AbitibiBowater gets court approval for nearly $5 million in annual cost savings

MONTREAL — Newsprint giant AbitibiBowater’s cost savings efforts took a step forward Wednesday after two Quebec judges endorsed changes that will save the insolvent company nearly $5 million a year.
The paper producer, which is operating under court protection from creditors, expects to save $12.1 million over five years after a court allowed the company to switch ocean shippers carrying its paper to offshore markets.

A second court approved the sale of a former Quebec pulp and paper mill that would save AbitibiBowater nearly $2.3 million annually.
“We’re trying to save and reduce costs in every fashion we can,” company spokesman Jean-Philippe Cote said Wednesday.
The Montreal-based forest products company has refused to disclose cost targets, but is working on a series of plans to reduce its expenditures.
It has sold assets, renegotiated contracts, closed mills and laid off office workers as its struggles to survive the punishing weight of its debt and deteriorating market conditions.
In addition to selling its stake in a Quebec hydroelectric generating facility for $615 million, AbitibiBowater has realized $91 million in net gains from the sale of timberlands in the first nine months of 2009.
Cost containment efforts cut $35 million of administrative costs during the third quarter and $93 million as of September, according to financial results filed with U.S. regulators.
Following on its success in terminating and renegotiating a contract to supply wood chips and bark to SFK Pulp (TSX:SFK.UN), AbitibiBowater has prematurely cancelled its contract with Spliethoff Transport B.V. to ship its products to the Caribbean and Mediterranean regions.
After the shipper refused to reduce its prices and agree to other contractual changes, Abitibi switched to Wagenborg Shipping.
Spliethoff challenged the decision to end terminate the eight-year agreement slated to run until January 2013. But Justice Daniele Mayrand refused to interfere with Abitibi’s decision.
She rejected Spliethoff’s claims that Abitibi had acted in bad faith saying the shipper took a “calculated risk” in eventually filing a proposal it acknowledged was “far from what” Abitibi had demanded.
A different judge approved Abitibi’s sale of its Belgo plant in Shawinigan, Que., to Recyclabe Arctic Beluga Inc.
The purchase price was undisclosed because AbitibiBowater and its Canadian subsidiary Abitibi-Consolidated are selling other assets in its restructuring under bankruptcy protection, said the judge’s court order.
Abitibi received four offers for the vacant building. The recycling company’s bid was deemed the most interesting financially and because it will create an undisclosed number of jobs from the partial use of the building.
The proceeds will be used either to partially repay debtor-in-possession financing or secured creditor, the National Association, formerly Wells Fargo Bank. The Belgo plant stopped production in February 2008.
AbitibiBowater, formed from the 2007 merger of Canadian and U.S. newsprint companies, produces newsprint, commercial printing papers, market pulp and wood products.
The company operates 23 pulp and paper mills and 30 wood products operations in the United States, Canada, the United Kingdom and South Korea.