Steelhead Partners, LLC and Fairfax Financial Holdings Limited want to lend Bowater Inc. (a subsidiary of AbitibiBowater) at least $50 million if they can negotiate satisfactory terms with AbitibiBowater.

"We appreciate Steelhead's and Fairfax's confidence and willingness to support our restructuring initiatives. AbitibiBowater's efforts will now be directed at obtaining support from our banks to bring Steelhead and Fairfax into our lending syndicate," stated William G. Harvey, Senior Vice President and Chief Financial Officer. "We believe the additional funds proposed to be made available by Steelhead and Fairfax would provide us with sufficient short-term liquidity while we continue to address our restructuring of Bowater's debt. The approval from and support of our banks in this process is a crucial step to a successful outcome."

Last year, Fairfax bought $350-million worth of convertible debentures, that can be converted into AbitibiBowater shares at $10 each.

At the time of that announcement, AbitibiBowater — North America's largest newsprint producer and as well as a pulp and lumber producer — had stock worth about $12.35 (Canadian) a share.

The shares are now worth 63 cents, making it impractical for Fairfax to convert the debt into equity.

Read more:
AbitibiBowater responds to Steelhead and Fairfax financing proposal (AbitibiBowater Press Release)
Fairfax ready to inject cash into Bowater (Report on Business)