AbitibiBowater Closing Four Mills, Idling Others

Company, one of the largest newsprint manufacturers in North America, also will suspend its shareholder dividend as part of plan to 'focus on debt reduction.'

NEW YORK (AP) β€” AbitibiBowater Inc., one of the largest newsprint manufacturers in North America, said Thursday it plans to close four paper mills, idle operations at others and suspend its shareholder dividend.
 
The Montreal-based company, formed last month from the merger of Abitibi-Consolidated Inc. and Bowater Inc., said the production changes, which will take place during the first quarter of next year, will lower its newsprint and commercial printing paper production capacity by about 1 million metric tons per year.
 
The mills slated for permanent closure are Belgo, Dalhousie, Fort William and Lufkin. One paper machine at the company's Gatineau facility in Quebec also will be permanently shut down. All but the Belgo and Dalhousie facilities previously stood idle; the idled operations had a combined capacity of 650,000 metric tons.
 
AbitibiBowater also plans to indefinitely idle two Canadian paper mills, the Donnacona and Mackenzie, as well as two sawmills tied to paper production at the Mackenzie facility.
 
The closures will cost the company about 100 million Canadian dollars ($100.5 million) in severance and other expenses. About 30 million Canadian dollars ($30.2 million) of that amount will not affect earnings, the company said.
 
Company officials weren't immediately available to disclose information on work force reductions.
 
The company said it decided to suspend the dividend in light of its ''focus on debt reduction,'' and plans to reconsider the move ''once clear progress has been made to achieve its financial targets.''
 
AbitibiBowater said it now expects to save 375 million Canadian dollars from the combination of Abitibi-Consolidated and Bowater earlier this year, up from an original projection of 250 million Canadian dollars. The company called on employees to ''contribute to cost-reduction initiatives'' and asked Canadian union members to reopen existing labor agreements.
 
A second round of plant closures could come in the middle of next year, the company said. In addition, the company said it will review its wood products business in an effort to possibly sell certain assets, consolidate operations and close some facilities.
 
Abitibibowater shares rose 33 cents to $19.10 in after-hours trading, extending gains of $1.49, or 8.6 percent during the regular session.
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