AbitibiBowater Files for Bankruptcy Protection

Newsprint maker AbitibiBowater Inc. on Thursday filed for bankruptcy court protection after deciding there was no other way it could deal with its debt of more than $6 billion.

AbitibiBowater Inc.'s headquarters are seen in Montreal, Canada, Thursday, April 16, 2009. The...

AbitibiBowater Inc.'s headquarters are seen in Montreal, Canada, Thursday, April 16, 2009. The newsprint maker on Thursday filed for bankruptcy court protection after deciding there was no other way it could deal with its debt of more than $6 billion. (AP Photo/The Canadian Press, Ryan Remiorz)

(AP)

AbitibiBowater, created in 2007 in a combination of U.S.-based Bowater and Canada's Abitibi-Consolidated, has faced collapsing demand for its newsprint as advertisers abandon newspapers for the Internet.

In addition, the recession has reduced the amount companies spend on newspaper ads, and rising newsprint prices have caused newspaper publishing companies to take such cost-savings measures as trimming the width of their pages. Further, declines in advertising and circulation have resulted in fewer pages printed overall, and in dozens of newspapers one or more of their print publication days have been eliminated.

Besides the global recession, the pulp and paper maker faced a subzero global credit environment plus the recent expropriation of a $300 million asset by a Canadian province.

By last month these challenges prompted AbitibiBowater to advise, in a U.S. regulatory filing, that its "liquidity position is currently severely constrained."

Efforts to avoid bankruptcy included selling hundreds of millions in assets, laying off workers and attempting to refinance its massive debt.

However, earlier this month it terminated a $1.8 billion refinancing effort to exchange existing debt for new debt. The exchange offer's deadline had been extended several times.

"The company concluded that there are no viable alternatives to its previously announced proposed refinancing ... and as a result has determined that the best course of action is to pursue its overall restructuring under Court supervision in the United States and Canada," AbitibiBowater said in a statement Thursday.

Company operations will continue as normal during its restructuring, spokesman Seth Kursman said in a telephone interview, adding that overseas facilities are not affected by the bankruptcy filings.