AbitibiBowater selling stake in Quebec power plant

AbitibiBowater Inc. is selling its stake in a hydroelectric station in Quebec for $615 million as part of a massive debt revamp.

The paper and forest-products company said Friday it is selling its 60 per cent stake in the station on the Manicouagan River to Hydro-Quebec.

The company said the sale will not affect its Baie-Comeau paper mill or any of its other hydro-electric operations.

The plan will see about $2.9 billion in existing debt replaced by new debt, along with company stock and warrants.

The company said noteholders owning more than $1 billion of Abitibi notes, approximately 34 per cent the total outstanding, have agreed to vote in favour of the recapitalization.

AbitibiBowater said it will solicit additional support for the debt plan from other noteholders, from its secured noteholders and from its lenders.

"This recapitalization is another important step in AbitibiBowater's ongoing efforts to deleverage the company and refinance its current debt obligations," said David Paterson, AbitibiBowater's president and CEO.

"The transaction offers substantial benefits to AbitibiBowater, increasing its financial stability while also reducing the company's annual interest costs and improving overall liquidity."

The refinancing still requires noteholder acceptance and court approval.