Abitibi and Bowater Announce Amendment to Merger Deal

Abitibi-Consolidated Inc. and Bowater Inc. have announced that they have amended the combination agreement signed on Jan. 29, 2007, in which Abitibi-Consolidated and Bowater agreed to combine their companies in an all-stock merger of equals.

The purpose of the amendment is to ensure that the combination remains tax deferred for U.S. resident holders of Abitibi-Consolidated shares.

As amended, the combination agreement limits the number of exchangeable shares that may be issued to an amount that, when combined with the exchangeable shares currently issued to holders of shares of a Canadian subsidiary of Bowater, is less than 20 percent of the total voting power of the combined company AbitibiBowater. In the event that eligible Abitibi-Consolidated shareholders elect to receive more exchangeable shares than are available, the remainder of their shares will be exchanged for shares of AbitibiBowater common stock, pro rata to their shareholdings.

According to a press release, Abitibi and Bowater believe that it is unlikely that eligible Canadian shareholders of Abitibi-Consolidated will be limited in their ability to receive exchangeable shares and to benefit from a tax deferral for Canadian income tax purposes.

The two companies announced plans to merge in January 2007. AbitibiBowater will own or operate 32 pulp and paper facilities and 35 wood product facilities located mainly in Eastern Canada and the Southeastern U.S. Pro forma combined paper production capacity is about 11.3 million metric tons per year and about 3.1 billion board feet of lumber.

More information is available at www.abitibiconsolidated.com.