Papermaker AbitibiBowater Inc. reached a preliminary agreement to sell its 75 percent stake in Ontario hydroelectric asset owner ACH Limited Partnership for C$540 million (US$443 million).
AbitibiBowater announced Dec. 22 it would sell its stake in ACH to an unnamed buyer assuming the partnership’s C$250 million (US$205 million) debt. Gross proceeds from selling the stake in the partnership, which was created in 2007 with Caisse de depot et placement du Quebec, will be C$197.5 million (US$161.8 million), AbitibiBowater said. (HNN 1/30/07)
Sale of 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 non-binding proposal for sale of the Ontario hydro assets is subject to due diligence.
AbitibiBowater said it expected a definitive agreement would be reached during the first quarter of 2009, but added it could not provide assurances as to when, or if, a definitive agreement would be executed.
Bond rating service DBRS said the company has a long way to go before it eases its financial woes. Abitibi has completed just over C$488 million (US$400 million) of the C$915 million (US$750 million) in asset sales it expected in 2008-2009, DBRS said. Abitibi has C$1.2 billion (US$1 billion) in debt due within one year, of which C$424 million (US$347 million) is due at the end of March 2009. A failure to refinance its debt maturities or raise more cash could force it to restructure, DBRS said.
Sale of the Ontario hydro facilities comes 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 owns other hydropower assets, including an installed share capacity of 363 MW in Quebec.