AbitibiBowater trying to avoid big tax bill

Nov 23, 2009 | In Financial News | 8 feedbacks »

AbitibiBowaterAbitibiBowater is juggling its corporate structure to avoid a big tax bill.

Unless AbitibiBowater is able to repay a $250 million loan between its Canadian and U.S. subsidiaries, the company faces a $55.25 million withholding tax in Canada, and potentially even more in the U.S.

The loan was agreed upon during the merger of Abitibi-Consolidated and Bowater last year. The Canadian company agreed to lend AbitibiBowater US Holding LLC $201.6 million. That amount increased to about $250 million with interest as of April's court protection.

The U.S. holding company doesn't have sufficient funds to repay the loan.

Creation of two holding companies would allow the debt to be paid by transferring preferred units under similar terms and conditions.

Source:
AbitibiBowater juggles to avoid large tax bills from $250 million loan (Canadian Press)

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Comment from: reduced [Member] Email
K!... having a little trouble trying to understand this post! Who owes this money to who?... Abitibibowater holding company owes this to the Abitibi 1/2 of the company or to the Bowater part of the company?
& from what i understand from this, is, that instead of having Abitibibowater.. it will (if approved) be Abitibi & then Bowater holding companies... so they are trying to separate the two in the courts now..??
This news release could have been written much more clearly!
23/11/09 @ 12:18
Comment from: reduced [Member] Email
Hmmm.. In trying to find answers to my questions the following has come to my attention as well, thought some may be interested!:

Proposed sale of the belgo mill / Monitors report!

http://documentcentre.eycan.com/eycm_library/Project%20Audi%5CEnglish%5CMonitor%27s%20Reports%5C23rdMonReport20Nov2009ENG.pdf
23/11/09 @ 14:35
Comment from: reduced [Member] Email
& FYI... this is the monitors report regarding the topic of this post for any interested enough to read it!:

http://documentcentre.eycan.com/eycm_library/Project%20Audi%5CEnglish%5CMonitor%27s%20Reports%5C22ndMonitorReport19Nov2009ENG.pdf
23/11/09 @ 14:41
Comment from: pulperpete [Member] Email
Well reduced, its confusing because its suppose to be confusing. It is quite a web of deciet. They want two holding companies now instead of one. ABH is a holding company for both ACI and BI but now they want to have a 2nd holding company to avoid paying taxes. What really makes me scratch my head is why worry about a mere $50 million tax bill when your $6 billion or more in debt ?
This is just further evidence that the 2007 merge is coming undone.
23/11/09 @ 16:05
Comment from: disgruntled [Member] Email
It seems to me that Abi-Bow is using bankruptcy as a tool to get out of obligations such as severence, pension, taxes, and to bust the union. I was very hopeful that this would be a quick bankruptcy, that the unprofitable mills would be closed, supply would tighten , and prices rise to a profitable level for those mills left in operation. Instead all thats happened is sneaky backroom deals, court extensions, and 1 billion in losses in 6 months. At least the lawyers are happy, I suppose, I think this stinks to high heaven and they are all in on it.
23/11/09 @ 17:20
Comment from: disgruntled [Member] Email
It also seems fishy to me that none of the Quebec mills are ever included in the "revolving shutdowns".
23/11/09 @ 17:48
Comment from: reduced [Member] Email
Well disgruntled i have to say that for once i actually agree with the majority of what u are saying! & i think by now we all know that the Company & the Union are all looking out for their interests in Quebec first & everything else is secondary! This has been proven by their actions over the last year!...
& FYI... one (well actually both) of the pending postings is mine... thought u all may want to know Monitors report that was released today deals exclusively with the selling of the Belgo mill & all assets... check under ernst 7 young if you want to read it... tried to post the link but it is "Under Review"... per post!...
23/11/09 @ 17:53
Comment from: pulperpete [Member] Email
I too find myself agreeing with "disgruntled"s post of 23/11/09 17:20. The lawyers and the bankruptcy firms are makeing $2 million a week ! So you know why they are dragging it out. Now that the negotiations with CEP have been put off until the new year it would seem that ABH will get yet another extension on Dec 15th. Happy New Year ! This could go on and on and on and on....
24/11/09 @ 12:14

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