March 23, 2009 / 10:11 PM / in 9 years

UPDATE 3-AbitibiBowater extends exchange deadline again

(Adds company comment on TSX review; figures in U.S. dollars unless noted.)

TORONTO, March 23 (Reuters) - AbitibiBowater Inc ABH.N ABH.TO gave its debtholders more time on Monday to accept the first part of a refinancing plan that North America’s largest newsprint maker says it needs to keep itself afloat.

The creditors now have until the end of on Wednesday to agree to exchange the $1.8 billion in debt they hold for AbitibiBowater’s Bowater unit, as the company belatedly pushed back a deadline that had expired last week.

Some creditors are balking at the plan, according to Canadian media reports, which could force the company or its Bowater and Abitibi units to file for court protection.

It is the third time the deadline has been pushed back, although the first two extensions were for a full week, two days longer than the latest one.

A comparison of the company’s status report on Monday with those made when it announced the earlier extensions indicates the percentage of notes tendered has slowly increased, but it still remains below two-thirds for most of the debt series.

A spokesman for AbitibiBowater declined to comment on the exact percentage of creditor approvals that it currently requires.

AbitibiBowater was created in 2007 in a combination of U.S.-based Bowater and Canada’s Abitibi-Consolidated, but the combination did not entirely join their respective financial structures.

The company wants to exchange debt at subsidiaries Bowater Inc and Abitibi-Consolidated Inc for new debt, stock and warrants, as it struggles with a sharp decline in newsprint demand. The proposed debt restructuring at Abitibi-Consolidated is contingent on the success of the Bowater debt exchange.

The company says that by easing its debtload it will be able to weather the current economic downturn that has reduced demand for paper and lumber.

AbitibiBowater was also told on Monday by the Toronto Stock Exchange that its common shares were under review and it has 30 days to bring them into compliance for listing.

The statement by the TSX did not elaborate on what prompted the review, but the exchange’s rules allow it to delist a company because of its weak financial condition or a change in business.

AbitibiBowater said the review was normal since it planned to speed up the recapitalization process by getting an exemption from the shareholder approval requirements.

The time needed for a shareholder vote would jeopardize the company’s financial viability, AbitibiBowater says.

The company’s shares in Toronto closed down 8 Canadian cents at 68 Canadian cents while its shares in New York ended up up 9 cents at 63 cents.

$1=$1.23 Canadian Reporting by Euan Rocha, Allan Dowd; editing by Rob Wilson

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