AbitibiBowater gets bankruptcy court on rights offering meant to backstop exit financing

AbitibiBowater gets court OK on rights offering

NEW YORK — Canadian newsprint maker AbitibiBowater Inc. on Friday said the U.S. bankruptcy court approved a commitment agreement related to its creditor protection proceedings and financing efforts for editing exit bankruptcy.

The company announced in May that it secured a backstop commitment from certain unsecured noteholders for a rights offering of up to $500 million.

In this rights offering, AbitibiBowater would offer new convertible notes with a seven-year maturity to eligible unsecured creditors. When the plan takes effect, the notes would be obtained upon exercise of the rights and convertible into common stock of the emerged company.

“This is another important step forward as we look ahead to the Company’s ultimate emergence from credit protection scheduled for early this fall,” David J. Paterson, President and CEO, said in a statement.

Before emerging, the company must obtain exit financing and address labor costs and pension issues, as well as satisfy other conditions. The company said it has started a process to obtain the exit financing.

The company expects to mail court-approved disclosure and voting materials to affected unsecured creditors who are entitled to vote on the reorganization plan in July.