JOHN LEHMANN
AbitibiBowater Inc. signed a deal Friday to sell its 75-per-cent interest in its Ontario hydro assets for $300-million in cash.
The Montreal-based forestry company said it will sell its indirect interest in ACH Ltd. to a consortium including an unidentified Canadian institutional investor and a private Canadian renewable energy company.
The deal values ACH's hydro assets at $640-million.
As part of the deal, the Caisse de dépôt et placement du Québec has also agreed to sell its 25-per-cent interest in ACH. AbitibiBowater will maintain its $250-million debt to the Caisse.
The company said the proceeds from the sale will be used to pay down debt, enhance liquidity and for general purposes.
"Our intention is to immediately apply $100-million of the proceeds from this sale to reduce company debt," AbitibiBowater president and chief executive officer Richard Garneau said.
ACH, established in 2007 to hold hydroelectric generating assets in Ontario, will continue to supply electricity to the company's Fort Frances and Iroquois Falls pulp and paper mills under the terms of a long-term power purchase agreement.