February 28, 2008 / 3:45 PM / in 10 years

AbitibiBowater posts quarterly loss

NEW YORK (Reuters) - AbitibiBowater Inc ABH.N ABH.TO, North America’s largest newsprint maker, posted a fourth-quarter loss on Thursday, hurt by weakness in several businesses and charges for asset closures, and its shares fell nearly 12 percent.

The net loss came to $250 million, or $5.09 a share, compared with a year-earlier profit of $107 million, or $3.58 a share.

Excluding special items, the loss was $2.34 a share.

The Montreal-based company, formed late last year following Bowater’s purchase of Abitibi-Consolidated, had delayed the release of its quarterly and full-year financial report. It said last week that it needed more time to finalize its results as this is the first period of combined operations.

AbitibiBowater’s newsprint business posted a loss of $52 million.

The company has announced a major restructuring to cut excess capacity in North American newsprint markets and help its price increases gain traction.

The newsprint industry has suffered in North America because of high wood, energy and labor costs, coupled with declining demand because of lower newspaper circulation and the growing impact of the Internet.

Late last year, AbitibiBowater announced it would close or idle several mills and reduce annual newsprint production by about 600,000 tonnes by the first quarter.

The company also reported losses of $56 million for its specialty papers segment and $53 million for wood products. The market pulp and coated papers segments were profitable.

AbitibiBowater is in the midst of a second comprehensive review of its operations, and analysts expect it to announce more closures in the second quarter.

DEBT CHALLENGES

The company said it had successfully amended Bowater’s credit facilities, but was still looking to refinance its Abitibi-Consolidated subsidiary’s $350 million in debt that currently has second-quarter maturity dates.

AbitibiBowater cautioned that continued negative conditions in the credit and capital markets, as well as the difficult industry operating environment, were challenging its ability to obtain such financing.

Last week, Fitch Ratings cut its ratings on AbitibiBowater two notches to “CCC,” eight levels below investment grade, from “B-minus.” The ratings remain on review for further downgrade.

The company’s principal revolving credit agreement and accounts receivable securitization programs, totaling more than $1.1 billion, mature in the fourth quarter.

“AbitibiBowater bonds are trading at distressed levels as concern mounts about the status of a new credit facility and upcoming debt maturities,” GimmeCredit analyst Kimberly Noland wrote in a note to clients on Wednesday.

The company also said it would not be able to meet the Friday deadline to submit its 10-K annual report to the U.S. Securities and Exchange Commission, again saying this was the first period of combined operations. It expects to file the report no later than March 17.

Shares of the company were down $1.92, or 11.6 percent, at $14.61 in morning New York Stock Exchange trade.

Reporting by Euan Rocha, editing by Lisa Von Ahn

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