AbitibiBowater head office in MontrealRyan Remiorz
Insolvent newsprint giant AbitibiBowater took another step towards exiting court protection after it finalized its Canadian pension agreements.
The Montreal-based forest products company signed a deal with the Ontario government, which provides funding relief from the heavy solvency deficits AbitibiBowater's pension plans.
A similar agreement was previously concluded with Quebec.
The agreements, which allow the company to fully meet its pension obligations to beneficiaries, were a condition of the company's court-supervised restructuring.
The U.S. Bankruptcy Court in Delaware is expected to rule on AbitibiBowater's amended restructuring plan, which apparently addresses most, if not all, of the objections of creditors.
A telephone hearing conducted Thursday has been adjourned until Tuesday.
"The best way to ensure pension benefits continue to be paid out is to ensure a company stays in business," Ontario Finance Minister Dwight Duncan said in a news release Friday.
AbitibiBowater's continued operation will ensure the employment of thousands of Ontarians and ensure that pensioners continue to receive their benefits, Duncan added.
The provincial government has also entered into a five-year agreement regarding a new subsidiary - AbiBow Canada - that will oversee its pulp and paper operations in Ontario.
The agreement becomes effective when AbitibiBowater emerges from creditor protection, expected later this fall.
The company and Ontario government will re-evaluate the covenants of the agreement at the end of the initial five-year term in light of the company's situation, the conditions affecting the pulp and paper industry as a whole and the solvency of its pension plans.
"We have signed today an agreement that is a significant step toward our emergence," said AbitibiBowater CEO David Paterson.
"We are convinced we have obtained the best deal possible for all our employees and retirees in Canada, and we would like to thank the Government of Ontario for its ongoing support."
AbitibiBowater directly employs about 8,500 workers and has some 20,000 pensioners in Ontario and Quebec.
It produces a wide range of newsprint, commercial printing and packaging papers, market pulp and wood products at 43 facilities in Canada, the United States and South Korea.