AbitibiBowater Financing Bonanza (ABH)

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AbitibiBowater Inc. (NYSE: ABH) is seeing shares surge after the open this morning.  The paper and wood products company secured a financing pact that it had made a filing for earlier.

The company noted that this refinancing plan will fulfill its upcoming liquidity needs and will provide "sufficient financial flexibility."  The total refinancing plan is roughly $1.4 billion.  While the company is now based in Canada, the following terms are in U.S. Dollars:

  • $400-500 million of new 364-day senior secured term loan secured by working capital and other assets;
  • $400 million new senior secured notes or a term loan due 2011 secured by fixed assets;
  • $200-300 million of new equity or equity-linked securities of AbitibiBowater Inc.

The company will start an exchange offer for some $500 million of the near-term maturities and will close out the maturities that were coming due in April, June, and August.

Shortly after the open, shares are up 17% at $11.81, which is above when the company announced its intent to refinance its debt and well above the $9.10 low that was recently put in.  As far as a post-merger performer, this has been a disaster as the high was $37.45.

Jon C. Ogg
March 7, 2008