NEW YORK (AP) -- AbitibiBowater Inc., the world's largest newsprint maker, said Thursday it will close or idle at least four paper mills and cut some 1,100 jobs to bring its production capacity into balance with falling demand.

The Montreal-based company, whose stock has fallen about 97 percent this year, faces a deteriorating customer base as newspapers struggle and their demand for paper plummets. In October, demand fell 18.2 percent.

"The North American newsprint market continues to contract and our customers have told us they anticipate further decline," Chief Executive David J. Paterson said in a statement. "International customers have also indicated that export growth will not be as strong in the coming year."

Within 16 weeks about 800 jobs will be permanently cut and approximately 300 jobs will be indefinitely cut, an AbitibiBowater spokesman said. The jobs affected are nearly 7 percent of the work force, according to the corporate Web site. The company owns or operates 27 pulp and paper mills and 34 wood products facilities worldwide.

The announced moves aim to achieve positive free cash flow which, along with up to some $750 million in asset sales by the end of next year, will enable the company to pay down about $1 billion of debt, Paterson said in a phone interview. "We are progressing well," he said, adding that about $300 million of assets already had been sold.

The announced moves include AbitibiBowater permanently closing its Grand Falls, Newfoundland, newsprint mill by the end of the first quarter 2009 and permanently closing its Covington, Tenn., paper converting facility by the end of this month. Those two actions will result in a fourth quarter 2008 noncash impairment charge of about $180 million.

In addition, the company will immediately idle its Alabama River, Ala., mill and two paper machines in Calhoun, Tenn. Finally, AbitibiBowater will idle, on a revolving basis, about 20,000 metric tons of monthly newsprint capacity until market conditions improve.

Paterson said the Grand Falls closure reflects "declining newsprint demand and high delivered cost" and came despite "sustained efforts and discussions with governments and unions."

Idling the Calhoun facility reflects "softening markets for the products produced at these facilities and the noncompetitive cost structure of southern U.S. electrical suppliers," the chief executive said.

Newspapers, already suffering from rapidly declining advertising revenue because of the recession and competition for readers from the Internet, have battled increases in newsprint prices by shrinking their usage. Many papers have reduced the width of their pages, while printing slimmer and fewer copies as advertising and circulation decline.

Capacity cuts will total about 1 million metric tons for savings of $375 million by the end of 2008. Selling, general and administrative expenses will be cut by 20 percent next year to achieve another $60 million in savings.

Severance and closure charges will total about $45 million, most in the second quarter of next year.

Shares slipped 3 cents to 46 cents in midday trading Thursday.

BMO Capital Markets analyst Stephen G. Atkinson was taking a wait-and-see posture to the company's announcement.

"There really hasn't been that much volume today," he said in a phone interview. "The big question is how much (of these capacity cuts) the market already had priced in. They are doing the right things, but we are in a global slowdown so we are maintaining an "Underperform" rating on the shares."

At the end of the third quarter, AbitibiBowater had about $6.6 billion of debt.