As part of the transaction, the Caisse de dépôt et placement du Québec has agreed to sell its 25% interest in ACH, taking into consideration AbiBow Canada's drag-along right contained in ACH's governing agreements between the Caisse and AbiBow Canada.
Cash proceeds for AbitibiBowater's 75% indirect interest will be approximately C$300M and will be used to reduce the Company's debt, to enhance liquidity and for general corporate purposes. As part of the transaction, ACH will maintain its outstanding debt with the Caisse with a face value of C$250M. The agreement values the hydro assets at approximately C$640M.
"We are looking forward to the completion of this transaction. Our intention is to immediately apply $100M of the proceeds from this sale to reduce Company debt,'' said Richard Garneau, President and Chief Executive Officer of AbitibiBowater. "We intend to protect the cost structure of the Iroquois Falls and Fort Frances mills and remain committed to reducing costs.''
The closing of the transaction is subject to certain terms and conditions, including, but not limited to, obtaining required consents and approvals and other customary conditions. Closing is expected to occur within the next 60 days. Following the completion of the transaction, ACH will continue to supply electricity to AbiBow Canada Inc.'s Fort Frances and Iroquois Falls pulp and paper mills under the terms of a long-term power purchase agreement.
CIBC World Markets Inc. acted as financial advisor and Davies Ward Phillips & Vineberg LLP and McCarthy Tétrault LLP acted as legal advisors to AbitibiBowater.
