8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 9, 2009

ABITIBIBOWATER INC.

(Exact name of Registrant as Specified in Charter)

Delaware	001-33776	98-0526415
(State or other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

AbitibiBowater Inc.

1155 Metcalfe Street, Suite 800

Montreal, Quebec

Canada H3B 5H2

(Address of principal executive offices)    (Zip Code)

Registrant’s telephone number, including area code: (514) 875-2160

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

The financial information regarding the quarter ended December 31, 2008 included in the “Recent Developments” discussion furnished herewith as Exhibit 99.2, as described below, is incorporated by reference into this Item 2.02.

Item 7.01 Regulation FD Disclosure.

On February 9, 2009, Bowater Finance II LLC (“BowFin”), an indirect wholly owned subsidiary of AbitibiBowater Inc. (the “Company”), will commence (i) a private exchange offer with respect to six series of outstanding debt securities (the “Bowater Notes”) issued by either Bowater Incorporated (“Bowater”), a wholly owned subsidiary of the Company, or Bowater Canada Finance Corporation, a wholly owned subsidiary of Bowater, (ii) a consent solicitation to effect certain amendments to the indentures governing the Bowater Notes, and (iii) a concurrent private offering of new 15.5% First Lien Notes due November 15, 2011 (the “First Lien Notes”) to holders of Bowater Notes who tender notes in the exchange offers (the “Concurrent Notes Offering”). A press release issued by the Company on February 9, 2009 announcing the transactions is attached as Exhibit 99.1 to this report. Both the exchange offers and the Concurrent Notes Offering are being made solely to qualified institutional buyers, as defined under Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S. persons, as defined under Regulation S under the Securities Act (“eligible holders”).

The exchange offers, consent solicitation and Concurrent Notes Offering will all be made pursuant to a confidential offering circular dated February 9, 2009 and distributed solely to eligible holders of Bowater Notes (the “Offering Circular”). The Offering Circular contains certain information regarding the Company that has not previously been publicly disclosed, including (i) certain “Recent Developments” relating to the Company, (ii) certain “Effects of the Exchange Offers and Concurrent Notes Offering,” (iii) “Summary Historical, Pro Forma and Other Security Data” relating to Bowater and Bowater Newsprint South LLC, (iv) the “Use of Proceeds” from the Concurrent Notes Offering, (v) updated risk factors relating to the Company’s liquidity and its business generally and (vi) the “Background to the Exchange Offers, Consent Solicitation and Concurrent Notes Offering”. The “Recent Developments,” “Effects of the Exchange Offers and Concurrent Notes Offering,” “Summary Historical, Pro Forma and Other Security Data,” “Use of Proceeds,” updated risk factors and “Background to the Exchange Offers, Consent Solicitation and Concurrent Notes Offering” are furnished as Exhibits 99.2, 99.3, 99.4, 99.5, 99.6 and 99.7 respectively, to this report.

In addition, the Offering Circular includes the following additional information:

1. The following additional information with respect to the exchange offers and concurrent notes offering:

Prior to launching the exchange offers and consent solicitation, BowFin entered into agreements (the “Backstop Agreements”) with holders of approximately $578 million in aggregate principal amount of the Bowater Notes, which represents approximately 32.0% of the outstanding Bowater Notes (the “Initial Backstop Group”), pursuant to which the Initial Backstop Group has agreed to tender such amount of Bowater Notes in the exchange offers. Pursuant to the Backstop Agreements, in the event we do not receive subscriptions equal to $211.2 million in the Concurrent Notes Offering, the Initial Backstop Group will subscribe for additional First Lien Notes, up to approximately $144.6 million in additional subscriptions. Prior to the expiration of the exchange offers, BowFin intends to enter into Backstop Agreements with other holders of Bowater Notes (the “Additional Backstop Group”) for up to an additional approximately $66.6 million in additional backstop commitments. The Initial Backstop Group holds Bowater Notes representing 51.2% of the Bowater Notes that are required to achieve the minimum tender condition in the exchange offers.

2. The following additional information with respect to a contemporaneous private placement of senior secured notes to an institutional investor:

In addition to the exchange offers, consent solicitation and Concurrent Notes Offering, BowFin entered into a note purchase agreement with Fairfax Financial Holdings Limited (“Fairfax”) whereby Fairfax has agreed to purchase, on a private placement basis, $80 million principal amount of First Lien Notes for a purchase price of $80 million. Such offer is a separate private placement of First Lien Notes to Fairfax in addition to the Concurrent Notes Offering, and will be made contemporaneously with and contingent upon the exchange offers and the Concurrent Notes Offering.

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The information contained in this Current Report on Form 8-K, including Exhibits 99.1, 99.2, 99.3, 99.4, 99.5, 99.6 and 99.7 is furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in this report shall not be incorporated by reference into any registration statement or any other document filed pursuant to the Securities Act, except as otherwise expressly stated in such filing. By filing this report and furnishing the information contained herein, including the exhibits hereto, the Company makes no admission as to the materiality of any such information.

Forward-Looking Statements

Statements in this report, including the documents included as exhibits, that are not reported financial results or other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. They include, for example, statements relating to the exchange offers, Concurrent Notes Offering, contemporaneous private placement and other refinancing activities, financial data expected to be reported for 2008, our business outlook and our strategies for achieving our goals generally. Forward-looking statements may be identified by the use of forward-looking terminology such as the words “will,” “could,” “may,” “intend,” “expect,” “believe,” “anticipate,” and other terms with similar meaning indicating possible future events or potential impact on the business or securityholders of Bowater and AbitibiBowater.

The reader is cautioned not to place undue reliance on these forward-looking statements, which are not guarantees of future performance. These statements are based on management’s current assumptions, beliefs and expectations, all of which involve a number of business risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include, but are not limited to, our substantial indebtedness and our ability to refinance our existing indebtedness or obtain financing or otherwise derive additional liquidity, especially in light of the current decline in the global economy and the credit crisis, the consequences of the exchange offers and the Concurrent Notes Offering to participating and non-participating holders, our capital intensive operations and the adequacy of our capital resources and the impact of our current liquidity position on the relationships with our customers, vendors and trade creditors. We undertake no obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

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Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1	Press Release issued by AbitibiBowater Inc. on February 9, 2009
99.2	Recent Developments
99.3	Effects of the Exchange Offers and Concurrent Notes Offering
99.4	Summary Historical, Pro Forma and Other Security Data
99.5	Use of Proceeds
99.6	Updated Risk Factors
99.7	Background to the Exchange Offers, Consent Solicitation and Concurrent Notes Offering

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

ABITIBIBOWATER INC.
By:	/s/ William G. Harvey
Name:	William G. Harvey
Title:	Senior Vice President and Chief Financial Officer

Dated: February 9, 2009

EXHIBIT INDEX

99.1	Press Release issued by AbitibiBowater Inc. on February 9, 2009
99.2	Recent Developments
99.3	Effects of the Exchange Offers and Concurrent Notes Offering
99.4	Summary Historical, Pro Forma and Other Security Data
99.5	Use of Proceeds
99.6	Updated Risk Factors
99.7	Background to the Exchange Offers, Consent Solicitation and Concurrent Notes Offering

EX-99.1

Exhibit 99.1

PRESS RELEASE

ABH (NYSE, TSX)

US$

ABITIBIBOWATER ANNOUNCES PRIVATE EXCHANGE OFFER AND CONSENT

SOLICITATION WITH RESPECT TO $1.8 BILLION OF DEBT SECURITIES AND

CONCURRENT PRIVATE NOTES OFFERINGS

MONTREAL, February 9, 2009 – AbitibiBowater Inc. (“AbitibiBowater”) announced today the commencement of private offers (the “Exchange Offers”) to exchange certain outstanding series of unsecured notes (the “Existing Notes”) issued by its Bowater Incorporated (“Bowater”) subsidiary (or by a subsidiary of Bowater), in a private placement, for new notes (the “Exchange Notes”) described below. The eligible series of Existing Notes consist of:

• 9.00% Debentures due 2009 (the “2009 Notes”);

• Floating Rate Senior Notes due 2010 (the “2010 Notes”);

• 7.95% Notes due 2011 issued by Bowater Canada Finance Corporation, a wholly-owned subsidiary of Bowater (the “2011 Notes”);

• 9.50% Debentures due 2012 (the “2012 Notes”);

• 6.50% Notes due 2013 (the “2013 Notes”); and

• 9.375% Debentures due 2021 (the “2021 Notes”).

The Exchange Notes will be issued by Bowater Finance II LLC (“Bowater Finance”), an indirect wholly owned subsidiary of AbitibiBowater, and will consist of:

• 10.00% Second Lien Notes due January 31, 2012; and

• 10.50% Third Lien Notes due March 31, 2012.

The Exchange Offers are being made only to qualified institutional buyers inside the United States and to certain non-U.S. investors located outside the United States (“Eligible Holders”).

The Company is also soliciting consents (the “Consent Solicitation”) to amend the indentures governing the Existing Notes to eliminate the covenants in such indentures relating to liens, secured debt and sale/leaseback transactions.

The Exchange Offers and Consent Solicitation will expire at 11:59 p.m., New York City time, on March 9, 2009, unless extended (the “Expiration Date”). Tendered Existing Notes may be validly withdrawn at any time prior to the Expiration Date but not thereafter.

Concurrently with the Exchange Offers and the Consent Solicitation, Bowater Finance is offering to Eligible Holders of Existing Notes, in a “Concurrent Notes Offering,” new 15.50% First Lien Notes due November 15, 2011 (the “First Lien Notes,” and together with the Exchange Notes, the “New Notes”). Holders of Existing Notes that tender some or all of their Existing Notes in the Exchange Offers will have the right, but not the obligation, to subscribe for a portion of the First Lien Notes being offered.

Holders that subscribe for First Lien Notes in the Concurrent Notes Offering will receive consideration consisting of an additional principal amount of Exchange Notes for their Existing Notes tendered and accepted in the Exchange Offers and a subscription fee payable in an additional principal amount of First Lien Notes. The maximum aggregate subscription amount for First Lien Notes that will be accepted in the Concurrent Notes Offering (i.e., cash proceeds to the issuer) is $211.2 million.

Separately, Bowater Finance has entered into a note purchase agreement with a private institutional investor pursuant to which the investor has agreed to purchase, on a private placement basis, $80 million principal amount of First Lien Notes for a purchase price of $80 million. Such offer is a separate private placement of First Lien Notes to the institutional investor in addition to the Concurrent Notes Offering, and will be made contemporaneous with and contingent upon the Exchange Offers and the Concurrent Notes Offering.

Net cash proceeds from both the Concurrent Notes Offering and the additional private placement will be used to repay amounts outstanding under Bowater’s bank credit facilities.

For each $1,000 principal amount of Existing Notes validly tendered (and not validly withdrawn) and accepted for exchange and for which the holder elects to subscribe for First Lien Notes in the Concurrent Notes Offering (a “Subscribing Tender”), such holder will receive the principal amount and form of Exchange Notes shown in the table below.

SUBSCRIBING TENDERS
EXISTING NOTES TENDERED	PRINCIPAL AMOUNT OF EXCHANGE NOTES	FORM OF EXCHANGE NOTES(1)
2009 NOTES	$800	SECOND LIEN NOTES
2010 NOTES	$700	THIRD LIEN NOTES
2011 NOTES	$650	THIRD LIEN NOTES
2012 NOTES	$600	THIRD LIEN NOTES
2013 NOTES	$575	THIRD LIEN NOTES
2021 NOTES	$550	THIRD LIEN NOTES

    ⁽¹⁾ Not including First Lien Notes subscribed for in Concurrent Notes Offering.

For each $1,000 principal amount of Existing Notes validly tendered (and not validly withdrawn) and accepted for exchange and for which the holder does not elect to subscribe for First Lien Notes in the Concurrent Notes Offering (a “Non-Subscribing Tender”), such holder will receive the principal amount and form of Exchange Notes shown in the table below.

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NON-SUBSCRIBING TENDERS
EXISTING NOTES TENDERED	PRINCIPAL AMOUNT OF EXCHANGE NOTES	FORM OF EXCHANGE NOTES
2009 NOTES	$750	THIRD LIEN NOTES
2010 NOTES	$650	THIRD LIEN NOTES
2011 NOTES	$600	THIRD LIEN NOTES
2012 NOTES	$550	THIRD LIEN NOTES
2013 NOTES	$525	THIRD LIEN NOTES
2021 NOTES	$500	THIRD LIEN NOTES

The Exchange Offers are conditioned upon, among other things, there being validly tendered and not validly withdrawn on or prior to the Expiration Date, greater than 97% in aggregate principal amount of 2009 Notes and 2010 Notes, and greater than 50% in aggregate principal amount of 2011, 2012, 2013 and 2021 Notes. However, this condition may be waived by Bowater Finance under certain circumstances. In addition, Bowater Finance has the right to terminate or withdraw any of the Exchange Offers at any time and for any reason, including if any of the conditions is not satisfied.

The New Notes will be senior secured obligations of Bowater Finance, and will be guaranteed by AbitibiBowater, Bowater, Bowater Newsprint South LLC (“Newsprint South”), a wholly owned subsidiary of AbitibiBowater, and by certain other subsidiaries of Bowater and Newsprint South.

Except as provided in the next sentence, the New Notes have not been and will not be registered under the Securities Act of 1933 or any state securities laws, may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements, and will therefore be subject to substantial restrictions on transfer. Bowater Finance will enter into a registration rights agreement pursuant to which it will agree to file an exchange offer registration statement with the Securities and Exchange Commission with respect to the New Notes.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering, solicitation or sale would be unlawful. This announcement is also not a solicitation of consents to the proposed amendments to the respective indentures.

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 25 pulp and paper facilities and 30 wood products facilities located in the United States, Canada, the United Kingdom and South Korea. Marketing its products in more than 90 countries, AbitibiBowater is also among the world’s largest recyclers of old newspapers and magazines, and has third-party certified 100% of its managed woodlands to

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sustainable forest management standards. AbitibiBowater’s shares trade under the stock symbol ABH on both the New York Stock Exchange and the Toronto Stock Exchange.

For Investors:	For Media:
Duane Owens	Seth Kursman
Vice President, Finance	Vice President, Communications and
(864) 282-9488	Government Relations
	(514) 394-2398
	seth.kursman@abitibibowater.com

Forward-Looking Statements

Statements in this press release that are not reported financial results or other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. They include, for example, statements about AbitibiBowater’s refinancing plans, the terms of the Exchange Offers and the timeframe for its completion. Forward-looking statements may be identified by the use of forward-looking terminology such as the words “expect,” “plan,” “intend,” “may,” “will,” and other terms with similar meaning indicating possible future events or potential impact on the business or other stakeholders of AbitibiBowater and its subsidiaries.

The reader is cautioned not to place undue reliance on these forward-looking statements, which are not guarantees of future performance. These statements are based on management’s current assumptions, beliefs and expectations, all of which involve a number of business risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include, but are not limited to, the ability to obtain additional new financing on terms satisfactory to AbitibiBowater and Bowater or at all, the condition of the U.S. credit markets generally and worsening industry conditions. Additional factors are detailed from time to time in AbitibiBowater’s and Bowater’s filings with the Securities and Exchange Commission (SEC), including those factors contained in AbitibiBowater’s Current Report on Form 8-K filed on February 9, 2009. All forward-looking statements in this news release are expressly qualified by information contained in AbitibiBowater’s and Bowater’s filings with the SEC. AbitibiBowater disclaims any obligation to update or revise any forward-looking information.

-30-

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EX-99.2

Exhibit 99.2

Recent Developments

Following the consummation of the Combination and a strategic review of the combined businesses, AbitibiBowater announced a number of significant strategic decisions, including a reduction in newsprint and specialty papers production capacity by approximately one million metric tons per year during the first quarter of 2008. These actions represented a reduction of approximately 600,000 metric tons of newsprint, 400,000 metric tons of specialty papers, and 500 million board feet of lumber capacity. We also permanently closed pulp and paper operations that had previously been idled with a total capacity of approximately 650,000 metric tons.

During the fourth quarter of 2008, we permanently closed two additional paper mills, which had previously been idled. In addition, we took (i) approximately 30,000 to 35,000 metric tons per month of market-related downtime in newsprint and (ii) approximately 35,000 metric tons, 23,000 short tons and 9,000 short tons of market-related downtime in pulp, coated papers and specialty papers, respectively.

On December 4, 2008, also we announced additional measures aimed at creating a more flexible and responsive operating platform, addressing ongoing volatility in exchange rates, energy and fiber pricing, as well as structural challenges in the North American newsprint industry. Pursuant to these measures, we announced the removal of an additional 830,000 metric tons of newsprint, 110,000 metric tons of specialty paper and 70,000 metric tons of coated paper capacity through the permanent closures of a newsprint mill and a paper converting facility, the indefinite idling of a newsprint mill and two paper machines at another facility and by taking 20,000 metric tons of monthly newsprint downtime in 2009 at other facilities across the organization until market conditions improve. As of January 30, 2009, we expect to curtail a further 100,000 to 125,000 metric tons of newsprint, 70,000 metric tons of commercial printing paper and 30,000 tons of market pulp during the first quarter of 2009.

In addition, we announced that we have achieved $320 million in annualized synergies from the Combination through September 30, 2008 and believe we have reached our targeted run rate of $375 million of annualized synergies as of year-end 2008, one full year ahead of plan.

On December 16, 2008, the Government of Newfoundland and Labrador passed legislation expropriating all of the timber rights, water rights, leases and hydroelectric assets of AbitibiBowater in the Province of Newfoundland and Labrador, whether partially or wholly owned through its subsidiaries and affiliated entities, following our announcement on December 4, 2008 of the permanent closure of the Grand Falls paper mill. The Government of Newfoundland and Labrador announced that it does not plan to compensate us for the loss of water and timber rights, but has indicated that it may compensate us for our hydroelectric assets. However, it has made no commitment to ensure that such compensation would represent the fair market value of such assets. We have retained legal counsel and are reviewing all legal options. We intend to submit a claim under the North American Free Trade Agreement (“NAFTA”), relating to the expropriation of these assets specifying violations by the Government of Newfoundland and Labrador under the terms of NAFTA. Although there is no guarantee regarding the outcome and receipt of fair compensation under the terms of NAFTA, we believe that the Government of Newfoundland and Labrador has violated the terms of NAFTA and that we (a U.S. domiciled company) should be fairly compensated for the expropriation. Under the terms of NAFTA, compensation for expropriated assets is based on fair value. We are still in the process of evaluating the impact of this expropriation and our related claim for fair compensation under NAFTA on our consolidated financial statements for the year ended December 31, 2008, the outcome of which may result in a material non-cash asset writedown of the carrying value of the expropriated assets, which is approximately $300 million.

On December 22, 2008, we issued a news release announcing that we expected our fourth quarter 2008 operating income before special item (gains on asset sales, impairments and mill closure and other related charges) to be in the range of $65 million to $95 million. We further announced that we expected our earnings before interest, taxes, depreciation and gains on asset sales, impairments and mill closure and other related charges (Adjusted EBITDA) to be in the range of $245 million to $275 million for the fourth quarter of 2008.

We are in the process of finalizing our year end financial statements, including our procedures related to goodwill impairment, long-lived asset impairment and the previously announced expropriation of our assets by the Government of Newfoundland and Labrador. Although our year end financial statements are not yet finalized, we now expect our fourth quarter operating income before special items (gains on asset sales, impairments and mill closure and other related charges) to be in the range of $52 million to $62 million compared to a $9 million loss for the third quarter of 2008. We also expect our Adjusted EBITDA to be in the range of $235 million to $245 million for the fourth quarter of 2008. For the third quarter of 2008, Adjusted EBITDA was $175 million.

        We review the carrying value of our goodwill for impairment in the fourth quarter of each year or more frequently, if events or circumstances indicate that goodwill might be impaired. We are still in the process of completing our annual goodwill impairment analysis and an interim goodwill impairment analysis in connection with the December 4, 2008 mill closure and downtime announcement discussed above. There have been a number of recent events that may impact our goodwill evaluations, including but not limited to the significant disruption in the capital markets and its impact on the price of our common stock and, accordingly, a significant decline in our market capitalization, and our announced projected production capacity curtailments for newsprint and specialty papers in the coming years. These events may result in a material non-cash goodwill impairment charge to our fourth quarter 2008 and full year 2008 financial statements and reported results.

As of December 31, 2008, AbitibiBowater had cash-on-hand of approximately $192 million (including approximately $42 million at Bowater, approximately $133 million at Abitibi and approximately $17 million at our Donohue Corp. subsidiary). Additionally, at December 31, 2008, Bowater had $59 million of availability under its bank credit facilities. As a result of an approximately $65 million decrease in availability under the Bowater U.S. bank credit facility resulting from a reduction in the borrowing base calculation (due principally to declines in accounts receivable and inventory during December and significant scheduled commitment reductions), Bowater was in an “overadvanced” position by approximately $51 million in early February. On February 5, 2009, Bowater repaid the overadvance, leaving $10 million unused under its bank credit facilities and minimum levels of cash-on-hand. To augment Bowater’s liquidity in light of the reduction in availability under the bank credit facilities, Bowater Canadian Forest Products Inc. (“BCFPI”) received an advance in the amount of $12 million from an affiliated party. Bowater expects to repay this advance by March 31, 2009.

On a consolidated basis, Bowater and Abitibi have in excess of $1 billion of maturities and repayment obligations that come due before the end of August 2009 and significant maturities that come due in 2010 and beyond. Bowater’s Canadian bank credit facility matures in 2009. Bowater has approximately $248 million outstanding aggregate principal amount of 9.00% Debentures that mature August 1, 2009. Bowater also has approximately $234 million outstanding aggregate principal amount of Floating Rate Senior Notes that mature March 15, 2010. Certain parameters that form part of the borrowing base calculation of Bowater’s bank credit facilities are scheduled to be reduced by an aggregate of $138 million by March 31, 2009 (subject to a possible partial extension to April 29, 2009 under certain circumstances). As part of a number of amendments Bowater will be required to make to its U.S. and Canadian bank credit facilities in order to consummate the Concurrent Notes Offering and the Additional Financing Transaction, Bowater will be requesting a modification of the bank credit facilities’ borrowing base provisions to increase its financial flexibility.

Although there can be no assurances that Bowater will have sufficient liquidity to meet its near-term obligations, we believe that cash-on-hand, cash generated from Bowater’s operations and the proceeds of the Concurrent Notes Offering and the Additional Financing Transaction, together with the successful completion of the amendments to Bowater’s U.S. and Canadian bank credit facilities, will provide Bowater with adequate liquidity to meet its anticipated requirements for working capital, capital expenditures and contractual obligations for the next twelve months.

During January and early February, Abitibi experienced a considerable decrease in liquidity due to a significant interest payment and lower advances from its accounts receivable securitization program due to lower sales activity. Further, Abitibi has a $347 million term loan due March 31, 2009 and $230 million outstanding under an accounts receivable securitization program that is scheduled to terminate in July 2009. As a result, Abitibi’s liquidity position is currently severely constrained. Abitibi expects to receive approximately $56 million through the sale of timberlands in late February 2009. In order to enhance near-term liquidity, Abitibi has entered into an arrangement with an affiliate to “backstop” a portion of the proceeds to be received from the anticipated timberlands sale. The maintenance of sufficient short-term operating liquidity at Abitibi will continue to be highly dependent on a number of factors, including the successful refinancing or extension of its term loan and accounts receivable securitization program, as well as the successful and timely completion of significant asset sales, including the February 2009 timberlands sale described above and the sale of various hydroelectric assets.

There are no cross-defaults or cross-acceleration provisions under Abitibi’s obligations in the event of a default or acceleration under Bowater’s obligations, or under Bowater’s obligations in the event of a default or acceleration under Abitibi’s obligations; however, AbitibiBowater has guaranteed certain debt obligations of Bowater and certain of its subsidiaries and will guarantee the New Notes.

Long-lived assets are tested for recoverability when events or changes in circumstances indicate the carrying values of the assets may not be recoverable, such as continuing losses in certain locations. In connection with the December 4, 2008 announcements of mill closures and our production capacity curtailments for newsprint and specialty papers in the coming years, we are performing an impairment evaluation of our long-lived assets. These evaluations, once finalized, will result in a material non-cash long-lived asset impairment charge to our fourth quarter 2008 financial statements and reported results.

Our references to operating income (loss) before special items, EBITDA and Adjusted EBITDA are not recognized measures under United States generally accepted accounting principles (“GAAP”). We provide these non-GAAP financial measures to assist investors in assessing the current performance of our core cash operating results in the same manner that management evaluates these operations. In this Offering Circular, operating income (loss) before special items, EBITDA and Adjusted EBITDA are presented because we believe they are useful measures of our operating performance and are frequently used by securities analysts, investors and other interested parties in the evaluation of companies like ours, with substantial financial leverage. However, operating income (loss) before special items, EBITDA and Adjusted EBITDA should not be considered as an alternative to cash flows from operations as a measure of liquidity or as an alternative to net loss as an indicator of operating performance or any other measure of performance in accordance with GAAP. Readers are cautioned not to place undue reliance on these non-GAAP financial measures.

Other companies may define operating income (loss) before special items, EBITDA and Adjusted EBITDA differently and, as a result, our non-GAAP financial measures may not be directly comparable to those of other companies.

Operating income (loss) before special items is defined as operating income (loss) from our consolidated statements of operations, excluding gains on asset sales, impairments, mill closure and other related charges and other discretionary charges or credits. A reconciliation of third quarter operating income (loss) before special items to GAAP operating income (loss) is included in our November 6, 2008 earnings release for the third quarter, available on our website.

Adjusted EBITDA is defined as EBITDA (net income (loss) before interest expense, interest income, income tax expense (benefit) and depreciation, amortization and cost of timber harvested) excluding gains on asset sales, impairments and mill closure and other related charges.

A reconciliation of the AbitibiBowater’s estimated operating income (loss) before special items and estimated Adjusted EBITDA to the most directly comparable GAAP measures are as follows:

(In millions)	Estimated for the three months ended December 31, 2008
Operating income (loss)
Operating loss, per GAAP	$	(285) to (295)
Special items
Gains on assets sales		(8)
Impairments(1)		318
Mill closure and other related charges(1)		37
Operating income (loss) before special items	$	52 to 62

(In millions)	Estimated for the three months ended December 31, 2008
EBITDA and Adjusted EBITDA reconciliations:
Operating loss	$	(285) to (295)
Depreciation, amortization and cost of timber harvested	$	183
EBITDA	$	(102) to (112)
Gains on assets sales		(8)
Impairments(1)		318
Mill closure and other related charges(1)		37
Adjusted EBITDA	$	235 to 245

(1) The finalization of the year end accounting processes for these items may result in additional or materially different non-cash asset charges to our fourth quarter 2008 and full year 2008 financial statements and reported results.

EX-99.3

Exhibit 99.3

Effects of the Exchange Offers and Concurrent Notes Offering

Effect on holders of Bowater Notes (other than Backstoppers (as defined herein)) electing to make a Non-Subscribing Tender

• Assuming the conditions to the exchange offers and Concurrent Notes Offering are satisfied, holders of Bowater Notes whose Bowater Notes are accepted in the exchange offers would receive:

i. an amount of 10.50% Third Lien Notes due March 31, 2012; the amount of Third Lien Notes that would be received will vary depending upon which series of Bowater Notes are tendered and accepted for exchange but in any case will be less than the principal amount of the Bowater Notes tendered and accepted for exchange.

• Whereas the Bowater Notes are unsecured, the Third Lien Notes will be secured by collateral as described in “Description of the New Notes – Security for the New Notes,” which primarily includes:

• a third lien on certain real estate, fixtures and equipment of Bowater, including the assets associated with the Catawba mill and the Calhoun mill (other than certain equipment and other assets at the Calhoun Mill owned by Calhoun Newsprint Company, a joint venture entity) (the “Bowater Fixed Asset Collateral”);

• a fourth lien on the existing and future collateral securing the Bowater U.S. bank credit facility which, among other things, includes a lien on the Coosa and Grenada Mills, substantially all of the wholly-owned accounts receivable and inventory of Newsprint South and Bowater and their wholly-owned U.S. subsidiaries who are guarantors under the Bowater U.S. bank credit facility and an intercompany account receivable from BCFPI to Bowater (such amounts being unsecured claims against BCFPI) (the “BI Credit Facility Collateral”);

• a first lien (shared with the Second Lien Notes) on a portion of the Bowater Notes accepted in the exchange offers that remain outstanding and held by BowFin or its subsidiaries (the “Tender Collateral”); and

• a third lien on any existing or future assets of BowFin other than the Tender Collateral and all assets of Catawba Property Holdings, LLC (the “Issuer Collateral”).

• With respect to the collateral, the Third Lien Notes will rank ahead of any unsecured claims against the entity that owns such collateral (including, in the case of Bowater, any Bowater Notes not exchanged pursuant to the exchange offers).

• The Third Lien Notes will be guaranteed by AbitibiBowater, Bowater, Newsprint South and certain wholly owned U.S. subsidiaries of Bowater and Newsprint South which will render the Third Lien Notes structurally senior, with respect to assets in such subsidiaries, to any unsecured claims against Bowater and Newsprint South (including, in the case of Bowater, any Bowater Notes not exchanged pursuant to the exchange offers).

ii. except for holders of 2010 Notes, an Accrued Interest Note in the amount of the accrued and unpaid interest up to but not including the Settlement Date which shall entitle the holder to be paid such amount on the date that is six months after the Settlement Date. The Accrued Interest Note will be guaranteed by the guarantors of the New Notes. The scheduled interest payment on the 2010 Notes due on March 15, 2009 (to holders of record as of March 1, 2009) will be made and no Accrued Interest Notes will be issued with respect to validly tendered (and not validly withdrawn) 2010 Notes.

Effect on holders of Bowater Notes (other than Backstoppers) electing to make a Subscribing Tender

• Assuming:

 i. the conditions to the exchange offers and Concurrent Notes Offering are satisfied; and

ii. the holder has submitted:

• in the case of the 2009 Notes, $250 cash per $1,000 principal amount of 2009 Notes tendered and accepted as a Subscribing Tender; and

• in the case of all other Bowater Notes, $95.66 cash per $1,000 principal amount of Bowater Notes tendered and accepted as a Subscribing Tender,

holders of Bowater Notes (other than Backstoppers) whose Bowater Notes are accepted in the exchange offers would receive:

  i. First Lien Notes in the principal amount of the cash submitted in the Concurrent Notes Offering pursuant to the Subscribing Tender;

• The First Lien Notes will have a first lien on the Bowater Fixed Asset Collateral and the Issuer Collateral and a second lien on the BI Credit Facility Collateral.

• The First Lien Notes would be guaranteed by AbitibiBowater, Bowater, Newsprint South and certain wholly owned U.S. subsidiaries of Bowater and Newsprint South which would render the First Lien Notes structurally senior, with respect to assets in such subsidiaries, to any unsecured claims held by creditors of Bowater and Newsprint South (including, in the case of Bowater, any Bowater Notes not exchanged pursuant to the exchange offers).

 ii. additional First Lien Notes in principal amount of (i) $12.50 per $1,000 principal amount of 2009 Notes accepted as Subscribing Tenders and (ii) $4.78 per $1,000 principal amount with respect to the Bowater Notes other than 2009 Notes accepted as Subscribing Tenders; and

iii. an amount of Third Lien Notes (Second Lien Notes in the case of 2009 Notes accepted as Subscribing Tenders), which varies depending upon which series of Bowater Notes are tendered and accepted for exchange. In any case, such amount would include an additional $50 principal amount of Exchange Notes per $1,000 of Bowater Notes tendered and accepted for exchange relative to what they would receive as a Non-Subscribing Tender. The amount received would, in any case, be less than the principal amount of the Bowater Notes tendered and accepted.

• Second Lien Notes issued in exchange for 2009 Notes would have a second lien on the Bowater Fixed Asset Collateral and the Issuer Collateral, a third lien on the BI Credit Facility Collateral and a first lien (shared with the Third Lien Notes) on the Tender Collateral.

• The Second Lien Notes would be guaranteed by AbitibiBowater, Bowater, Newsprint South and certain wholly owned U.S. subsidiaries of Bowater and Newsprint South which would render the Second Lien Notes structurally senior, with respect to assets in such subsidiaries, to any unsecured claims held by creditors of Bowater and Newsprint South (including, in the case of Bowater, any Bowater Notes not exchanged pursuant to the exchange offers).

 iv. An Accrued Interest Note (other than with respect to the 2010 Notes)

Effect on holders of Bowater Notes who are Backstoppers

• Holders of Bowater Notes who are Backstoppers have agreed, pursuant to a Backstop Agreement, to subscribe for additional First Lien Notes, in an amount equal to the lesser of such Backstopper’s pro rata portion of the Total Call Amount (as defined herein) and such Backstopper’s individual Commitment Amount.

• Each Backstopper has a specified Backstop Commitment Amount (each a “Commitment Amount”) which is the basis upon which any calls on the Backstop are allocated and is also the maximum amount that can be called from such Backstopper.

• Assuming the conditions to the exchange offers and Concurrent Notes Offering are satisfied or waived then, in addition to the consideration that is available to a Backstopper in its capacity as a holder making a Subscribing or a Non-Subscribing Tender (as described above), a Backstopper shall receive the following incremental consideration:

  i. A commitment fee equal to:

• 5% of such Backstopper’s Commitment Amount payable in cash (which will be paid regardless of whether the conditions to the exchange offers and Concurrent Notes Offering are satisfied or waived);

• 2.5% of such Backstopper’s Commitment Amount payable in First Lien Notes.

 ii. An entitlement to replace a portion of the Third Lien Notes received in the exchange offers with Second Lien Notes. This entitlement is limited to the amount of the Backstopper’s Bowater Notes that were tendered and accepted in the exchange offers in exchange for such Third Lien Notes. The amount of the Backstopper’s Bowater Notes eligible for this treatment may not exceed four times an Initial Backstopper’s Commitment Amount. The Third Lien Notes that were issued in exchange for such eligible Bowater Notes shall be replaced with Second Lien Notes.

Because the number of Third Lien Notes issued in exchange for Bowater Notes varies depending upon whether the Backstopper submitted for Subscribing Tenders or Non-Subscribing Tenders and which series of Bowater Notes are tendered, the principal amount of Third Lien Notes a Backstopper can “trade-up” for Second Lien Notes varies depending upon those same factors.

iii. In addition to any Second Lien Notes received pursuant to the Backstopper’s trade-up described in (ii) above, the Backstopper would also received additional principal amount of Second Lien Notes equal to 2.5% of such Backstopper’s eligible Bowater Notes accepted for exchange.

iv. If a Backstopper is called upon to fulfill some portion of its Backstop Commitment Amount, it would receive:

• a Backstop subscription fee of $50 principal amount of additional First Lien Notes for each $1,000 in subscriptions provided by the Backstopper pursuant to the Backstop Agreements in addition to the First Lien Notes that such Backstopper is called upon to subscribe for in the Concurrent Notes Offering (for which it would receive First Lien Notes in an amount equal to the funded subscription amount); and

• its pro rata share (allocated based on the Commitment Amounts) of Second Lien Notes in principal amount equal to the aggregate incremental principal amount of Exchange Notes that would have been issued to holders who tendered such Bowater Notes as Non-Subscribing Tenders had such holders instead elected to tender as Subscribing Tenders.

Effect on AbitibiBowater and Bowater

• Assuming:

 i. the conditions to the exchange offers and Concurrent Notes Offering are satisfied; and

ii. 100% of the outstanding Bowater Notes of each series are tendered and accepted; then

• The effects on Bowater would be as follows:

- Approximately $83 million of the net proceeds of the Concurrent Notes Offering and the Additional Financing Transaction would be applied as a permanent reduction in the aggregate amount available under Bowater’s U.S. and Canadian bank credit facilities.

- Aggregate cash and undrawn lines of credit would increase by approximately $166 million (the “Excess Proceeds”).

- Substantially all of the material term debt maturities of Bowater in 2009 and 2010 would be addressed.

- The Bowater Canadian bank credit facility would be extended to the date that is 364-days after the Settlement Date (the maximum extension permitted pursuant to the terms of the BCFPI notes and debentures).

- Payment of accrued and unpaid interest on acquired Bowater Notes (other than the 2010 Notes) would be deferred until September 2009.

- The aggregate principal amount (rather than book value) of total consolidated Bowater indebtedness, including debt guaranteed by Bowater, would not change materially because a portion of the Bowater Notes acquired in the exchange offers would remain outstanding and would be owned (directly or indirectly) by BowFin, an affiliate of Bowater that is not directly or indirectly owned by Bowater. Such acquired and retained Bowater Notes would be pledged in favor of the Second and Third Lien Notes.

- Bowater would have liens on substantially all of its assets.

- For U.S. federal and state income tax purposes, Bowater may recognize income from the discharge of the Bowater Notes in the exchange offers. Generally, such income may be equal to the difference between the “issue price” of the Exchange Notes and principal amount of the Bowater Notes exchanged therefor.

• The effects on AbitibiBowater would be as follows:

- The aggregate principal amount (rather than book value) of total consolidated indebtedness of AbitibiBowater would be reduced by approximately $555 million (after eliminating Bowater Notes owned (directly or indirectly) by BowFin, an indirect subsidiary of AbitibiBowater, after the exchange offers and excluding the Accrued Interest Notes that will replace the accrued interest payables on the Bowater Notes other than the 2010 Notes). The net reduction in debt will be less than the foregoing amount if less than all of the outstanding Bowater Notes of each series are validly tendered (and not validly withdrawn) in the exchange offers.

- The estimated consolidated aggregate annual cash interest payable on debt issued pursuant to the exchange offers and Concurrent Notes Offering would be approximately $16 million higher than that of the debt acquired or extinguished. This net change in annualized interest will vary based on a number of factors, including the principal amount of Bowater Notes tendered as Subscribing and Non-Subscribing Tenders, as well as the series of Bowater Notes held by Backstoppers.

Effect on holders of Bowater Notes not electing to Tender

• Assuming the conditions to the exchange offers and Concurrent Notes Offering are satisfied, holders of Bowater Notes (“Untendered Notes”) who elect not to tender in the exchange offers will be affected in the following manner:

 i. Such holders would retain their Bowater Notes on existing terms except that certain covenants relating to liens, secured debt and sale/leaseback transactions would have been eliminated by the Proposed Amendments.

ii. There would be a net increase in the secured debt ranking ahead of the Untendered Notes of approximately $1.5 billion and there would be no material change in the aggregate principal amount of total indebtedness of Bowater.

EX-99.4

Exhibit 99.4

Summary Historical, Pro Forma and Other Security Data

On May 15, 2008, Bowater transferred its 100% ownership interest in Newsprint South to its parent, AbitibiBowater. Therefore, for periods ending after May 15, 2008, Newsprint South’s results of operations and financial position are no longer consolidated in the Bowater consolidated financial statements. In the tables set forth below (unless otherwise noted), financial data as of and for the nine months ended September 30, 2008 has been compiled by management to include the accounts of both Bowater and Newsprint South, adjusted for eliminations of intercompany transactions between Bowater and Newsprint South for the period from May 16 to September 30, 2008. Bowater’s financial data has been derived from Bowater’s unaudited interim consolidated financial statements. Newsprint South’s financial data has been derived from the underlying accounting records of AbitibiBowater and then adjusted for certain allocations, as described in the introductory paragraph in the section above, “Newsprint South.” Financial data for Newsprint South has not been derived from financial statements prepared in accordance with GAAP and may not include all of the necessary adjustments to fully reflect the costs to Newsprint South of doing business on a stand-alone basis, and any differences could be significant.

The New Notes are guaranteed by AbitibiBowater, Bowater, Newsprint South and certain wholly owned U.S. subsidiaries of Bowater and Newsprint South. Subject to certain prior claims of the Bowater U.S. and Canadian bank credit facilities on certain assets, the New Notes are secured by substantially all of the wholly owned U.S. mill operations and accounts receivable and inventory of Bowater and Newsprint South. In addition, the New Notes are secured by a pledge of an unsecured account receivable from BCFPI that is due to Bowater (subject to a prior claim in favor of the Bowater bank credit facilities) which varies in amount based on the flow of funds between Bowater and BCFPI, and as of September 30, 2008, had a balance of $333 million. As such, parts of the combined operations and assets of Bowater and Newsprint South, including their subsidiaries, form the collateral for the New Notes or contribute to the value of unsecured claims that may benefit the New Notes. In addition, they form the group of assets that is intended to generate the cash flow from which the New Notes will be serviced. As a result, the Bowater and Newsprint South combined financial data is representative of the assets and operations that support the New Notes. Though the collateral structure is complex with some claims ranking ahead of the New Notes by virtue of a higher-ranking lien or structural seniority, we believe the financial information below is useful in evaluating decisions regarding the exchange offers and the Concurrent Notes Offering.

The “Accounts Receivable and Inventory Data” and “Adjusted Combined EBITDA” sections below should be read in conjunction with the “Risk Factors — Risks Related to the Exchange Offers, Consent Solicitation, Concurrent Notes Offering and the New Notes.”

Pro Forma Credit Statistics

The pro forma credit statistics set forth below give effect to the exchange offers, the Concurrent Notes Offering and the Additional Financing Transaction as if they had occurred on October 1, 2007 with respect to the results of operations data and other data and as if they had occurred on September 30, 2008 with respect to the financial position data. The pro forma credit statistics are for informational purposes only and are not necessarily indicative of what the combined financial position or results of operations would have been had the exchange offers and the Concurrent Notes Offering been completed as of such dates and do not purport to represent what the cash interest expense, ratio of total principal amount of debt to Adjusted Combined EBITDA, ratio of Adjusted Combined EBITDA to cash interest expense, deficiency of earnings to fixed charges, cash and cash equivalents, total principal amount of debt and the availability under Bowater’s U.S. and Canadian bank credit facilities might be for any future period. Adjusted Combined EBITDA is calculated by combining Bowater’s Adjusted EBITDA (as defined in the “Bowater” section above) plus Newsprint South’s Adjusted divisional income (as defined in the “Newsprint South” section above). The exchange offers and the Concurrent Notes Offering may result in a significant gain on extinguishment of debt, which, for purposes of this pro forma financial data, has been excluded from Adjusted Combined EBITDA and earnings.

The pro forma financial data assumes that all of the principal amount of each series of Bowater Notes is validly tendered (and not validly withdrawn) in the exchange offers as Subscribing Tenders and reflects the effect of the Initial Backstop Group’s right to exchange Third Lien Notes they receive in the exchange offers for Second Lien Notes. The pro forma financial data also reflects the issuance of approximately $34 million of Accrued Interest Notes. The actual and pro forma debt balances are based on the principal amounts outstanding as of September 30, 2008. We will record the New Notes at their fair values on the date of issuance. The difference between the principal amounts and the fair values could be significant. We expect to receive net cash proceeds of approximately $249 million consisting of (i) approximately $171 million through subscriptions for First Lien Notes in the Concurrent Notes Offering, including any subscriptions submitted pursuant to the Backstop Agreements, and (2) approximately $78 million from the consummation of the Additional Financing Transaction. The net proceeds amounts reflect the deduction from the gross proceeds received of the cash fees payable under the Backstop Agreements and pursuant to the Additional Financing Transaction and approximately $30 million of cash transaction costs expected to be incurred. We intend to use all of such net cash proceeds (from both the Concurrent Notes Offering and the Additional Financing Transaction) to reduce amounts outstanding under Bowater’s U.S. and Canadian bank credit facilities, of which approximately $83 million will be a permanent reduction in the aggregate amount available thereunder.

Any significant variances from any of these assumptions could have a significant impact on these pro forma credit statistics.

	As of and for the Twelve Months Ended September 30, 2008
(in millions, except ratios)	Actual		Pro Forma
Cash interest expense	$	207	$	220
Ratio of total debt to Adjusted Combined EBITDA		18.7x		14.9x
Ratio of Adjusted Combined EBITDA to cash interest expense		0.7x		0.6x
Deficiency of earnings to fixed charges	$	502	$	502
Total principal amount of debt (1)	$	2,581	$	2,060
Available liquidity(2)	$	176	$	342

⁽¹⁾ For additional information, see “—Debt” below.

⁽²⁾ Available liquidity represents cash, cash equivalents and commitments available under Bowater’s U.S. and Canadian bank credit facilities. This does not reflect declines in the aggregate commitments available under the U.S. and Canadian bank credit facilities that occurred subsequent to September 30, 2008. See “Recent Developments.”

Accounts Receivable and Inventory Data

The following table reflects accounts receivable and inventory for Bowater (excluding non-U.S. operations) and Newsprint South, on a combined basis, as of the end of the last four quarters. The account balances for Bowater were derived from the financial statements as of the respective periods and adjusted to exclude non-U.S. operations, as such operations are not provided as collateral under the exchange offers and the Concurrent Notes Offering.

(In millions)	December 31, 2007		March 31, 2008		June 30, 2008		September 30, 2008
Accounts receivable, net	$	337	$	330	$	325	$	374
Inventories, net		213		197		203		237
Total	$	550	$	527	$	528	$	611

Adjusted Combined EBITDA for Mill Operations

The following table provides Adjusted Combined EBITDA (as defined in the “Pro Forma Credit Statistics” section above) for the years ended December 31, 2007, 2006 and 2005, and for the nine months ended September 30, 2008 and 2007, which has been allocated by : (1) Bowater U.S. mill operations (Bowater Fixed Asset Collateral Operations); (2) Newsprint South mill operations; and (3) other Bowater mill operations and eliminations.

Management believes this operational data is useful for investors because Adjusted EBITDA is frequently used by securities analysts, investors and other interested parties in the evaluation of assets and credit analysis. The financial information below (which has the limitations referred to above) is included to assist holders of Bowater Notes in evaluating their decisions regarding the exchange offers and the Concurrent Notes Offering.

(In millions)	Year Ended December 31, 2007			Year Ended December 31, 2006		Year Ended December 31, 2005		Nine Months Ended September 30, 2008			Nine Months Ended September 30, 2007
Adjusted Combined EBITDA:
Bowater U.S. mill operations (1)	$	192		$	212	$	227	$	207		$	140
Newsprint South mill operations(2)		53			96		81		41			42
Other Bowater mill operations and eliminations (3)		(165	)		65		164		(100	)		(92	)
Adjusted combined EBITDA	$	80		$	373	$	472	$	148		$	90

(1) Adjusted Combined EBITDA for the Bowater U.S. mill operations represents the results of the Catawba mill and the wholly owned portion of the Calhoun mill and exclude the results of Calhoun Newsprint Company (“CNC”). CNC, which owns one of Calhoun’s paper machines (No. 5), Calhoun’s recycle fiber plant and a portion of the thermomechanical pulp mill, is owned approximately 51% by AbitibiBowater indirectly and approximately 49% by Herald Company, Inc.

(2) Adjusted Combined EBITDA for the Newsprint South mill operations represents the results of the Coosa Pines and Grenada mills.

(3) Includes elimination entries necessary to combine the entities and includes CNC, which is excluded from Bowater U.S. mill operations, as noted above.

Debt

The following table sets forth Bowater’s and Newsprint South’s principal amount of debt (excluding debt due to affiliates within AbitibiBowater) as of September 30, 2008 on an actual basis and as adjusted to give the pro forma effect to the exchange offers, the Concurrent Notes Offering and the Additional Financing Transaction, as described under the section above, “Pro Forma Credit Statistics.” Note that we will record the New Notes at their fair values on the date of issuance. The difference between the principal amounts and the fair values could be significant.

	As of September 30, 2008
	Principal Amounts
(In millions)	Actual		As Adjusted
Secured Debt:
Bowater U.S. bank credit facility(1)	$	315	$	109
Bowater Canadian credit facility(1)		67		24
15.50% First Lien Notes due November 15, 2011		—		311
10.00% Second Lien Notes due January 31, 2012(2)		—		531
10.50% Third Lien Notes due March 31, 2012(2)		—		659
Total Secured Debt		382		1,634
Unsecured Debt:
9.00% Debentures due 2009		248		—
Accrual Interest Notes due 2009		—		34
Floating Rate Senior Notes due 2010 (5.82% at September 30, 2008)		234		—
7.95% Notes due 2011		600		—
10.60% Notes due 2011		70		70
9.50% Debentures due 2012		125		—
6.5% Notes due 2013		400		—
10.85% Debentures due 2014		117		117
9.375% Debentures due 2021		200		—
7.625% Recycling facilities revenue bonds due 2016		30		30
7.75% Recycling facilities revenue bonds due 2022		62		62
7.40% Recycling facilities revenue bonds due 2022		40		40
Industrial revenue bonds due 2029 with interest at floating rates (7.60% at September 30, 2008)		34		34
10.50% Notes due at various dates from 2009 to 2010		20		20
10.26% Notes due at various dates from 2009 to 2011		7		7
6.5% UDAG loan agreement due at various dates from 2009 to 2010		5		5
7.40% Pollution control revenue bonds due at various dates from 2009 to 2010		4		4
10.63% Notes due 2010		3		3
Total Unsecured Debt		2,199		426
Total Debt	$	2,581	$	2,060

(1) Of the $249 million net cash proceeds we expect to receive from the Concurrent Notes Offering and the Additional Financing Transaction, approximately $40 million and $43 million will be used to permanently reduce amounts outstanding under Bowater’s U.S. bank credit facility and Bowater’s Canadian bank credit facility, respectively. The pro forma data also assumes that the remaining $166 million of net cash proceeds will be used to further reduce amounts outstanding under Bowater’s U.S. bank credit facility.

(2) The principal amounts of Second Lien Notes and Third Lien Notes represent the amounts that would be issued pursuant to the exchange offers and the Concurrent Notes Offering, as described under “Pro Forma Credit Statistics” above and reflect the effect of the Initial Backstop Group’s right to exchange Third Lien Notes they receive in the exchange offers for Second Lien Notes. The amounts shown do not reflect the effect of similar exchange privileges that would be granted to members of the Additional Backstop Group or the Private Purchaser under the Additional Financing Transaction. Such parties could collectively be eligible to replace the Third Lien Notes received upon tendering up to approximately $306 million of Bowater Notes for Second Lien Notes instead. The amount of Third Lien Notes exchanged for Second Lien Notes will vary depending upon which Bowater Notes are held by such Backstoppers and the Private Purchaser and whether such Bowater Notes were tendered and accepted as Subscribing Tenders or Non-Subscribing Tenders.

EX-99.5

Exhibit 99.5

USE OF PROCEEDS

If each of the terms and conditions of the exchange offers, consent solicitation and Concurrent Notes Offering and the Additional Financing Transaction are satisfied or waived and BowFin receives subscriptions for First Lien Notes equal to the Concurrent Notes Offering Limit, then we expect to receive net cash proceeds of approximately $249 million consisting of (i) $171 million from subscriptions in the Concurrent Notes Offering, including any subscriptions submitted pursuant to the Backstop Agreements and (ii) $78 million in net cash proceeds from the Additional Financing Transaction.

We intend to use all of the net proceeds from both the Concurrent Notes Offering and the Additional Financing Transaction to reduce amounts outstanding under Bowater’s U.S. and Canadian bank credit facilities (of which approximately $83 million will be a permanent reduction in the aggregate amount available under the U.S. and Canadian bank credit facilities). As a result, as of December 31, 2008, and assuming the exchange offers, the Concurrent Notes Offering and the Additional Financing Transaction were consummated on that date, Bowater’s estimated cash and availability under its U.S. and Canadian bank credit facilities would have been approximately $267 million. However, subsequent to December 31, 2008, Bowater’s availability under its U.S. bank credit facility decreased by approximately $65 million and such reduction is not reflected in the pro forma amount shown above. See “Recent Developments” for additional information regarding the reduction in availability under the U.S. bank credit facility subsequent to December 31, 2008.

The Bowater U.S. and Canadian bank credit facilities bear interest at specified market interest rates plus a margin. The U.S. and Canadian bank credit facilities currently terminate in May 2011 and June 2009, respectively. As of December 31, 2008, $280 million and $50 million were outstanding under the U.S. and Canadian bank credit facilities, respectively, and they bore interest at rates 6.4% and 6.8%, respectively.

Following consummation of the exchange offers, a portion of the Bowater Notes accepted for exchange will remain outstanding and be held by BowFin or its subsidiaries, and will serve as a portion of the collateral for the Exchange Notes. The remaining Bowater Notes accepted for exchange will be transferred to Bowater through a series of intercompany transfers and then will be cancelled. See “Description of the New Notes — Security for the New Notes.” Assuming that all of the outstanding Bowater Notes are validly tendered (and not validly withdrawn) in the exchange offers as Subsidiary Tenders, approximately $585 million aggregate principal amount of Bowater Notes accepted in the exchange offers will remain outstanding and will be held by BowFin or its subsidiaries. The foregoing amount will be lower if less than all of the Bowater Notes are validly tendered as Subsidiary Tenders (and not validly withdrawn).

EX-99.6

Exhibit 99.6

Risks Related to Our Liquidity

We have substantial indebtedness that is currently affecting and is likely to continue to affect, our financial position and operational flexibility.

We have a significant amount of indebtedness. As of December 31, 2008, AbitibiBowater, on a consolidated basis, had outstanding total debt of approximately $5.9 billion, of which approximately $1.1 billion was secured debt. As of December 31, 2008, Bowater, on a consolidated basis, had outstanding total debt of approximately $2.5 billion, of which approximately $330 million was secured debt. As of December 31, 2008, Abitibi, on a consolidated basis, had outstanding total debt of approximately $3.1 billion, of which approximately $760 million was secured debt. Our substantial amount of debt could have important negative consequences, such as:

• limiting our ability to obtain additional financing, if needed, or refinancing, when needed, for debt service requirements, working capital, capital expenditures or other purposes;

• increasing our vulnerability to current and future adverse economic and industry conditions;

• requiring us to dedicate a substantial portion of our cash flows from operations to make payments on our debt;

• causing us to monetize assets such as timberland or production facilities on terms that may be unfavorable to us;

• causing us to offer debt or equity securities on terms that may not be favorable to us or our shareholders;

• reducing funds available for operations, future business opportunities or other purposes;

• limiting our flexibility in planning for, or reacting to, changes and opportunities in our business and our industry;

• increasing employee turnover and uncertainty, diverting management’s attention from routine business and hindering our ability to recruit qualified employees; and

• placing us at a competitive disadvantage compared to our competitors that have less debt.

Our bank credit facilities, the indentures governing our various notes, debentures and other debt securities and the terms and conditions of our other indebtedness may permit us or our subsidiaries to incur or guarantee additional indebtedness, including secured indebtedness in some circumstances. The terms of this indebtedness also restrict our ability to sell assets, apply the proceeds of such sales, and reinvest in our business. As discussed in the immediately following risk factor, we expect that we will incur additional or replacement indebtedness in the near term. As a result, some or all of the risks discussed above may increase.

Our Abitibi and Bowater subsidiaries both are experiencing severe liquidity constraints and face significant near-term debt maturities. We may be unable to address our liquidity concerns in an adequate or timely manner and we may be unable to repay, renew or extend our indebtedness.

As of December 31, 2008, AbitibiBowater had cash-on-hand of approximately $192 million (including approximately $42 million at Bowater, approximately $133 million at Abitibi and approximately $17 million at Donohue Corp. subsidiary). Additionally, at December 31, 2008, Bowater had $59 million of availability under its bank credit facilities. As a result of an approximately $65 million decrease in availability under the Bowater U.S. bank credit facility resulting from a reduction in the borrowing base calculation (due principally to declines in accounts receivable and inventory during December and significant scheduled commitment reductions), Bowater was in an “overadvanced” position by approximately $51 million in early February. On February 5, 2009, Bowater repaid the overadvance, leaving $10 million unused under its bank credit facilities and minimum levels of cash-on-hand. To augment Bowater’s liquidity in light of the reduction in availability under the bank credit facilities, BCFPI received an advance in the amount of $12 million from an affiliated party. Bowater expects to repay this advance by March 31, 2009.

On a consolidated basis, Bowater and Abitibi have in excess of $1 billion of maturities and repayment obligations that come due before the end of August 2009 and significant maturities that come due in 2010 and beyond. Bowater’s Canadian bank credit facility matures in June 2009. Bowater has approximately $248 million outstanding aggregate principal amount of 9.00% Debentures that mature August 1, 2009. Bowater also has approximately $234 million outstanding aggregate principal amount of Floating Rate Notes that mature March 15, 2010. Certain parameters that form part of the borrowing base calculation of Bowater’s bank credit facilities are scheduled to be reduced by an aggregate of $138 million by March 31, 2009 (subject to a possible partial extension to April 29, 2009 under certain circumstances). As part of a number of amendments Bowater will be required to make to its U.S. and Canadian bank credit facilities in order to consummate the Concurrent Notes Offering and the Additional Financing Transaction, Bowater will be requesting a modification of the bank credit facilities’ borrowing base provisions to increase its financial flexibility.

Although there can be no assurances that Bowater will have sufficient liquidity to meet its near-term obligations, we believe that cash-on-hand, cash generated from Bowater’s operations and the proceeds of the Concurrent Notes Offering and the Additional Financing Transaction, together with the successful completion of the amendments to Bowater’s U.S. and Canadian bank credit facilities, will provide Bowater with adequate liquidity to meet its anticipated requirements for working capital, capital expenditures and contractual obligations for the next twelve months.

During January and early February, Abitibi experienced a considerable decrease in liquidity due to a significant interest payment and lower advances from its accounts receivable securitization program due to lower sales activity. Further, Abitibi has a $347 million term loan due March 31, 2009 and $230 million outstanding under an accounts receivable securitization program that is scheduled to terminate in July 2009. As a result, Abitibi’s liquidity position is currently severely constrained. Abitibi expects to receive approximately $56 million through the sale of timberlands in late February 2009. In order to enhance near-term liquidity, Abitibi has entered into an arrangement with an affiliate to “backstop” a portion of the proceeds to be received from the anticipated timberlands sale. The maintenance of sufficient short-term operating liquidity at Abitibi will continue to be highly dependent on a number of factors, including the successful refinancing or extension of its term loan and accounts receivable securitization program, as well as the successful and timely completion of significant asset sales, including the February 2009 timberlands sale described above and the sale of various hydroelectric assets.

In addition to the exchange offers, the Concurrent Notes Offering, the Additional Financing Transaction, the amendments to the U.S. and Canadian credit facilities and the asset sales discussed above, we are negotiating with various additional financing sources and actively exploring various alternatives to refinance or restructure our indebtedness and address our severe liquidity situation. However, there can be no assurance that we will be able to consummate any such transactions prior to the maturities of this indebtedness or that such transactions will adequately address our liquidity situation. Our bank credit facilities and our term loans contain a borrowing base provision and financial covenants that limit the amount we can borrow under the facilities or from other sources. Moreover, the indentures for our outstanding notes contain provisions that may restrict the secured debt we may incur in the future. In addition, the continuing disrupted state of the credit and capital markets and the global economic downturn, among other things, are creating significant impediments to our efforts to address these concerns.

Abitibi’s current financial challenges could have material adverse consequences on us or Bowater.

As described in the preceding risk factor, Abitibi is experiencing an immediate and severe liquidity crisis and large impending debt maturities. Our efforts to strengthen Abitibi’s liquidity situation may not be successful. In addition, if we are unable to refinance or restructure Abitibi’s term loan on or before its due date, Abitibi could be in default under that loan. Such default could trigger defaults under Abitibi’s other indebtedness, which would permit the holders of such indebtedness to accelerate Abitibi’s repayment obligations under them. If we are unsuccessful in immediately addressing Abitibi’s liquidity crisis or refinancing or restructuring the Abitibi term loan, Abitibi may be compelled to seek protection under or be forced into a proceeding under Canada’s Companies’ Creditors Arrangement Act, the U.S. Bankruptcy Code, or both. Even though there are no cross default provisions in Abitibi’s debt instruments, an Abitibi bankruptcy filing could have adverse consequences on Bowater, such as tightening trade credit, negative customer reaction, among other results, all of which would put additional operational and financial pressure on Bowater. There can be no assurance that the successful completion of the exchange offers, the Concurrent Notes Offering and the Additional Financing Transaction could overcome such pressures. In order to protect itself and its stakeholders, Bowater may take precautionary measures, such as engaging restructuring advisors, or other steps it may deem prudent, to prepare for such a scenario. In addition, even if we are successful in obtaining additional financing, such financing could be costly or have adverse consequences, such as increased debt servicing cost and additional restrictive financial and other covenants. As a result, we can give no assurance as to the terms or availability of additional capital.

We may not be able to generate sufficient cash flows to service, repay or refinance our debt.

There can be no assurance that we will be able to generate sufficient cash flows to service, repay or refinance our outstanding indebtedness when it matures, in light of (1) the current state of the global economy in general and the tight credit markets in particular, and (2) a challenging operating environment making it more difficult to generate sufficient cash flows due to (i) the significant decreases in demand, particularly in North America, for newsprint, which is our principal product, (ii) the current weakness in the housing and lumber markets and (iii) current pricing for our coated, specialty and market pulp products. As a result of our liquidity situation, on October 15, 2008, we elected to exercise our option to pay interest due on that date on our outstanding convertible senior notes due 2013 by increasing the outstanding principal amount of such notes. We do not have the ability to make similar “payment-in-kind” interest payments on our other outstanding indebtedness. If our future cash flow is insufficient and refinancing or additional financing is unavailable, we may be unable to meet our debt obligations. If we default under the terms of some of our indebtedness, the relevant debt holders may accelerate the maturity of their obligations, which could cause cross-defaults or cross-acceleration under our other obligations. There are no cross-defaults or cross-acceleration provisions under Abitibi’s obligations in the event of default or acceleration under Bowater’s obligations, or under Bowater’s obligations in the event of default or acceleration under Abitibi’s obligations.

In addition, our substantial indebtedness and current liquidity situation may cause concern to one or more of our customers, vendors or trade creditors. If any customer’s, vendor’s or trade creditor’s concern changes their business relationships with us by stopping work, ceasing sales, requiring sales on cash terms or other changes, these changes may materially adversely affect our cash flows and results of operations.

The current decline in the global economy may significantly inhibit our ability to sell assets to reduce our current indebtedness.

We have targeted approximately $750 million in asset sales by the end of 2009, including our 75% equity interest in ACH Limited Partnership (for which we accepted a non-binding sale proposal in December 2008), our Mokpo, South Korea paper mill, as well as other paper mills, additional timberlands, sawmills, other hydroelectric sites and other assets in order to reduce our outstanding indebtedness and provide us with additional working capital. However, as a result of the current global economy and credit crisis, it may be difficult for potential purchasers to obtain the financing necessary to buy such assets. As a result, we may be forced to sell the assets for significantly lower amounts than planned or may not be able to sell them at all.

If we do not meet the continued listing requirements of the New York Stock Exchange, our common stock may be delisted.

Our common stock is listed on both the New York Stock Exchange (“NYSE”) and the Toronto Stock Exchange. The NYSE requires us to continue to meet certain listing standards, including standards related to the trading price of our common stock (e.g., maintaining an average share price of at least $1.00), as well as required maintenance levels with respect to our average global market capitalization. We believe that concerns about our liquidity have contributed to recent declines in our stock price, which, except for two days in January 2009, has closed at less than $1.00 per share since November 24, 2008. Furthermore, our average global market capitalization has fallen below certain threshold levels. We have been notified by the NYSE that we have fallen below these standards and, per its request, we have provided the NYSE with our plan for corrective action to regain compliance with the continued listing standards. If we fail to regain compliance with such standards, our common stock will be delisted from the NYSE. A delisting of our common stock from the NYSE could hurt our investors by reducing the liquidity and market price of our common stock. Additionally, a delisting could negatively impact us by reducing the number of investors willing to hold or acquire our common stock, which could negatively impact our ability to access the public capital markets, and by reducing the value of our equity compensation plans, which could negatively impact our ability to retain key employees.

Restrictive covenants in agreements governing our current indebtedness and in the indenture for the New Notes may reduce our operational and financial flexibility, which may prevent us from capitalizing on business opportunities.

The terms of the agreements governing our current indebtedness contain, and the indenture governing the New Notes will contain, a number of operating and financial covenants restricting our ability to among other things (not all of which are included in each such agreement or the indenture for the New Notes):

• incur additional debt;

• create liens on assets;

• pay dividends or distributions on, or redeem or repurchase, our capital stock;

• make investments;

• engage in sale and leaseback transactions;

• engage in transactions with affiliates;

• transfer or sell assets;

• issue and sell equity interests in Bowater’s wholly-owned subsidiaries;

• guarantee debt;

• restrict dividends and other payments to us;

• consolidate, merge or transfer all or substantially all of our assets and the assets of our subsidiaries; and

• engage in unrelated businesses.

In addition, our ability to comply with such covenants and those contained in the agreements governing other debt to which we are or may become a party may be affected by events beyond our control, including prevailing economic, financial and industry conditions. Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in an acceleration of our debt and cross-defaults under our other debt. This could require us to repay or repurchase debt prior to the date it would otherwise be due, which could adversely affect our financial condition. Even if we are able to comply with all applicable covenants, the restrictions on our ability to manage our business in our sole discretion could adversely affect our business by, among other things, limiting our ability to take advantage of financings, mergers, acquisitions and other corporate opportunities that we believe would be beneficial to us.

We may be required to record additional goodwill and long-lived asset impairment charges.

We have a significant amount of goodwill recorded in our Consolidated Balance Sheets. We review the carrying value of our goodwill for impairment in the fourth quarter of each year or more frequently, if an event occurs that triggers such an interim review.

Goodwill is allocated to reporting units for purposes of performing a test for impairment. If a reporting unit’s carrying value exceeds its fair value, an impairment charge equal to the difference in the carrying value of the goodwill and the implied fair value of the goodwill is recorded.

There have been a number of recent events that may impact our goodwill evaluations, including, but not limited to the significant disruption in the capital markets and its impact on the price of our common stock and, accordingly, a significant decline in our market capitalization and our announced production capacity curtailments for newsprint and specialty papers in the coming years. We believe the decline in our stock price was principally driven by the current economic environment and the extraordinary decline in the worldwide stock market as a whole. It has also been impacted by Abitibi’s and Bowater’s liquidity concerns. As part of our annual goodwill impairment test, we will prepare a reconciliation of the fair value of our reporting units to our market capitalization. As a result of this reconciliation process, it is possible that we could identify factors impacting enterprise value that have not yet been reflected in our assessment of reporting unit fair value. Any consequent reduction in the estimated fair value of our reporting units as a result of the identification of such factors could result in a non-cash goodwill impairment charge in the fourth quarter of 2008, as well as in future periods.

Towards the end of the fourth quarter of 2008, it became evident that we will need to significantly reduce our projected production capacity of newsprint and specialty papers in the coming years in order to keep pace with the falling demand for these products. As a result of this triggering event, the estimated fair value of our reporting units will be reduced. This reduction could result in a non-cash goodwill impairment charge in the fourth quarter of 2008.

Losses related to impairment of long-lived assets are recognized when circumstances indicate the carrying values of the assets may not be recoverable, such as continuing losses in certain locations. When certain indicators that the carrying value of a long-lived asset may not be recoverable are triggered, we evaluate the carrying value of the asset in relation to its expected undiscounted future cash flows. If the carrying value of the asset is greater than the expected undiscounted future cash flows, an impairment charge is recorded based on the excess of the long-lived asset’s carrying value over its fair value.

In November 2008, we announced the permanent closure of our previously idled Donnacona and Mackenzie paper mills, based on current market conditions. Upon review of the recoverability of the long-lived assets at these facilities, we recorded long-lived asset impairment charges of $127 million at our Donnacona paper mill and $12 million at our Mackenzie paper mill in the third quarter of 2008.

In December 2008, we announced the permanent closure of our Grand Falls, Newfoundland and Labrador newsprint mill by the end of the first quarter of 2009 and our Covington, Tennessee paper converting facility by the end of 2008, based on current market conditions. Upon review of the recoverability of the long-lived assets at these facilities, we will record long-lived asset impairment charges in the fourth quarter of 2008.

As part of our review of our long-lived assets for indications of impairment, which we perform in the fourth quarter of 2008, we are evaluating the carrying value of certain of our long-lived assets in relation to the expected undiscounted future cash flows. As a result of this testing, it is possible that we could record an additional non-cash long-lived asset impairment charge in the fourth quarter of 2008, as well as in future periods when there is a triggering event.

Risks Related to Our Business

Developments in alternative media could continue to adversely affect the demand for our products, especially in North America, and our responses to these developments may not be successful.

Trends in advertising, electronic data transmission and storage and the Internet could have further adverse effects on traditional print media, including our products and those of our customers, but neither the timing nor the extent of those trends can be predicted with certainty. Our newspaper, magazine and catalog publishing customers may increasingly use, and compete with businesses that use, other forms of media and advertising and electronic data transmission and storage, including television and the Internet, instead of newsprint, coated paper, uncoated specialty papers or other products made by us. The demand for certain of our products weakened significantly over the last several years. For example, industry statistics indicate that North American newsprint consumption has been in decline for several years and has experienced annual declines of 5.1% in 2005, 6% in 2006, 9.8% in 2007 and 11.2% in 2008. Third party forecasters indicate that these declines in newsprint demand could continue or accelerate for 2009 due to conservation measures taken by publishers, reduced North American newspaper circulation, less space devoted to advertising and substitution to other uncoated mechanical grades.

One of our responses to the declining demand for our products has been to curtail our production capacity. For example, during the first quarter of 2008, we completed the implementation of the first phase of a strategic review of our business, pursuant to which, among other things, we reduced our newsprint and specialty papers production capacity by almost 1 million metric tons per year. During the first quarter of 2008, we also permanently closed pulp and paper operations that had previously been idled with a total capacity of approximately 650,000 metric tons. During the fourth quarter of 2008, we took approximately 30,000 to 35,000 metric tons per month of market-related downtime in newsprint. During the fourth quarter of 2008, we also took approximately 35,000 metric tons, 23,000 short tons and 9,000 short tons of market-related downtime in pulp, coated papers and specialty papers, respectively. In addition, on December 4, 2008, we announced the removal of an additional 830,000 metric tons of newsprint, 110,000 metric tons of specialty paper and 70,000 metric tons of coated paper capacity, through the permanent closures of a newsprint mill and a paper converting facility, the indefinite idling of a newsprint mill and two paper machines at another facility and by taking 20,000 metric tons of monthly newsprint downtime in 2009 at other facilities across the organization until market conditions improve. As of January 30, 2009, we expect to remove a further 100,000 to 125,000 metric tons of newsprint, 70,000 metric tons of commercial printing paper and 30,000 tons of market pulp during the first quarter of 2009.

It may become necessary to curtail even more production or permanently shut down even more machines or facilities. Such further curtailments and shut downs would become increasingly likely as North American newsprint demand continues to decline or if market conditions otherwise worsen. Curtailments or shutdowns could result in goodwill or asset write-downs and additional costs at the affected facilities, and could negatively impact our cash flows and materially affect our results of operations and financial condition.

Bankruptcy of a significant customer could have a material adverse effect on our liquidity, financial position and results of operations.

Trends discussed in the immediately preceding risk factor continue to impact the operations of our newsprint customers. If a customer is forced into bankruptcy as a result of these trends, any pre-petition receivables related to that customer may not be realized. In addition, such a customer may choose to reject its contracts with us, which could result in a larger pre-petition claim.

Currency fluctuations may adversely affect our results of operations and financial condition, and changes in foreign currency exchange rates can affect our competitive position, selling prices and manufacturing costs.

We compete with North American, European and Asian producers in most of our product lines. Our products are sold and denominated in U.S. dollars, Canadian dollars and selected foreign currencies. A substantial portion of our manufacturing costs are denominated in Canadian dollars. In addition to the impact of product supply and demand, changes in the relative strength or weakness of such currencies, and particularly the U.S. dollar, may also affect international trade flows of these products. A stronger U.S. dollar may attract imports into North America from foreign producers, increase supply and have a downward effect on prices, while a weaker U.S. dollar may encourage U.S. exports and increase manufacturing costs that are in Canadian dollars or other foreign currencies. Variations in the exchange rates between the U.S. dollar and other currencies, particularly the Euro and the currencies of Canada, United Kingdom, Sweden and certain Asian countries, will significantly affect our competitive position compared to many of our competitors.

We are particularly sensitive to changes in the value of the Canadian dollar versus the U.S. dollar. The impact of these changes depends primarily on our production and sales volume, the proportion of our production and sales that occur in Canada, the proportion of our financial assets and liabilities denominated in Canadian dollars, our hedging levels and the magnitude, direction and duration of changes in the exchange rate. We expect exchange rate fluctuations to continue to impact costs and revenues; however, we cannot predict the magnitude or direction of this effect for any quarter, and there can be no assurance of any future effects. During the last two years, the relative value of the Canadian dollar ranged from US$0.85 in January 2007 to US$1.09 in November 2007 and back to US$0.77 in October 2008.

Based on exchange rates and hedging levels during the nine months ended September 30, 2008, a one cent increase in the Canadian-U.S. dollar exchange rate would have increased our operating loss by approximately $22 million.

If the Canadian dollar strengthens again against the U.S. dollar, it could influence the foreign exchange rate assumptions that are used in our evaluation of goodwill and long-lived assets for impairment and, consequently, result in goodwill or asset impairment charges. See the discussion under “Critical Accounting Estimates — Goodwill” and “Critical Accounting Estimates — Long-lived Assets” in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2007 incorporated herein by reference, as updated in Item 2 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2008, also incorporated herein by reference.

We may not be successful in our strategy of increasing our share of coated and specialty papers and competing in growth markets with higher returns.

One of the components of our long-term strategy is to improve our portfolio of businesses by focusing on coated and specialty papers and competing more aggressively in growth markets with higher returns. There are risks associated with the implementation of this strategy, which is complicated and which involves a substantial number of mills, machines and personnel. Full implementation of this strategy may also require significant capital investment. To the extent we are unsuccessful in achieving this strategy, our results of operations may be adversely affected.

We face intense competition in the forest products industry and the failure to compete effectively would have a material adverse effect on our business, financial condition and results of operations.

We compete with numerous forest products companies, some of which have greater financial resources than we do. There has been a continued trend toward consolidation in the forest products industry, leading to new global producers. These global producers are typically large, well-capitalized companies that may have greater flexibility in pricing and financial resources for marketing, investment and expansion than we do. The markets for our products are all highly competitive. Actions by competitors can affect our ability to sell our products and can affect the volatility of the prices at which our products are sold. While the principal basis for competition is price, we also compete on the basis of customer service, quality and product type. There has also been an increasing trend toward consolidation among our customers. With fewer customers in the market for our products, our negotiation position with these customers could be weakened.

In addition, our industry is capital intensive, which leads to high fixed costs. Some of our competitors may be lower-cost producers in some of the businesses in which we operate. Global newsprint capacity, particularly Chinese and European newsprint capacity, has been increasing, which is expected to result in lower prices, volumes or both for our exported products. We believe that new hardwood pulp capacity at South American pulp mills has unit costs that are significantly below those of our hardwood kraft pulp mills. Other actions by competitors, such as reducing costs or adding low-cost capacity, may adversely affect our competitive position in the products we manufacture and, consequently, our sales, operating income and cash flows. We may not be able to compete effectively and achieve adequate levels of sales and product margins. Failure to compete effectively would have a material adverse effect on our business, financial condition and results of operations.

The forest products industry is highly cyclical. Fluctuations in the prices of, and the demand for, our products could result in small or negative profit margins, lower sales volumes and curtailment or closure of operations.

The forest products industry is highly cyclical. Historically, economic and market shifts, fluctuations in capacity and changes in foreign currency exchange rates have created cyclical changes in prices, sales volume and margins for our products. Most of our paper and wood products are commodities that are widely available from other producers and even our coated and specialty paper is susceptible to these fluctuations. Because our commodity products have few distinguishing qualities from producer to producer, competition for these products is based primarily on price, which is determined by supply relative to demand. The overall levels of demand for the products we manufacture and distribute and, consequently, our sales and profitability, reflect fluctuations in levels of end-user demand, which depend in part on general economic conditions in North America and worldwide. In 2008, we experienced lower demand and decreased pricing for our wood products due to a weaker U.S. housing market. We are not expecting any significant improvements in the wood products market before the end of 2009. As such, during 2008 we announced the curtailment of annualized capacity of approximately 1.3 billion board feet of lumber in the provinces of Quebec and British Columbia. We are also conducting an in-depth review of our wood products business with the objective of selling non-core assets, consolidating facilities, and curtailing or closing non-contributing operations. Curtailments or shutdowns could result in goodwill or asset write-downs at the affected facilities and could negatively impact our cash flows and materially affect our results of operations and financial condition. See also “Developments in alternative media could continue to adversely affect the demand for our products, especially in North America, and our responses to these developments may not be successful.”

Our manufacturing businesses may have difficulty obtaining fiber at favorable prices, or at all.

Fiber is the principal raw material we use in our business. We use both virgin fiber (wood chips and logs) and recycled fiber (old newspapers and magazines) as fiber sources for our paper mills. Wood fiber is a commodity and prices historically have been cyclical. The primary source for wood fiber is timber. Environmental litigation and regulatory developments have caused, and may cause in the future, significant reductions in the amount of timber available for commercial harvest in Canada and the United States. In addition, future domestic or foreign legislation, litigation advanced by aboriginal groups and litigation concerning the use of timberlands, the protection of endangered species, the promotion of forest biodiversity and the response to and prevention of catastrophic wildfires could also affect timber supplies. Availability of harvested timber may further be limited by factors such as fire and fire prevention, insect infestation, disease, ice storms, wind storms, drought, flooding and other natural and man-made causes, thereby reducing supply and increasing prices. As is typical in the industry, we do not maintain insurance for any loss to our outstanding timber from natural disasters or other causes.

Wood fiber pricing is subject to market influences and our cost of wood fiber may increase in particular regions due to market shifts. In 2008, we experienced lower demand and decreased pricing for our wood products due to a weaker U.S. housing market. We are not expecting any significant improvements in the wood products market before the end of 2009. We and other wood products producers have announced closures or curtailments of sawmills. Continued closures and curtailments are likely to reduce the supply and increase the price of wood fiber.

Pricing of recycled fiber increased significantly during the first three quarters of 2008, but began to decrease during the fourth quarter of 2008. For example, prices of old newspapers increased from an average of $118 per ton in December 2007, to averages of $158 per ton, $165 per ton and $195 per ton during the first, second and third quarters of 2008, respectively, and then decreased to $111 per ton during the fourth quarter of 2008. We believe that the price increases in the first three quarters of 2008 were related to expanding paper and packaging capacity in Asia, as well as strong North American demand, and that the price decreases in the fourth quarter of 2008 were due to declining North American demand. There can be no assurance that prices of recycled fiber will remain at their current lower levels. Any sustained increase in fiber prices would increase our operating costs and we may be unable to increase prices for our products in response.

Although we believe that the balance of fiber supply between our internal sources and the open market is adequate to support our current wood products and paper and pulp production requirements, there is no assurance that access to fiber will continue at the same levels achieved in the past. The cost of softwood fiber and the availability of wood chips may be affected. If our cutting rights pursuant to the forest licenses or forest management agreements of Abitibi and Bowater are reduced or if any third-party supplier of wood fiber stops selling or is unable to sell wood fiber to us, our financial condition and operating results would suffer.

An increase in the cost of our purchased energy, chemicals and other raw materials would lead to higher manufacturing costs, thereby reducing our margins.

Our operations consume substantial amounts of energy, such as electricity, natural gas, fuel oil, coal and wood waste. We buy energy and raw materials, including chemicals, wood, recovered paper and other raw materials, primarily on the open market.

The prices for raw materials and energy are volatile and may change rapidly, directly affecting our results of operations. The availability of raw materials and energy may also be disrupted by many factors outside our control, adversely affecting our operations. Energy prices, particularly for electricity, natural gas and fuel oil, have been volatile in recent years and prices for 2005, 2006, 2007 and 2008 exceeded historical averages. As a result, fluctuations in energy prices will impact our manufacturing costs and contribute to earnings volatility.

We are a major user of renewable natural resources such as water and wood. Accordingly, significant changes in climate and agricultural diseases or infestation could affect our financial condition and results of operations. As is typical in the industry, we do not maintain insurance for any loss to our standing timber from natural disasters or other causes. Also, we can provide no assurance that we will be able to maintain our rights to utilize water or to renew them at conditions comparable to those currently in effect.

For our commodity products, the relationship between industry supply and demand for these products, rather than changes in the cost of raw materials, will determine our ability to increase prices. Consequently, we may be unable to pass along increases in our operating costs to our customers. Any sustained increase in energy, chemical or raw material prices without any corresponding increase in product pricing would reduce our operating margins and potentially require us to limit or cease operations of one or more of our machines.

We could experience disruptions in operations or increased labor costs due to labor disputes.

We believe we are the largest employer in the Canadian pulp and paper sector and have the sector’s largest representation by unions. A significant number of our collective bargaining agreements with respect to our paper operations in Eastern Canada will expire in the second quarter of 2009. The collective bargaining agreement for the Calhoun, Tennessee facility, which expired in July 2008, has not been renewed. The collective bargaining agreement which covers the Catawba, South Carolina expires in April 2009. The employees at the facility in Mokpo, South Korea have complied with all conditions necessary to strike, but the possibility of a strike or lockout of those employees is not clear. While negotiations with the unions in the past have resulted in collective agreements being signed, as is the case with any negotiation, we may not be able to negotiate acceptable new agreements, which could result in strikes or work stoppages by affected employees. Renewal of collective bargaining agreements could also result in higher wage or benefit costs. Therefore, we could experience a disruption of our operations or higher ongoing labor costs which could have a material adverse effect on our business, financial condition or results of operations.

Our operations require substantial capital and we may not have adequate capital resources to provide for all of our capital requirements.

Our businesses are capital intensive and require that we regularly incur capital expenditures in order to maintain our equipment, increase our operating efficiency and comply with environmental laws. In addition, significant amounts of capital may be required to modify our equipment to produce alternative grades with better demand characteristics or to make significant improvements in the characteristics of our current products. If our available cash resources and cash generated from operations are not sufficient to fund our operating needs and capital expenditures, we would have to obtain additional funds from borrowings or other available sources or reduce or delay our capital expenditures. We may not be able to obtain additional funds on favorable terms or at all. If we cannot maintain or upgrade our equipment as we require, we may become unable to manufacture products that compete effectively.

Changes in laws and regulations could adversely affect our results of operations.

We are subject to a variety of foreign, federal, state, provincial and local laws and regulations dealing with trade, employees, transportation, taxes, timber and water rights and the environment. Changes in these laws or regulations or their interpretations or enforcement have required in the past, and could require in the future, substantial expenditures by us and adversely affect our results of operations. For example, changes in environmental laws and regulations have in the past, and could in the future, require us to spend substantial amounts to comply with restrictions on air emissions, wastewater discharge, waste management and landfill sites, including remediation costs. Environmental laws are becoming increasingly stringent. Consequently, our compliance and remediation costs could increase materially.

Changes in the political or economic conditions in Canada, the United States or other countries in which our products are manufactured or sold could adversely affect our results of operations.

We manufacture products in Canada, the United States, the United Kingdom and South Korea and sell products throughout the world. Paper prices are tied to the health of the economies of North and South America, Asia and Europe, as well as to paper inventory levels in these regions. The economic and political climate of each region has a significant impact on our costs and the prices of, and demand for, our products. Changes in regional economies or political instability, including acts of war or terrorist activities, can affect the cost of manufacturing and distributing our products, pricing and sales volume, directly affecting our results of operations. Such changes could also affect the availability or cost of insurance.

We may be subject to environmental liabilities.

We are subject to a wide range of general and industry-specific laws and regulations relating to the protection of the environment, including those governing air emissions, wastewater discharges, timber harvesting, the storage, management and disposal of hazardous substances and waste, the clean-up of contaminated sites, landfill operation and closure, forestry operations, endangered species habitat, and health and safety. As an owner and operator of real estate and manufacturing and processing facilities, we may be liable under environmental laws for cleanup and other costs and damages, including tort liability and damages to natural resources, resulting from past or present spills or releases of hazardous or toxic substances on or from our current or former properties. We may incur liability under these laws without regard to whether we knew of, were responsible for, or owned the property at the time of, any spill or release of hazardous or toxic substances on or from our property, or at properties where we arranged for the disposal of regulated materials. Claims may arise out of currently unknown environmental conditions or aggressive enforcement efforts by governmental or private parties.

We have net liabilities with respect to our pension plans and the actual cost of our pension plan obligations could exceed current provisions.

As of December 31, 2007, our defined benefit pension plans were under-funded by an aggregate of approximately $496 million on a financial accounting basis. Our future funding obligations for the defined benefit pension plans depend upon changes to the level of benefits provided by the plans, the future performance of assets set aside in trusts for these plans, the level of interest rates used to determine minimum funding levels, actuarial data and experience and any changes in government laws and regulations. Any adverse change to any of these factors may require us to increase our cash contributions to our pension plans and those additional contributions could have a material adverse effect on our cash flows and results of operations.

The determination of projected benefit obligations and the recognition of expenses related to our pension plan obligations are dependent on assumptions used in calculating these amounts. These assumptions include, among other things, expected rates of return on plan assets, which are developed using relevant company experience in conjunction with market related data for each individual country in which such plans exist. All assumptions are reviewed periodically with third party actuarial consultants and adjusted as necessary. Recent deterioration in the global securities markets has impacted the value of the assets included in our defined benefit pension plans. In June 2008, we embarked on a de-risking strategy with our pension plans by reducing the equity component of such plans. Currently, our plans are comprised of approximately 25% equity and 75% fixed income. Accordingly, we mitigated much of the effect of the recent volatility that impacted the global equity markets. Future minimum cash contributions are not expected to be materially impacted in 2009 as a result of the market volatility in 2008, since the 2009 contributions are largely based on valuations performed as of or prior to January 1, 2008. A decline in fair value of our plans may, however, increase the minimum cash contributions that will be required in 2010.

We may not be compensated for the expropriation of certain assets by the government of Newfoundland and Labrador.

On December 17, 2008, the Government of Newfoundland and Labrador, Canada passed legislation to expropriate all of the timber rights, water use rights, leases and hydroelectric assets of AbitibiBowater in the Province of Newfoundland and Labrador, whether partially or wholly owned through its subsidiaries and affiliated entities, following our announcement on December 4, 2008 of the permanent closure of the Grand Falls paper mill. The Government of Newfoundland and Labrador announced that it does not plan to compensate us for the loss of the water and timber rights, but has indicated that it may compensate us for our hydroelectric assets. However, it has made no commitment to ensure that such compensation would represent the fair value of these assets.

We have retained legal counsel and are reviewing all legal options. We intend to submit a claim under NAFTA relating to the expropriation of these assets specifying violations by the Government of Newfoundland and Labrador under the terms of NAFTA. Although there is no guarantee regarding the outcome and receipt of fair compensation under the terms of NAFTA, we believe that the Government of Newfoundland and Labrador has violated the terms of NAFTA and that we should be fairly compensated for the expropriation. Under the terms of NAFTA, compensation for the expropriated assets is based on fair value.

We are still in the process of evaluating the impact of this expropriation and our related claim for fair compensation under NAFTA on our consolidated financial statements for the year ended December 31, 2008, the outcome of which may result in a material non-cash asset writedown on the carrying value of the expropriated assets, which is approximately $300 million.

EX-99.7

Exhibit 99.7

BACKGROUND TO THE EXCHANGE OFFERS, CONSENT SOLICITATION AND CONCURRENT NOTES OFFERING

Despite progress on merger integration, favorable exchange rates and an improved pricing environment, we face significant liquidity constraints, a situation made more difficult by the current global economic downturn and extremely tight credit markets. Overall, we have in excess of $1 billion of maturities and repayment obligations that come due before the end of August 2009, and significant additional maturities in 2010 and beyond. As of December 31, 2008, Abitibi had a $347 million term loan due March 30, 2009 and $272 million outstanding under an accounts receivable securitization program that is scheduled to terminate in July 2009. Bowater’s Canadian bank credit facility, which has a current available commitment of $117 million, matures in June 2009. Bowater has approximately $248 million outstanding aggregate principal amount of 9.00% Debentures that mature August 1, 2009 and $234 million outstanding aggregate principal amount of Floating Rate Senior Notes that mature March 15, 2010. In addition, certain parameters that form part of the borrowing base calculation of Bowater’s bank credit facilities are scheduled to be reduced by an aggregate of $138 million by March 31, 2009 (subject to a possible extension through April 29, 2009 under certain circumstances). As of the date of this Offering Circular, we do not have funds sufficient to repay all such amounts when due and we may not be able to renew or extend these maturities. We are negotiating with various financing sources and actively exploring various alternatives to secure the necessary funds or to otherwise restructure this indebtedness, including amending Bowater’s U.S. and Canadian bank credit facilities and conducting the exchange offers, the Concurrent Notes Offering and the Additional Financing Transaction. However, there can be no assurance that we will be able to consummate any such financing or restructuring transactions prior to those maturities. The continued disrupted state of the credit and capital markets, among other things, is creating a significant impediment to our efforts. If we are unable to refinance or restructure these obligations on or before their maturities, we would be in default under the indentures or agreements relating to such obligations. Such default could trigger defaults under our other indebtedness, which would permit the holders of such indebtedness to accelerate our repayment obligations under them. There are no cross-defaults or cross-acceleration provisions under Abitibi’s obligations in the event of a default or acceleration under Bowater’s obligations, or under Bowater’s obligations in the event of a default or acceleration under Abitibi’s obligations; however, AbitibiBowater has guaranteed certain debt obligations of Bowater and certain of its subsidiaries and will guarantee the New Notes.

We are taking steps that are intended to address the significant challenges that we face and to improve our near-term liquidity and generally reduce financial risk. Through the exchange offers, the Concurrent Notes Offering and the Additional Financing Transaction, we are seeking to reduce our debt levels in order to maximize and preserve liquidity through the current economic downturn and extremely tight credit market. The exchange offers, consent solicitation and Concurrent Notes Offering are an important element of our effort to effect a successful restructuring of our indebtedness.