December 9, 2010 / 6:52 PM / 7 years ago

UPDATE 2-AbitibiBowater emerges from bankruptcy

* Has been under court protection since 2009

* Emerges with less debt, low fixed costs

* Company says product mix more balanced (Updates with analyst comments; in U.S. dollars unless noted)

WILMINGTON, Delaware, Dec 9 (Reuters) - The world's largest newsprint maker, AbitibiBowater Inc ABWTQ.PK, emerged from bankruptcy protection on Thursday after shedding nearly $6 billion of debt and simplifying its corporate structure.

The Montreal-based company had been in creditor protection in the United States and Canada since early 2009 when it succumbed to the cross-currents of the credit crunch and a deep recession among the consumers of its newsprint.

AbitibiBowater shed significant production capacity in both its paper and wood operations during the reorganization, and says it has emerged with a more balanced product portfolio and greater flexibility in its remaining mills.

The company also used the restructuring process to consolidate debt at the parent level. Prior to bankruptcy, many of its subsidiaries issued their own debt, which prevented the company from moving cash from operating units that were flush to those that were in need of funds.

The reorganized AbitibiBowater has the potential to generate significant cash flow, said Kevin Mason, who analyses the forest products industry for Equity Research Associates.

The newsprint market still has its struggles, "but it is doing a heck of a lot better than it was," said Mason, who sees the company in a much better position now to handle future market downturns.

The company's chief executive, David Paterson, recently told Reuters he wants to shift Abitibi away from its reliance on newsprint, including investments in green energy. [ID:nN23136251]

Mason said the company's stronger balance sheet should give it the option of being able to shift mills into new products rather than closing them if it wants to reduce newsprint capacity.

The company currently has an annual production capacity of 3.3 million tonnes of newsprint, 2.2 million tonnes of commercial paper, 1.1 million tonnes of pulp and 2.2 billion board feet of wood products.

As part of its reorganization Abitibi also struck new labor deals with its unions and reached agreements with the provinces of Ontario and Quebec that it says will reduce its annual pension fund contributions by $200 million.

The Toronto Stock Exchange said AbitibiBowater shares will begin trading on Friday. The company will also be listed on the New York Stock Exchange.

The company was formed in 2007 by the merger of rival papermakers Abitibi-Consolidated and Bowater Inc. (Reporting by Tom Hals and Allan Dowd, editing by Dave Zimmerman and Rob Wilson)

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