AbitibiBowater sells stake in 335-MW Manicouagan to Hydro-Quebec

Newsprint manufacturer AbitibiBowater Inc. announced it has agreed to sell its 60 percent stake in the 335-MW Manicouagan hydroelectric project in Quebec to utility Hydro-Quebec.

The non-binding agreement in principle calls for the province-owned utility to purchase the majority stake in the Manicouagan Power Co. project for C$615 million (US$484 million). American aluminum producer Alcoa Inc., which owns the remaining 40 percent, reportedly waived its option to buy the project.

The sale is part of AbitibiBowater’s complex recapitalization plan, unveiled March 13, which is intended to cut its net debt by US$2.4 billion.

Manicouagan was built in 1949 on the Manicouagan River near Hydro-Quebec’s Manic hydropower complex. (HNN 7/4/06) Its sale is subject to terms and conditions including satisfactory due diligence investigation, regulatory approvals, and definitive agreements including a long-term power sales contract with AbitibiBowater’s Baie-Comeau, Quebec, paper mill.

AbitibiBowater said the deal does not include sale of the Baie-Comeau paper mill and will not affect any of the company’s other hydroelectric projects. The paper maker’s other hydro assets include 162.5 MW of capacity in Quebec.

Toronto’s Globe and Mail reported in February that AbitibiBowater is prepared to sell its Ontario-based hydroelectric assets to Brookfield Asset Management Inc. (HNN 2/3/09) AbitibiBowater said in December it had reached a preliminary agreement to sell its 75 percent stake in Ontario hydro asset owner ACH Limited Partnership to an unnamed buyer for C$540 million (US$443 million).

Sale of Ontario hydro capacity totaling 138.8 MW is part of AbitibiBowater’s effort to sell non-core assets and reduce debt. The company’s Ontario projects include 12.8-MW Fort Frances, 25.2-MW Iroquois Falls, 47-MW Island Falls, and 22-MW Twin Falls.

The hydro project sales come as AbitibiBowater is fighting plans by Newfoundland and Labrador Premier Danny Williams to expropriate Abitibi’s hydroelectric assets in Newfoundland. (HNN 12/18/08) The company has warned it would file suit under the North American Free Trade Agreement if it does not get fair compensation for the Newfoundland facilities.

AbitibiBowater hydro developments in Newfoundland and Labrador include 30-MW Beeton, 45-MW Grand Falls-Windsor, and the 20-MW Bishop’s Falls project, all on the Exploits River. It also is an owner of 18-MW Star Lake.

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