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Courts In US, Canada Allow AbitibiBowater To Operate In Bankruptcy

April 20, 2009 (FinancialWire) — Canadian paper maker AbitibiBowater Inc. (OTC: ABWTQ) (TSX: ABH) said that bankruptcy courts in Delaware and Montreal have given the company the go-ahead to continue its operations while under court protection. The company filed for bankruptcy protection in the U.S. and Canada on April 16.

According to the company, a U.S. bankruptcy court has granted relief that AbitibiBowater requested in its “first day motions” filed in conjunction with its voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code.

In addition, the company and its Canadian subsidiaries have obtained an order from the Quebec Superior Court in Canada for creditor protection under to the companies’ creditors arrangement act.

AbitibiBowater said that the Delaware and Quebec Courts issued a variety of orders on either a final or interim basis that will support business continuity for AbitibiBowater throughout its restructuring process.

The U.S. and Canadian orders include authorization to continue making payments relating to employees’ current wages, salaries and benefit programs and to ensure the continuation of current cash management systems.

AbitibiBowater said that the courts will also allow it to honor ongoing customer obligations and enter into financing commitments for debtor-in-possession financing totaling around $200 million for certain of its Bowater subsidiaries.

The company will also be allowed to enter into an amendment providing for the continuation of an existing Abitibi-Consolidated subsidiary securitization program for its accounts receivable, in the approximate amount of $210 million.

As a result of the BK filings, AbitibiBowater’s common shares have been removed from listing by the New York Stock Exchange. The company said it has received a letter from the Toronto Stock Exchange to the effect that trading on its common shares and exchangeable shares had been suspended and would be delisted at the close of market on May 15.

Montreal-based AbitibiBowater produces newsprint, commercial printing papers, market pulp and wood products. The company owns or operates 23 pulp and paper facilities and 30 wood products facilities located in the United States, Canada, the United Kingdom and South Korea.

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