AbitibiBowater Could Get $13.8M From Asset Sale

Insolvent newsprint giant's move to unload assets could see it recover at least $13.8 million from sale of four idled paper mills and machines.

MONTREAL (CP) -- Insolvent newsprint giant AbitibiBowater's move to unload more mothballed assets could see it recover at least $13.8 million from the sale of four paper mills in Ontario, Quebec and New Brunswick and the machines that are gathering dust inside the vacant buildings.

The Montreal-based company is asking for bankruptcy court approval to sell closed mills in Beaupre and Donnacona, Que., Dalhousie, N.B., and Thunder Bay, Ont. to Montreal-based American Iron & Metal for $8.7 million.

It would also receive $100,000 from the Montreal company as part of a land swap with the Fort William First Nation Development Corp. for unused, vacant lands.

The scrap metal company would also pay AbitibiBowater 40 per cent of the money raised from the sale of the paper machines. Even if they are sold for scrap, American Iron would pay at least $5 million.

The metals company would assume all environmental liabilities associated with the closed mills.

Owner Herbert Black said he's open to ideas to reuse the vacant mills as long as they abide by conditions of the sale agreement with AbitibiBowater.

"I'm totally flexible to help the people," he said in an interview, noting that somebody is objecting to the sale.

Failure to conclude a deal could see the buildings scrapped for their metal value. Given the depressed state of the forestry products industry, some of the paper machines may suffer the same fate, Black said.

"Some is scrap and some is marketable, it's like everything else. There's a lot of paper mills closing across the world."

AbitibiBowater filed for protection from creditors last year amid mounting losses and has been streamlining operations, cutting jobs and selling money-losing mills and other assets to restructure its balance sheet and cope with the company's large debts.

AbitibiBowater said the prospective owners can do what they want with the sites as long as they aren't used to produce paper.

"One of the options is dismantling for metal, but it's their decision," said spokesman Jean-Philippe Cote.

The four mills in question were permanently closed between 2007 and 2009 after 82 to 94 years of operation. They sit on land totalling nearly 200 hectares.

The land swap would ensure the purchaser is provided with access to the mill. It would also allow Abitibi's Canadian subsidiary Abitibi-Consolidated to retain access to its landfill lands.

AbitibiBowater originally last October sought to sell the properties and one in Mackenzie, B.C.

However, the British Columbia pulp and paper mill and sawmill facilities were later hived off and sold to a subsidiary of privately held Conifex Inc. for an undisclosed price.

The deal with DTR Wood Acquisition Co. is expected to close around April 30.

AbitibiBowater last fall unloaded its idled Belgo paper mill in Shawinigan to Recyclage Arctic Beluga Inc.

It is also looking to sell three closed mills in Quebec. The mills in Roberval, Saint-Fulgence and Lebel-sur-Quevillon have been closed since last year.

North America's largest newsprint producer hopes to exit court protection from creditors in Canada and the United States by fall after some 18 months.

In addition to its large debt, AbitibiBowater has faced a collapse in newsprint demand caused by dwindling advertising and a structural shift to electronic media.

It operates 23 pulp and paper mills and 30 wood products operations in the United States, Canada, the United Kingdom and South Korea.

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