AbitibiBowater Agrees to Sell Interest in Ontario Hydro Assets

AbitibiBowater has signed a binding agreement to sell its 75 percent indirect interest in ACH Limited Partnership to a consortium formed by a major Canadian institutional investor and a private Canadian renewable energy company. 

ACH LP was established in April 2007 to hold hydroelectric generating assets in Ontario by the company’s Abitibi-Consolidated Co. of Canada subsidiary. As part of the transaction, the Caisse de dépôt et placement du Québec agreed to sell its 25 percent interest in ACH LP.

Cash proceeds from the sale is expected to be about C$300 million and will be used to reduce the company's debt, enhance liquidity and for general corporate purposes. As part of the transaction, ACH LP will maintain its outstanding debt with the Caisse with a face value of C$250 million. The agreement values the hydro assets, which have a combined capacity of about 131 MW, at about C$640 million.

"We are looking forward to the completion of this transaction. Our intention is to immediately apply $100 million of the proceeds from this sale to reduce company debt,'' says Richard Garneau, president and CEO of AbitibiBowater. "We intend to protect the cost structure of the Iroquois Falls and Fort Frances mills and remain committed to reducing costs.''