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S&P rates Abitibi notes
Standard & Poor's said it assigned its BB rating to Montreal, Que.-based Abitibi-Consolidated Co. of Canada's $200 million floating-rate notes due 2011 and $200 million 7.75% notes due 2011. The notes are unconditionally guaranteed by Abitibi-Consolidated Inc.
At the same time, S&P affirmed its BB long-term corporate credit rating on Abitibi.
The outlook is negative.
The proceeds will be used to reduce debt outstanding under Abitibi's existing revolving credit facility and to repay the $118 million floating-rate term loan maturing on June 30 of Alabama River Newsprint Co., which recently became a wholly owned subsidiary of Abitibi, and for general corporate purposes.
"The note issue modestly improves Abitibi's liquidity and maturity profile, as it increases availability under the company's revolving credit facility and lengthens the debt repayment schedule," said S&P credit analyst Daniel Parker.
The ratings reflect Abitibi's high debt levels, heavy exposure to cyclical commodity-oriented groundwood papers, and weak financial performance in the wake of unfavorable industry conditions.
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