October 05, 2010 (FinancialWire) (Go to http://www.financialwire.net/?s=ftrdnwswnd for all of today’s featured news.) – Bankrupt Canadian papermaker AbitibiBowater, Inc. (OTC: ABTWQ) said it has closed the sale of $850 million aggregate principal amount of 10.25% senior secured notes due 2018 in a private placement.

The notes were issued by ABI Escrow Corp., a wholly owned subsidiary of AbitibiBowater. ABI Escrow will merge with and into AbitibiBowater in connection with AbitibiBowater's and its subsidiaries' emergence from creditor protection, which is scheduled to occur this fall, subject to confirmation of its U.S. plan of reorganization.

AbitibiBowater said that proceeds of the notes offering have been placed in escrow until the effectiveness of the plans of reorganization. It said that net proceeds from the sale of the notes will be used upon emergence to repay certain existing debt.

Canada-based AbitibiBowater is a pulp and paper manufacturer formed by the merger of Bowater and Abitibi-Consolidated, which was announced 29 January 2007.

The merger, which was validated in October 2007, created the third largest pulp and paper company in North America, and the eighth largest in the world.

On 16 April 2009 the company filed for bankruptcy protection in the United States, citing its debt of almost $5 billion USD ($2.9 billion from its Canadian division Abitibi-Consolidated, $1.8 billion from its American division, Bowater); the following day it won court approval for $206 million to finance restructuring.

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