(In U.S. dollars unless noted)
TORONTO, March 16 (Reuters) - AbitibiBowater Inc ABH.N said on Monday a new investor will provide a backstop commitment of up to $100 million to the company’s recapitalization plan, which will increase the support of unsecured noteholders to 39 percent of the outstanding principal involved in the plan.
AbitibiBowater, North America’s biggest newsprint maker, announced the recapitalization plan last week as it tries to cope with a crippling debt load and a sharp decline in newsprint demand.
It did not name the new investor.
Under the plan, $2.9 billion in unsecured notes issued by predecessor company Abitibi-Consolidated, which remains a subsidiary, will be converted into a combination of new notes, warrants and shares of AbitibiBowater.
The company was formed in 2007 with the merger of Canada’s Abitibi-Consolidated and U.S.-based Bowater. A large portion of the company’s debt is still isolated within its Abitibi and Bowater subsidiaries.
AbitibiBowater has been exploring the sale of noncore assets, with a view to using the proceeds toward reducing debt.
Last week, AbitibiBowater said it would sell its 60 percent interest in Quebec’s Manicouagan Power Co, a generator of hydro-electricity, to provincial government-owned Hydro-Quebec for C$615 million ($484 million).
AbitibiBowater shares rose 4.7 percent to 67 cents in early trade on the New York Stock Exchange on Monday.
$1=$1.27 Canadian Reporting by Euan Rocha; Editing by Peter Galloway