11 February 2007

Abitibi shedding power plants

Canadian Press reports that Abitibi Consolidated is transferring some of its electricity production to a new company owned 75% by the paper giant and 25% by a Quebec financial institution. The deal will yeild gross proceeds to ACI of slightly less than $300 million, according to an Abitibi news release.

Industry analyst Paul Quinn notes, however, that the move could jeopardize Abitibi's low-cost power generation, which might, in turn, affect paper pricing and profitability.

He doubts that more than 50% of existing assets would be transferred to the new company, despite company claims that it is looking at moving more and more power assets to the new company.