Report: AbitibiBowater to sell Ontario hydro assets to Brookfield

A Canadian newspaper reports papermaker AbitibiBowater Inc. is prepared to sell its Ontario-based hydroelectric assets to Brookfield Asset Management Inc.

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). (HNN 12/31/08)

Toronto’s Globe and Mail reported Feb. 2 that Brookfield, whose units have numerous hydro projects in operation or development in Canada and the United States, is to be the buyer of the Ontario assets. A Brookfield spokesman said the company �does not comment on speculation.�

The Globe and Mail said AbitibiBowater would use revenues from the sale to refinance some debt as it attempts to stave off a possible court filing for creditor protection. The debt-strapped company faces a March deadline to pay back a US$347 million secured loan. It has about the same amount in debt due later this year.

Brookfield heightened speculation last week after its Brookfield Renewable Power unit borrowed C$300 million (US$241.8 million) through a three-year note issue, with the proceeds to be used to repay debt and for general purposes.

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, would 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.

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.

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