Canadian Manufacturing

Abitibi cutbacks to cost $US 4M

Recycling pilot project too expensive: CEO



MONTREAL—AbitibiBowater will stop producing paper at its Coose Pines, Alabama facility and end a pilot project to make recycled lightweight packaging.

About 150 employees will be impacted by the production cutbacks, according to Richard Garneau, president of the Montreal-based forest products maker.

Garneau said it would require too much capital investment to manufacture recycled lightweight and ultra lightweight packaging and linerboard.

The facility will keep producing fluff pulp.

Garneau estimated severance and other closure costs at about $US4 million, with the majority of costs incurred in the first half of 2011. A non-cash charge of approximately US$10 million will be taken to reflect the permanent closure, he added.

In December, AbitibiBowater exited 20 months of court-protection from creditors. The company sold about US$1 billion of assets and closed several facilities.

Last week, Abitibi announced a deal to sell its 75 per cent interest in its Ontario hydro assets for C$300 million in cash. A total of $100 million of the proceeds will be applied to the company’s debt.

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