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Chinese Rayon Producer Buys Minority Interest in Neucel Specialty Cellulose

Zhejiang Fulida Ltd. has taken a direct minority investment in Neucel Specialty Cellulose Ltd. and signed a long-term supply agreement to procure Neucel's chemical cellulose product. Fulida is one of the leading producers of rayon in the world.

Neucel plans to use the investment to accelerate its capital plan targeted mainly at capacity expansion in addition to cost and quality improvements.

"This partnership will enable us to gain an improved market presence in China and solidify our strong position in both the viscose and specialty markets," said Bob Taylor, president and CEO of Neucel.

"Viscose rayon fibre production capacity has increased greatly in China and competition has become intense. With the relationship with Neucel, Fulida gains a smooth and stable supply of dissolving pulp materials," said Jainer Qi, CEO of Fulida.

Neucel plans to deploy the available capital immediately to keep pace with the high customer demand in the chemical cellulose market. The company notes that this capital will complement the funding provided by the Government of Canada's Pulp and Paper Green Transformation Program to further reduce its energy consumption.

After arduous negotiations, the Communications, Energy and Paperworkers Union of Canada (CEP) has agreed to a tentative agreement with AbitibiBowater to renew the collective agreement. This deal fulfills an essential condition towards the emergence of the company from the current restructuring process.

"We have the best possible agreement, given the precarious financial condition of the company", says CEP President Dave Coles. "We are proud to have been able to protect retirees and to have created a new stable pension plan for the active workers. Our members will no longer have to fear the shadow of an insolvency of their plan".

The company took off the table its proposal to terminate the pension plans, which would have reduced pension benefits by an average of 25%. Provincial government will now bear the responsibility to adopt the appropriate regulatory changes to allow the company to financially fix the pension plans.

However, the union is furious at the total lack of help shown by the Conservative government to the forestry workers. "It is our members who had to make sacrifices to save the company from bankruptcy", says Dave Coles. "The last federal budget fully demonstrated the contempt of this government for forestry workers. It is now clear for our workers, our retirees and our communities that the Conservatives have abandoned them".

This agreement covers about 4,500 workers and 8,000 retirees from 23 AbitibiBowater locals at 12 pulp and paper mills in Eastern Canada.

AbitibiBowater announced today the Company has received approval for a process to call for employee and other specified creditor claims (the "Second Claims Process") by the Quebec Superior Court in Canada and the U.S. Bankruptcy Court for the District of Delaware. This Second Claims Process follows an earlier call for specified creditor claims which was approved by the courts and announced on September 4, 2009 (the "First Claims Process").

The Second Claims Process outlines the procedures by which specified creditors can make claims against the Company. These specified creditors include, among others: certain creditors that were not subject to the First Claims Process, such as Company employees who were active as at April 16, 2009, or thereafter; certain creditors who may have claims arising from the breach or repudiation of contracts arising after August 31, 2009; and certain Company lenders. A comprehensive listing of procedures and specified creditors has been included in the Thirty-Second Report of the Monitor, a link to which can be found on abitibibowater.com.

Under the Second Claims Process, creditor claims must be received by 4:00 p.m. (Eastern Daylight Time) on April 7, 2010.

The Monitor, Ernst & Young Inc., and the Company's Claims Agent, Epiq Bankruptcy Solutions, LLC, will be mailing proof of claim packages to all known specified creditors. In addition, a copy of the court orders and the proof of claim package will be available through a link on abitibibowater.com. Creditors, or any other interested parties, who do not receive a proof of claim package can obtain the information through the Company website.

More information about AbitibiBowater's restructuring process can be found at www.abitibibowater.com or by calling toll-free 888 266-9280. International callers should dial 503 597-7698.

AbitibiBowater produces a wide range of newsprint, commercial printing papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 22 pulp and paper facilities and 27 wood products facilities located in the United States, Canada and South Korea. Marketing its products in more than 90 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has third-party certified 100% of its managed woodlands to sustainable forest management standards. AbitibiBowater's shares trade over-the-counter on the Pink Sheets and on the OTC Bulletin Board under the stock symbol ABWTQ.

Fraser Papers Inc., the Canadian Energy and Paperworkers Union of Canada, the Government of New Brunswick, and other stakeholders, have agreed to the broad terms under which Fraser Papers will proceed to close the sale of its specialty papers business to a company sponsored by the secured creditors of Fraser Papers (Newco).

The agreement included proposed changes to the collective agreements at the company's Edmundston pulp and energy complex which will require ratification on or before March 10, 2010.

The company has filed the agreement with the Ontario Superior Court of Justice, and will work with its secured creditors and Newco to close the sale of the specialty papers business before March 31, 2010.

Under the terms of the purchase agreement, the unsecured creditors of Fraser Papers will receive promissory notes and a 49% common equity interest in the new company. Brookfield Asset Management Inc., a secured creditor, has agreed to convert its secured claim against the company into a 51% common equity interest in Newco while the Government of New Brunswick has agreed to convert its $35 million secured loan plus accrued interest into equity in the form of preferred shares of the new company.

Fraser Papers also announced that the Court has granted a further extension of its creditor protection to April 9.

All eight of the unions at Corner Brook Pulp and Paper have voted to agree to a wage deferral request from Kruger Inc., The Western Star reports.

The seven unions represented by the Communications, Energy and Paperworkers (CEP) Union of Canada as well as Lodge 1567 of the International Association of Machinists and Aerospace Workers, voted on the proposal from Kruger. According to the newspaper, Kruger asked the unions to take a 10% cut in pay, which could be paid back to the workers if the mill can improve its bottom line.

The company, according to the agreement, will commit to repaying the lost wages "as soon as Corner Brook Pulp and Paper Limited returns to profitability (pre-tax profit) and has recovered the accumulated losses since Jan. 1, 2010." The Western Star also states that Kruger is committing to allowing the unions access to the necessary financial information, on a quarterly basis, so the unions can better comprehend and evaluate the profitability of the Corner Brook mill.

Lignol Energy Corporation and Novozymes have established the framework of a multi-year collaboration agreement to optimize the latest generation of Novozymes' enzymes for use in Lignol's cellulosic biofuel process.

Lignol plans to construct large-scale biorefineries for the production of cellulosic biofuel from wood chips and forestry residues. Novozymes supplies enzymes that convert cellulosic biomass into sugars that can then be fermented into ethanol. The parties plan to use Lignol's fully integrated industrial-scale pilot plant in Burnaby, B.C., to optimize enzyme performance across a range of cellulosic feedstocks in Lignol's unique process.

This announcement follows progress between the parties which has resulted in significant improvements in the conversion of woody biomass to ethanol. "We are excited with the opportunity to collaborate with the world's leading enzyme producer to optimize their latest technology for Lignol's unique substrate. In so doing, we are removing a critical cost barrier to the commercialization of cellulosic ethanol. This marks a major step for our industry in achieving the cellulosic biofuel objectives set out by various governments throughout the world," said Lignol president and CEO, Ross MacLachlan. "Our integrated plant is perfectly suited for this type of collaboration in which our industrial process is coupled with Novozymes' biological technology to make cellulosic ethanol a commercial reality."

Lignol is a Canadian company undertaking the development of biorefining technologies for the production of fuel-grade ethanol and other biochemical co-products from non-food cellulosic biomass feedstocks. Lignol's modified solvent-based pre-treatment technology facilitates the rapid, high-yield conversion of cellulose to ethanol and the production of value-added biochemical co-products, including high purity HP-LTM lignins.

AbitibiBowater today filed a Notice of Arbitration under the North American Free Trade Agreement ("NAFTA") with regards to the expropriation of its assets and rights in Newfoundland and Labrador, Canada. The Company contends that the provincial government's enactment in December 2008 of Bill 75, which expropriates an extensive array of the Company's rights and assets, was arbitrary, discriminatory and illegal under international law.

The claim seeks direct compensation for damages of approximately C$500 million, plus additional costs and relief deemed just and appropriate by the Arbitral Tribunal. This is one of the largest claims ever filed against Canada under NAFTA. Under international law, the Canadian Federal Government is responsible for the actions of Newfoundland and Labrador in violation of the investment protection provisions of NAFTA.

Read the full official release here