AbitibiBowater sells paper mills for $42.6 million

AbitibiBowater Inc. has completed the sale of several idle paper mills to two buyers for a total of $42.6 million — the latest in the Canadian pulp and paper giant’s restructuring efforts.

The deal sees four mills located in Beaupré, Que., Donnacona, Que., Dalhousie, N.B. and Thunder Bay, Ont. sold to the American Iron & Metal Company Inc. for $8.7 million.

In addition, AIM will pay AbitibiBowater $5 million on Sept. 6 for equipment inside the mills and has also agreed to pay 40% of the net proceeds from any sale of paper machines in the future.

In a separate transaction, Conifex has purchased AbitibiBowater assets located in Mackenzie, B.C. including a paper mill, two saw mills and timberland operations with a forestry licence covering 932,500 cubic metres of land.

The Montreal-based company filed for bankruptcy protection on both sides of the border last year to ward off debt problems stemming from its 2007 merger. AbitibiBowater’s heavy debt load was exacerbated by the steep decline in demand for newsprint during the recession. It was carrying roughly $6 billion in debt at the time it filed.

Hundreds of jobs have been lost as a result of the streamlining process that has seen AbitibiBowater shut down 3.4 million metric tons of paper capacity to focus on what it calls its “top performing” facilities.

Over the last three years, the company has raised more than $980 million selling assets.

The company expects to exit court protection this fall.

AbitibiBowater projects a loss for this year, followed by a net profit of about $273 million in 2011. The balance sheet overhaul is expected to trim its interest expense and, along with improving demand, it expects its net profit to rise to about $423 million by 2014.

Abitibi owns or operates 21 pulp and paper facilities and 24 wood products facilities located in the United States, Canada and South Korea.

--with files from Reuters