MONTREAL (AP) - The Quebec government offered newsprint maker AbitibiBowater Inc. a loan guarantee of up to $100 million Friday in an attempt to save jobs in the province a day after the debt-laden company filed for bankruptcy court protection.
Quebec Finance Minister Raymond Bachand said the government’s priority is helping the company, as it restructures, to retain the 7,500 AbitibiBowater workers in the province.
The U.S. based company, which has administrative headquarters in Montreal, announced Thursday that it has filed for bankruptcy and restructuring protection in Canada and the United States. The forestry company said it had no other option after failing to refinance its debt of more than $6 billion.
“AbitibiBowater and its employees appreciate the confidence in our restructuring initiatives and the ongoing demonstration of support and collaboration shown by Investissement Quebec and the Quebec government,” President and CEO David J. Paterson said in a statement Friday.
AbitibiBowater has been struggling since 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.
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 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 after extending the deadline several times.
Company operations will continue as normal during its restructuring, spokesman Seth Kursman said, adding that overseas facilities are not affected by the bankruptcy filings.
No layoffs, closures or pay cuts were announced with the bankruptcy, though such moves may be forthcoming as the restructuring progresses.
Paterson also said Friday that the company is working towards a rapid conclusion of the previously announced sale of AbitibiBowater’s 60 percent interest in its Manicouagan hydroelectric facility in Quebec for $506 million.
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