THUNDER BAY, ON - April 16, 2009 - Early this morning David Peterson, CEO of AbitibiBowater announced the filing for bankruptcy protection in the United States, this move has quickly been followed by similar action in Canada. Citing the difficulty of raising capital in the current credit market Peterson said there was no other alternative than to seek the protection of the courts while the company restructures its operations.

Local reaction to this announcement has been swift from local community leaders. Below is the full response from Thunder Bay’s Mayor Lynn Peterson, who is currently in Fort Frances attending a municipal convention.

In response to today's announcement that AbitibiBowater Inc. has filed for creditor protection in the United States and Canada to pursue its restructuring plan under Court supervision while day-to-day operations continue, Mayor Lynn Peterson issued the following statement:

"AbitibiBowater advises that today's decisions mean day-to-day operations will continue while restructuring proceeds under Court supervision. AbitibiBowater has a major impact on the Thunder Bay economy including local companies that supply products and services to the Thunder Bay plant operations.

"As a community, we are following every step and hoping that the process unfolds with the best possible outcome for local employees, their families,  local suppliers and our community. As a City Council we are in close touch with the company, which has given so much to this community and, we hope,
will continue to do so far into the future."

Pulp and Paper, what was once synonymous with bread and butter in our city has faced a severe challenge in the last decade. Currently the AbitibiBowater mill is the last operating facility in our city employing fewer than 600 at the mill site but supporting many more throughout the community. This bankruptcy proceeding is a matter of grave concern to us all.

What does it mean when a company declares bankruptcy protection? What does court supervised restructuring mean? Bankruptcy protection allows the company to proceed with the restructuring (in this case debt not operations) of its debt load without the fear of money lenders demanding repayment in full. When companies and lenders cannot agree to a plan where debt is too repaid for example in part with stock and cash and there is no other avenue other than bankruptcy protection.

A good restructuring plan will see the company return to profitability, and it will also make provisions for the debt holders to get their pound of flesh. Over the last several years the company has made drastic cost savings measures in an attempt to stay ahead of disastrous market conditions. Some people have mentioned that the local mill has returned to profitability when it has been running in recent months, a faint glimmer of hope after many consecutive months of routine losses.

Court supervised restructuring means just that. They will work to ensure that the secured stakeholders and non secured stakeholders (like pension funds) work with the company to come up with a workable plan. For the courts to support a debt for equity proposal, AbitibiBowater must convince the courts that its business plan is sound and can be realistically achieved. On the last day of trading AbitibiBowater stock closed at $0.68.

Bankruptcy Protection is a source of concern for us all, it opens up new doors and the hope for a future, but sometimes when a new door opens we never quite know where it will lead us.