AbitibiBowater Inc. is looking to borrow $1.35-billion (U.S.) to exit bankruptcy and creditor protection in October, but the newsprint giant wants to keep its bank fees confidential, according to U.S. court filings.
The world's largest newsprint producer by capacity plans to repay debt through a combination of cash on hand, $500-million worth of equity in the new company to general unsecured creditors and exit financing from either a notes offering or new credit facility to secured creditors.
A $750-million notes offering is the preferred option because of "favourable market conditions that currently exist in the high yield debt markets.
"The debtors currently believe that the notes offering will provide [them]with the best financing terms and greatest operational flexibility upon their emergency from Chapter 11," said a motion filed Friday in U.S. Bankruptcy Court in Delaware.
However, the company may instead raise the funds through a secured term loan credit facility if market uncertainties result in unsatisfactory terms.
AbitibiBowater also has sought the court's permission to seal the fee schedules for the notes offering and term loan because they contain "commercially sensitive and proprietary information."
The company has been under court protection from creditors since April, 2009.
"Publication of the confidential fee schedules would be inappropriate and could be materially harmful to the respective businesses of the lead managers and/or lead arrangers that are providing essential financing to the debtors," said a separate motion.
"It would also create a competitive disadvantage in the firm's competition with other financial institutions to lead other financing."
A hearing is scheduled for Aug. 25 in Delaware.
In addition to the exit financing, AbitibiBowater wants to enter into an asset-backed revolving loan of up to $600-million from Citigroup, Barclay's and JP Morgan.
Creditors will vote on AbitibiBowater's restructuring plan on Sept. 14. The date was delayed about two weeks because of protracted negotiations with unsecured creditors and financial supporters and the complexity of its cross-border restructuring.
AbitibiBowater hopes to exit court protection in mid-October.
AbitibiBowater has cut 6,000 employees and dramatically reduced its paper and wood capacity as it prepared to exit creditor protection as a lower-cost producer better able to absorb market and currency fluctuations.
The reorganized company with 11,900 workers hopes to capitalize on export market opportunities and promising growth markets for paper used in catalogues, magazine inserts, direct mail, inkjet paper and paper packaging.
North American newsprint demand fell by about 23 per cent last year. It is expected to decrease an additional eight per cent in 2010 and five to seven per cent annually over the next four years.
AbitibiBowater has streamlined its asset portfolio to focus on top-performing facilities by closing or idling 3.4 million tonnes of paper capacity since 2007. It has the capacity to produce nearly seven million tonnes of paper annually, including 3.7 million in Canada and three million in the United States.
Newsprint production capacity has been trimmed 36 per cent to 3.6 million tonnes and accounts for 38 per cent of total sales, down from 45 per cent in 2007.
Commercial paper capacity was chopped 38 per cent to 2.3 million tonnes while wood products is down 21 per cent to 2.5 billion board feet.
The company has sold more than $940-million of assets and land, including its 60 per cent stake in Manicouagan Power Co. for $615-million (Canadian).
The restructuring plan will see AbitibiBowater's debt decrease from $6.5-billion (U.S.) to $1.6-billion as it pays off secured creditors and debtor-in-possession financing.