AbitibiBowater CEO David PatersonCharla Jones/The Globe and Mail
AbitibiBowater Inc. is set to return to trading on the stock markets as the newsprint giant formally emerges from bankruptcy protection and sets out on a new course as a slimmed-down player in the forest products industry.
Abitibi's shares will begin pre-trading on the Toronto Stock Exchange on Friday, using the same ticker symbol (ABH) it had when it ceased trading in May of 2009, soon after entering court-ordered protection from its creditors.
Montreal-based Abitibi's unsecured creditors are to receive shares in the company, according to terms of the restructuring agreement, in an initial distribution by Dec. 17.
But the shares will be available for trading on a "when-issued" basis on Friday, said TSX owner TMX Group Inc.
The listing on the TSX will be for slightly more than 106 million shares.
Senior executives plan to take their story about the renewed company on the road and pitch the investing community, said Abitibi vice-president of public affairs Seth Kursman.
"There should be an opportunity over the next week or two weeks and also in the new year to get out there and talk about the fact that this is not the same company that filed for protection 20 months ago," he said. "The stock that trades will reflect a fundamentally different company."
The shares will also be listed on the New York Stock Exchange.
Among measures taken in the reorganization efforts on both sides of the border are a reduction of exposure to the shrinking newsprint market, a move to higher-grade papers and the shutting of underperforming mills.
The company also sold non-core assets and land holdings for total proceeds of more than $940-million (U.S.). All told, about 3.4 million tonnes of paper capacity on an annual basis was closed or idled, with the total number of facilities reduced to 18 from 31.
Agreements with Ontario and Quebec have reduced annual pension fund contributions by about $200-million.
"We think the company has used bankruptcy the right way to become a low-cost producer of forest products," JPMorgan analyst Tarek Hamid said in a research note Thursday.
The company has more than $700-million of cash on hand available, he added.
While Abitibi remains in a highly cyclical business, the trends point to an upswing for the next couple of years, with strong newsprint export demand and higher print advertising spending into 2011, he said.
The total enterprise value of Abitibi's assets is in the range of $2.9-billion to $4.2-billion, he said.
Abitibi president and chief executive officer David Paterson has said that besides continuing the shift from newsprint to other grades of paper, the company will seek growth opportunities in the emerging green sector, such as alternative energy and biofuels.
The company suffered major blows from the global recession as well as the dramatic drop in demand for newsprint in North America. It filed for bankruptcy protection, in both Canada and the U.S. in April of 2009.
AbitibiBowater was created in 2007 from the merger of Abitibi-Consolidated Inc. of Montreal and Bowater Inc. of Greenville, S.C., which said at the time that they were combining forces to take on the challenge of declining markets.
Bertrand Marotte