Apr 18, 2009

MONTREAL — Troubled forestry giant AbitibiBowater Inc. (TSX:ABH) has been granted bankruptcy protection in both Canada and the U.S.

AbitibiBowater says the U.S. Bankruptcy Court for the District of Delaware has granted the company's request for relief under Chapter 11 of the American bankruptcy code.

The company also says the same protection has been granted by a court in Quebec.

AbitibiBowater said earlier in the week it had no choice but to seek bankruptcy protection because it couldn't get its debt problems under control.

The company also faces other storm clouds as demand for pulp, lumber, newsprint and other paper products takes a hit around the world as a result of the ongoing global recession.

The company has said it intends to continue its daily operations, including payroll and customer obligations, as it deals with a debt load totalling some US$6 billion.

Bankruptcy protection laws in both Canada and the U.S. are designed to allow companies to continue to operate while negotiating with their creditors under court supervision.

As a result of its challenges,AbitibiBowater - the eighth largest publicly traded pulp and paper manufacturer in the world - has been delisted by the New York Stock Exchange. The Toronto Stock Exchange, where trading in the company is currently suspended, has served notice it will delist AbitibiBowater shares next month.

AbitibiBowater owns or operates 23 pulp and paper facilities and 30 wood products facilities located in the U.S., Canada, the United Kingdom and South Korea.

The company has 15,800 active employees around the world, including more than 11,000 in Canada.