The Government of Canada and AbitibiBowater announced a settlement today of AbitibiBowater’s NAFTA challenge of the 2008 seizure of its property and assets by the House of Assembly.
There is no word on any settlement with other companies also affected by the seizure. Government seized hydroelectric assets belonging to Fortis and Enel. Other companies affected by the seizure included Clarica, Sun Life Assurance, Mutual Life Assurance, Standard Life Assurance, and Industrial Life Assurance.
AbitibiBowater initially sought much higher damages in its claim under the North American Free Trade Agreement.
The expropriation will still hit provincial taxpayers in their collective bank accounts. Premier Danny Williams confirmed that in May.
A gigantic legal error in the wording of the expropriation legislation means that the provincial government seized not only assets but also most of AbitibiBowater’s substantial environmental liabilities.
On top of that, the expropriation bill for taxpayers also includes millions spent on futile legal arguments.
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Government of Canada news release:
“The Government of Canada and AbitibiBowater have reached an agreement regarding the expropriation of assets in Newfoundland and Labrador.
“The Government of Canada has agreed to make a payment of $130 million to AbitibiBowater upon the company’s restructuring. This payment represents the fair market value of the company’s expropriated assets.
“AbitibiBowater has agreed to irrevocably and permanently withdraw its claim against Canada.
“The Government of Canada has resolved this dispute for the benefit of Canada’s long-term economic interests. In reaching this agreement, we are avoiding potentially long and costly legal proceedings.
“This approach reaffirms the Government of Canada’s commitment to maintaining a rules-based business environment that facilitates free trade and encourages investment.
“The Government of Canada is moving forward on an ambitious free trade and investment agenda—a cornerstone of Canada’s strong economic position and future growth. We will continue to stand up for Canadian businesses at home and abroad by securing greater access to the North American marketplace.”
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Trade Media Relations Office
Foreign Affairs and International Trade Canada
AbitibiBowater news release:
AbitibiBowater Announces Intention to Withdraw NAFTA Notice of Arbitration - Settlement Agreement Reached with the Government of Canada for C$130 Million
MONTREAL, Aug 24, 2010 /PRNewswire via COMTEX/ --
AbitibiBowater today announced a formal settlement agreement with the Government of Canada with regards to its assets and rights in Newfoundland and Labrador, Canada, expropriated by the provincial government under Bill 75 in December 2008. The Government of Canada will pay AbitibiBowater C$130 million, representing not more than the fair market value of those rights and assets, following the Company's emergence from creditor protection.
As part of the settlement agreement AbitibiBowater will waive its legal actions and claims against the Government of Canada under the North American Free Trade Agreement (NAFTA).
"We believe this is an acceptable settlement for our Company, stakeholders and creditors, given the set of circumstances faced by the Company at this particular time as well as the inherent uncertainty of any judicial process," stated David J. Paterson, President and Chief Executive Officer. "We are now able to move forward and focus on finalizing our restructuring process and plans to emerge from creditor protection in the fall 2010."
"AbitibiBowater would like to thank the Government of Canada for its efforts to reach this settlement and avoid a protracted and expensive NAFTA case. We look forward to continuing our strong working relationships with Canada and contributing to the country's economic, social and sustainable development," concluded Paterson.
The settlement agreement is conditional upon AbitibiBowater obtaining the approval of its terms by the Superior Court of Quebec in the CCAA proceedings and by the U.S. court in the chapter 11 bankruptcy proceedings as well as court approvals in the U.S. and Canada of AbitibiBowater's restructuring plans. Following emergence, the settlement payment will be paid to the new Canadian entity.
AbitibiBowater produces a wide range of newsprint, commercial printing and packaging papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 19 pulp and paper facilities and 24 wood products facilities located in the United States, Canada and South Korea. Marketing its products in more than 70 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.
SOURCE ABITIBIBOWATER INC. - ENGLISH