EX-99.1 2 dex991.htm THIRTY-THIRD REPORT OF THE MONITOR, DATED FEBRUARY 19, 2010 Thirty-Third Report of the Monitor, dated February 19, 2010

Exhibit 99.1

 

CANADA   SUPERIOR COURT

PROVINCE OF QUÉBEC

DISTRICT OF

MONTRÉAL

  

Commercial Division

Sitting as a court designated pursuant to the

Companies’ Creditors Arrangement Act,

R.S.C., c. C-36, as amended

No.: 500-11-036133-094    
  IN THE MATTER OF THE PLAN OF COMPROMISE OR ARRANGEMENT OF:
  ABITIBIBOWATER INC., a legal person incorporated under the laws of the State of Delaware, having its principal executive offices at 1155 Metcalfe Street, in the City and District of Montréal, Province of Quebec, H3B 5H2;
  And
  ABITIBI-CONSOLIDATED INC., a legal person incorporated under the laws of Canada, having its principal executive offices at 1155 Metcalfe Street, in the City and District of Montréal, Province of Quebec, H3B 5H2;
  And
  BOWATER CANADIAN HOLDINGS INC., a legal person incorporated under the laws of the Province of Nova Scotia, having its principal executive offices at 1155 Metcalfe Street, in the City and District of Montréal, Province of Quebec, H3B 5H2;
  And
  the other Petitioners listed on Appendices “A”, “B” and “C”;
  Petitioners
  And
  ERNST & YOUNG INC., a legal person under the laws of Canada, having a place of business at 800 René-Lévesque Blvd. West, Suite 1900, in the City and District of Montréal, Province of Quebec, H3B 1X9;
  Monitor

THIRTY-THIRD REPORT OF THE MONITOR

FEBRUARY 19, 2010

INTRODUCTION

 

1. On April 17, 2009, Abitibi-Consolidated Inc. (“ACI”) and its subsidiaries listed in Appendix “A” hereto (collectively with ACI, the “ACI Petitioners”) and Bowater Canadian Holdings Incorporated (“BCHI”), its subsidiaries and affiliates listed in Appendix “B” hereto (collectively with BCHI, the “Bowater Petitioners”) (the ACI Petitioners and the Bowater Petitioners are collectively referred to herein as the “Petitioners”) filed for and obtained protection from their creditors under the Companies’ Creditors Arrangement Act (the “CCAA” and the “CCAA Proceedings”) pursuant to an Order of this Honourable Court, as amended on May 6, 2009 (the “Initial Order”). Pursuant to an Order of this Honourable Court dated November 10, 2009, Abitibi-Consolidated (U.K.) Inc., a subsidiary of ACI, was added to the list of the ACI Petitioners.

 

2. Pursuant to the Initial Order, Ernst & Young Inc. (“EYI”) was appointed as monitor of the Petitioners (the “Monitor”) under the CCAA and a stay of proceedings in favour of the Petitioners was granted until May 14, 2009 (the “Stay Period”). The Stay Period has been subsequently extended to March 15, 2010 pursuant to further Orders of this Honourable Court.

 

3. On April 16, 2009, AbitibiBowater Inc. (“ABH”), Bowater Inc. (“BI”), and certain of their direct and indirect U.S. and Canadian subsidiaries, including BCHI and Bowater Canadian Forest Products Inc. (“BCFPI”) (collectively referred to herein as “U.S. Debtors”), filed voluntary petitions (collectively, the “Chapter 11 Proceedings”) for relief under Chapter 11 of the U.S. Bankruptcy Code, 11 U.S.C. §§ 101 et seq. (the “U.S. Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “U.S. Bankruptcy Court”).

 

4. BCHI, Bowater Canada Finance Corporation, Bowater Canadian Limited, AbitibiBowater Canada Inc., BCFPI, Bowater LaHave Corporation and Bowater Maritimes Inc. have commenced both CCAA Proceedings and Chapter 11 Proceedings and are referred to herein collectively as the “Cross-Border Petitioners” and are also included in the definition of “Petitioners”.

 

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5. The Petitioners are all subsidiaries of ABH (ABH, collectively with its subsidiaries, are referred to as the “ABH Group”).

 

6. On April 17, 2009, ABH and the petitioners listed on Appendix “C” hereto (collectively with ABH, the “18.6 Petitioners”) obtained Orders under Section 18.6 of the CCAA in respect of voluntary proceedings initiated under Chapter 11 and EYI was appointed as the information officer in respect of the 18.6 Petitioners.

 

7. On April 16, 2009, ACI and ACCC filed petitions for recognition under Chapter 15 of the U.S. Bankruptcy Code. On April 21, 2009, the U.S. Bankruptcy Court granted the recognition orders under Chapter 15 of the U.S. Bankruptcy Code.

 

8. On April 22, 2009, the Court amended the Initial Order to extend the stay of proceedings to the partnerships (the “Partnerships”) listed in Appendix “D” hereto.

BACKGROUND

 

9. ABH is one of the world’s largest publicly traded pulp and paper manufacturers. It produces a wide range of newsprint and commercial printing papers, market pulp and wood products. The ABH Group owns interests in or operates pulp and paper facilities, wood products facilities and recycling facilities located in Canada, the United States, the United Kingdom and South Korea.

 

10. Incorporated in Delaware and headquartered in Montreal, Quebec, ABH functions as a holding company and its business is conducted principally through four direct subsidiaries: BI, Bowater Newsprint South LLC (“Newsprint South”) (BI, Newsprint South and their respective subsidiaries are collectively referred to as the “BI Group”), ACI (ACI and its subsidiaries are collectively referred to as the “ACI Group”) and AbitibiBowater US Holding LLC (“ABUSH”) (ABUSH and its respective subsidiaries are collectively referred to as the “DCorp Group”).

 

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11. ACI is a direct and indirect wholly-owned subsidiary of ABH. ABH wholly owns BI which in turn, wholly owns BCHI which, in turn, indirectly owns BCFPI which carries on the main Canadian operations of BI.

 

12. ACCC, a wholly-owned subsidiary of ACI, and BCFPI hold the majority of ABH’s Canadian assets and operations.

PURPOSE

 

13. This is the thirty-third report of the Monitor (the “Thirty-Third Report”) in these CCAA Proceedings, the purpose of which is to report to this Honourable Court with respect to the following:

 

  (i) the Petitioners’ four-week cash flow results for the period from January 4, 2010 to January 31, 2010 (the “Reporting Period”), in accordance with the first stay extension order of this Honourable Court dated May 14, 2009 (the “First Stay Extension Order”), and to provide details with respect to the following:

 

  (a) an update regarding the overview of the current market conditions in the forest products industry provided in the thirty-first report of the Monitor dated January 21, 2010 (the “Thirty-First Report”);

 

  (b) the recent administration filing of Bridgewater Paper Company Limited (“Bridgewater”), which is a subsidiary of the Petitioners in the United Kingdom;

 

  (c) the receipts and disbursements of the ACI Group and BCFPI for the Reporting Period with a discussion of the variances from the respective forecasts (the “ACI Forecast” and the “BCFPI Forecast”) set forth in the Thirty-First Report;

 

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  (d) the current liquidity and revised cash flow forecasts of the ACI Group and BCFPI for the 13-week period ending May 2, 2010; and

 

  (e) an update with respect to certain key performance indicators (“KPIs”).

TERMS OF REFERENCE

 

14. In preparing this Thirty-Third Report, the Monitor has been provided with and, in making comments herein, has relied upon unaudited financial information, the ABH Group’s books and records, financial information and projections prepared by the ABH Group and discussions with management of the ABH Group (the “Management”). The Monitor has not audited, reviewed or otherwise attempted to verify the accuracy or completeness of such information and, accordingly, the Monitor expresses no opinion or other form of assurance in respect of such information contained in this Thirty-Third Report. Some of the information referred to in this Thirty-Third Report consists of forecasts and projections. An examination or review of the financial forecast and projections, as outlined in the Canadian Institute of Chartered Accountants Handbook, has not been performed. Future-oriented financial information referred to in this Thirty-Third Report was prepared by the ABH Group based on Management’s estimates and assumptions. Readers are cautioned that, since these projections are based upon assumptions about future events and conditions the actual results will vary from the projections, even if the assumptions materialize, and the variations could be significant.

 

15. Capitalized terms not defined in this Thirty-Third Report are as defined in the previous reports of the Monitor and the Initial Order. All references to dollars are in U.S. currency and are translated at a rate of CDN$1.00=US$0.90 unless otherwise noted.

 

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16. Copies of all of the Monitor’s Reports, in both English and French, including a copy of this Thirty-Third Report, and all motion records and Orders in the CCAA Proceedings will be available on the Monitor’s website at www.ey.com/ca/abitibibowater. The Monitor has also established a bilingual toll-free telephone number that is referenced on the Monitor’s website so that parties may contact the Monitor if they have questions with respect to the CCAA Proceedings.

 

17. Copies of all of the U.S. Bankruptcy Court’s orders are posted on the website for Epiq Bankruptcy Solutions LCC (“Epiq”) at http://chapter11.epiqsystems.com/abitibibowater. The Monitor has included a link to Epiq’s website from the Monitor’s website.

CURRENT MARKET CONDITIONS IN THE FOREST PRODUCTS INDUSTRY

 

18. Pursuant to the First Stay Extension Order, the Monitor has provided this Honourable Court with regular reports on the Petitioners’ cash flows for each reporting period following the date of the First Stay Extension Order. These regular reports have included details with respect to the market conditions in the forest products industry.

 

19. On January 21, 2010, Catalyst Paper Corporation (“Catalyst”), a competitor of the Petitioners, announced it would be indefinitely idling a newsprint machine at their Crofton, British Columbia facility. The idled machine, which was temporarily idled on December 23, 2009, is capable of producing approximately 140,000 tonnes of newsprint on an annual basis.

 

20. Kruger Inc. (“Kruger”), a competitor of the Petitioners, recently announced that it will be continuing to idle a coated paper machine at its Wayagamack mill in Trois-Rivieres, Quebec. This machine was shut down December 31, 2009 and was scheduled to restart on February 23, 2010, but will be idled for a further five weeks. Weak market conditions and the strength of the Canadian dollar were provided by Kruger as contributing factors to this decision.

 

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21. According to a January 22, 2010 report on RISI.com (a leading forest products publication), White Birch Paper Company will be restarting production at a newsprint machine in Newburg, Oregon. This machine, which is capable of producing 170,000 tonnes per year, had been idled for market-related reasons.

 

22. As reported in certain industry publications, the Petitioners have announced that the $50 per tonne price increase that was scheduled for March, 2010 will now be spread over March and April in $25 per tonne increments.

BRIDGEWATER ADMINISTRATION FILING

 

23. Bridgewater, a subsidiary of the Petitioners in the United Kingdom (“UK”), filed for administration, a form of insolvency proceeding in the UK, on February 2, 2010. Ernst & Young (UK) has been appointed as the administrator of Bridgewater (the “Administrator”). The Administrator has ceased production at the Bridgewater mill which had capacity of 235,000 tonnes per year.

 

24. The Administrator is currently liquidating existing inventory.

 

25. Prior to the administration proceedings, the bulk of the Petitioners’ European sales were made through Bridgewater as a broker. The Petitioners now sell their own production into the UK and Europe using Bridgewater (under administration) as a sales agent.

RECEIPTS AND DISBURSEMENTS FROM JANUARY 4, 2010 TO JANUARY 31, 2010 FOR THE ACI GROUP AND BCFPI

The ACI Group

 

26. The table below summarizes the ACI Group’s (including DCorp) actual receipts and disbursements for the Reporting Period, which is detailed in Appendix “E” of this Thirty-Third Report, with a comparison to the ACI Forecast amounts provided in the Thirty-First Report.

 

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     US$000        
     Actual     Forecast     Variance        

Opening Cash

    $ 251,795      $ 251,795      $ —        —     

Receipts

      197,842        177,012        20,830      12 % 

Disbursements

         

Net Trade Disbursements

      (99,030 )      (110,458 )      11,428      10 % 

Intercompany

      2,360        —          2,360      N/A   

Other

      (76,686 )      (77,296 )      610      1 % 
                          
     (173,356 )      (187,754 )      14,398      8 % 

Financing

         

Securitization Inflows / (Outflows)

      (16,757 )      (15,852 )      (905 )    (6 %) 

Adequate Protection by DCorp to ACCC Term Lenders

      (3,074 )      (3,287 )      213      6 % 

Bridgewater Funding

      1,460        —          1,460      N/A   

Restructuring & Other Items

      (3,531 )      (4,250 )      719      17 % 

Foreign Exchange Translation

      (6,605 )      —          (6,605 )    N/A   
                          
     (28,507 )      (23,389 )      (5,118 )    (22 %) 

Net Cash Flow

      (4,021 )      (34,131 )      30,110      (88 %) 

Ending Cash

    $ 247,774      $ 217,664      $ 30,110      14 % 
                          

ULC DIP Facility Available Upon Notice

      45,000        45,000        —        —     

Immediately Available Liquidity

    $ 292,774      $ 262,664      $ 30,110      11 % 
                          

Total Available Liquidity

    $ 349,039      $ 318,929      $ 30,110      9 % 
                          

 

27. As detailed in the twenty-ninth report of the Monitor dated December 16, 2009 (the “Twenty-Ninth Report”) the sale of the MPCo Transaction closed on December 9, 2009 and, pursuant to certain agreements related to the transaction, the proceeds of the CDN$615 million (the “Proceeds”) for the ACCC MPCo Interest were received by the Petitioners. Certain of the Proceeds were paid to the Monitor for distribution as follows:

 

  (i) CDN$200.0 million to the Senior Secured Noteholders (i.e. the holders of the 13.75% notes due 2011); and

 

  (ii) CDN$130.0 million to the ACI Group under the ULC DIP Facility.

 

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28. The Monitor continues to hold the following amounts related to the sale of the ACCC MPCo Interest pursuant to an order of this Honourable Court dated November 16, 2009:

 

  (i) $45.0 million that is available as liquidity to the ACI Group subject to providing notice to certain creditors (the “ULC DIP Facility Available Upon Notice”);

 

  (ii) $45.0 million that is available to the ACI Group subject to Court approval for the use of such funds (the “ULC DIP Facility Available Upon Court Approval”); and

 

  (iii) Approximately $47.1 million that is not available to the ACI Group (the “Restricted ULC Reserve Deposit”). The Monitor will continue to hold these funds until further order of this Honourable Court.

 

29. “Immediately Available Liquidity” in the chart above includes cash on hand plus liquidity available via the ULC DIP Facility Available Upon Notice. “Total Available Liquidity” includes Immediately Available Liquidity plus the ULC DIP Facility Available Upon Court Approval plus the Recycling Proceeds (as defined herein).

 

30. Pursuant to an order issued by the U.S. Bankruptcy Court, funds related to the sale of the DCorp’s recycling assets (the “Recycling Proceeds”) are only available to the ACI Group on ten days’ notice to the agent for the ACCC Term Lenders. These funds (approximately $11.3 million) are held in a designated account and are separate from the ACI Group’s general operating funds.

 

31. As shown in the table above, the ACI Group’s total receipts for the Reporting Period, net of joint venture remittances, were approximately $20.8 million higher than projected in the ACI Forecast. Disbursements were approximately $14.4 million lower than projected in the ACI Forecast and Financing cash flow was approximately $5.1 million less than projected in the ACI Forecast. Overall, the ending cash balance and immediately available liquidity were each approximately $30.1 million higher than the ACI Forecast.

 

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Receipts

 

32. A breakdown of the receipts for the Reporting Period are outlined in the table below:

 

           $US 000        

Receipts

    Para.     Actual     Forecast     Variance     Variance %  

A/R Collections

    33 (i)    $ 163,299      $ 155,324      $ 7,975      5 % 

Intercompany A/R Settlement

    33 (i)      16,770        —          16,770      N/A   

Joint Venture Remittances, Net

    33 (i)      (20,157 )      (21,303 )      1,146      5 % 

Collections on Behalf of Joint Ventures

    33 (ii)      7,265        17,480        (10,215 )    (58 %) 
                                

Net A/R Collections

        167,177        151,501        15,676      10 % 

Other Inflows

    33 (iii)      30,665        25,511        5,154      20 % 
                                

Total Receipts

      $ 197,842      $ 177,012      $ 20,830      12 % 
                                

 

33. The variance analysis has been compiled based on discussions with Management and the following represents the more significant reasons for the variances:

 

  (i) A/R Collections, inclusive of receipts related to Intercompany A/R Settlements, net Joint Venture Remittances, and Collections on Behalf of Joint Ventures, were approximately $167.2 million during the Reporting Period compared to a forecast amount of $151.5 million resulting in a positive variance of approximately $15.7 million. The reason for this variance is that certain customers who had balances due in December paid in early January, reversing negative variances previously incurred.

Intercompany A/R Settlements represent payments to the ACI Group from an affiliated ABH Group entity for ACI Group accounts receivable that were collected by the affiliated entity, such as BI or BCFPI.

 

  (ii)

Collections on Behalf of Joint Ventures totalled approximately $7.3 million during the Reporting Period. This amount represents amounts collected by the ACI Group for accounts receivable that belong to a joint

 

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venture partner. Such amounts will be paid to the joint venture partner on a monthly basis or in accordance with the joint venture agreement. The collections on behalf of joint ventures were $7.3 million for the Reporting Period as compared to a forecast amount of approximately $17.5 million, resulting in a negative variance of approximately $10.2 million.

This variance is partly due to the fact that certain portions of amounts collected on behalf of joint ventures are also included in the “A/R Collections” line and have not yet been specifically allocated to “Collections on Behalf of Joint Ventures” as these amounts are allocated on a monthly basis.

During the Reporting Period, disbursements related to Joint Venture Remittances totalled approximately $20.2 million resulting in a positive variance of approximately $1.1 million. This is primarily due to lower than forecast activity at the Augusta joint venture.

 

  (iii) Other Inflows, which includes tax refunds and other miscellaneous receipts, totalled approximately $30.7 million during the Reporting Period. The ACI Forecast included projected receipts of $25.5 million. Significant receipts include:

 

  (a) A refund of operating costs from Donohue Malbaie, a joint venture partner, in the amount of approximately $3.9 million; and

 

  (b) Higher than forecast receipts related to the sale of hydroelectric power to the grid from the Fort Frances co-generation plant.

 

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Disbursements

 

34. A breakdown of the disbursements related to Net Trade Disbursements for the Reporting Period is outlined below:

 

           $US 000        
     Para.     Actual     Forecast     Variance     Variance %  

Trade Payables

    35 (i)    $ (112,003 )    $ (107,510 )    $ (4,493 )    (4 %) 

Intercompany A/P Settlement

    35 (i)      13,357        —          13,357      N/A   

Intercompany A/P Settlements - Disbursements

    35 (i)      (384 )      —          (384 )    N/A   

Capital Expenditures

    35 (ii)      —          (2,948 )      2,948      100 % 
                                

Net Trade Disbursements

      $ (99,030 )    $ (110,458 )    $ 11,428      10 % 
                                

 

35. The variance analysis with respect to the disbursements for the more significant variances has been compiled based on discussions with Management and the following represents a summary of the reasons for the variances:

 

  (i) Disbursements related to Trade Payables were approximately $112.0 million during the Reporting Period, which was approximately $4.5 million greater than the ACI Forecast. Consistent with prior periods:

 

  (a) Capital Expenditures have been included in the actual amount for Trade Payables disbursements until such time as the ACI Group identifies and allocates the disbursements which are capital in nature;

 

  (b) The ACI Group regularly disburses amounts on behalf of other affiliated entities which are included in Trade Payables (as noted above, the ACI Group was reimbursed by affiliates for approximately $13.4 million of such amounts, detailed on the Intercompany A/P Settlements line, during the Reporting Period). The quantum of amounts disbursed on behalf of other entities is not known until such time as the Petitioners reconcile their intercompany accounts, which is done on a regular basis; and

 

  (c) During the Reporting Period, the ACI Group was reimbursed for certain freight expenses incurred by affiliates in November and December, 2009. Due to the fact that these amounts were reimbursed in January 2010, a positive variance resulted. The quantum of such reimbursement was approximately $10.0 million, of which only $7.2 million was forecast.

 

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  (ii) As noted above, Capital Expenditures are not tracked on a weekly basis. The disbursements related to capital expenditures have been included in the Trade Payables disbursement line. Management has advised the Monitor that capital expenditures for the month of December, 2009 totalled approximately $4.0 million.

 

36. The net disbursements related to intercompany collections are detailed in the chart below:

 

           $US 000      
     Para.     Actual     Forecast    Variance     Variance %

A/R Collections - Affiliates

    36 (i)    $ 20,762      $ —      $ 20,762      N/A

Intercompany A/R Settlements

    36 (ii)      (18,402 )      —        (18,402 )    N/A
                             
     $ 2,360      $ —      $ 2,360      N/A
                             

 

  (i) A/R Collections – Affiliates totalled approximately $20.8 million during the Reporting Period. As part of its normal Cash Management System, the ACI Group regularly collects accounts receivable on behalf of other ABH Group entities. As it is not possible to forecast which customers will incorrectly pay the ACI Group on behalf of the other entities, collections on behalf of affiliates are not forecast by the Petitioners. The funds are paid on a regular basis by the ACI Group to the appropriate ABH Group entity, which payments are reflected in the Intercompany A/R Settlements line of the “Intercompany” section of the cash flow statement. As discussed in the next section, an amount of approximately $18.4 million was paid out to affiliates during the Reporting Period by the ACI Group to reimburse affiliates for collections made on their behalf by the ACI Group.

 

  (ii) The ACI Group does not forecast the disbursement of Intercompany A/R Settlements as it is not possible to predict which customers will pay the incorrect ABH Group entity for accounts receivable. The corresponding receipt of these amounts collected from affiliate customers is included in the A/R Collections – Affiliates line included in the “Intercompany” section of the cash flow statement.

 

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37. Disbursements related to “Other” items are summarized in the chart below:

 

           $US 000        
     Para.     Actual     Forecast     Variance     Variance %  

Marine Freight Payments

    37 (i)    $ (6,331 )    $ (6,000 )    $ (331 )    (6 %) 

Utility Payments

    37 (ii)      (26,937 )      (27,480 )      543      2 % 

Payroll & Benefits

    37 (iii)      (43,418 )      (43,816 )      398      1 % 
                                
     $ (76,686 )    $ (77,296 )    $ 610      1 % 
                                

 

  (i) Marine Freight Payments totalled approximately $6.3 million during the Reporting Period. This compares to an amount of $6.0 million in the ACI Forecast.

 

  (ii) Utility Payments totalled approximately $26.9 million during the Reporting Period. This compares to an amount of approximately $27.5 million in the ACI Forecast.

 

  (iii) Total payments for Payroll & Benefits were approximately $43.4 million during the Reporting Period compared to an amount of approximately $43.8 million in the ACI Forecast.

 

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Financing

 

38. Details regarding the ACI Group’s financing activities are summarized in the following table:

 

           $US 000        

Financing

    Para.     Actual     Forecast     Variance     Variance %  

Securitization Inflows / (Outflows)

    39 (i)    $ (16,757 )    $ (15,852 )    $ (905 )    (6 %) 

Adequate Protection by DCorp to ACCC Term Lenders

    39 (ii)      (3,074 )      (3,287 )      213      6 % 

Bridgewater Funding

    39 (iii)      1,460        —          1,460      N/A   

Restructuring & Other Items

    39 (iv)      (3,531 )      (4,250 )      719      17 % 

Foreign Exchange Translation

    39 (v)      (6,605 )      —          (6,605 )    N/A   
                                
     $ (28,507 )    $ (23,389 )    $ (5,118 )    (22 %) 
                                

 

39. The variance analysis with respect to the ACI Group’s financing activities has been compiled based on discussions with Management and the following represents a summary of the reasons for the variances:

 

  (i) Securitization Inflows/(Outflows) totalled an outflow of approximately $16.8 million compared to a projected outflow of approximately $15.9 million during the Reporting Period due to a lower than forecast accounts receivable balance offset by higher than forecast availability under the Securitization Program.

 

  (ii) Adequate Protection by DCorp to ACCC Term Lenders totalled approximately $3.1 million compared to a forecast amount of approximately $3.3 million.

 

  (iii) In order to maintain sufficient liquidity at Bridgewater, the ACI Group transferred approximately $1.5 million to Bridgewater prior to the commencement of the Reporting Period. These funds were repaid in the week ended January 10, 2010.

 

  (iv) Payments for Restructuring & Other Items totalled approximately $3.5 million compared to a forecast of approximately $4.3 million. The difference is primarily due to the timing of receipt of invoices from various professional service firms.

 

  (v) Amounts on the Foreign Exchange Translation line represent the difference between the actual exchange rate between Canadian and U.S. dollars at the time of conversion as compared to the forecast rate of CDN$1.00=US$0.90. During the Reporting Period the value of the Canadian dollar fluctuated between US$0.9384 and US$0.9755.

 

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BCFPI

 

40. The following table summarizes the receipts and disbursements of BCFPI for the Reporting Period, which is detailed in Appendix “F” of this Thirty-Third Report:

 

     US$000        
     Actual     Forecast     Variance        

Receipts

    $ 55,870      $ 47,658      $ 8,212      17 % 

Disbursements

         

Net Trade Disbursements

      (37,587 )      (28,826 )      (8,761 )    (30 %) 

Intercompany

      1,539        —          1,539      N/A   

Other

      (13,675 )      (16,512 )      2,837      17 % 
                              
     (49,723 )      (45,338 )      (4,385 )    (10 %) 

Financing

         

Interest

      (1,287 )      (2,080 )      793      38 % 

Restructuring Costs

      (547 )      (1,172 )      625      53 % 

Foreign Exchange Translation

      (1,585 )      —          (1,585 )    N/A   
                              
     (3,419 )      (3,252 )      (167 )    5 % 

Net Cash Flows

      2,728        (932 )      3,660      (393 %) 

Opening Cash

      11,347        11,347        —        —     
                              

Ending Cash

    $ 14,075      $ 10,415      $ 3,660      35 % 
                              

 

41. As detailed in the table above, BCFPI’s total receipts for the Reporting Period were approximately $8.2 million higher than the BCFPI Forecast. Disbursements were $4.4 million higher than the BCFPI Forecast and Financing cash flows were consistent with the BCFPI Forecast. BCFPI had cash on hand of approximately $14.1 million at January 31, 2010. Overall, the ending cash balance was approximately $3.7 million higher than the BCFPI Forecast.

 

- 16 -

Receipts

 

42. A breakdown of the BCFPI receipts is summarized in the table below:

 

     US$000        

Receipts

    Para.     Actual     Forecast     Variance     Variance %  

A/R Collections

    43 (i)    $ 9,149      $ 50,546      $ (41,397 )    (82 %) 

Intercompany A/R Settlements

    43 (i)      36,013        —          36,013      N/A   
                                

Total A/R Collections

        45,162        50,546        (5,384 )    (11 %) 

Advances from/(to) Bowater Inc.

    43 (ii)      (6,000 )      (19,000 )      13,000      (68 %) 

Other Inflows

    43 (iii)      16,708        16,112        596      4 % 
                                

Total Receipts

      $ 55,870      $ 47,658      $ 8,212      17 % 
                                

 

43. The variance analysis with respect to the receipts has been compiled based on discussions with Management and the following represents a summary of the reasons for the significant variances:

 

  (i) Total A/R Collections were approximately $45.2 million resulting in a negative variance of approximately $5.4 million. This variance is primarily due to the timing of collections from BCFPI’s customers.

Pursuant to BCFPI’s normal practice and the Cash Management System, sales which are made to customers domiciled in the United States are made through an affiliate, Bowater America Inc. (“BAI”). BAI, which is a subsidiary of BI, collects the accounts receivable from third party customers and then remits these funds via an Intercompany A/R Settlement to BCFPI. BCFPI continues to reconcile its intercompany trade receivables on a regular basis.

In addition to the above, BI collects substantially all accounts receivable related to BCFPI’s sale of pulp. Such amounts are reconciled and transferred from BI to BCFPI on a monthly basis. Transfers of pulp receipts through the end of December have been paid to BCFPI during the Reporting Period.

 

  (ii) On a net basis, Advances from Bowater Inc. totalled a repayment of $6.0 million during the Reporting Period. Repayments of $19.0 million were forecast in the BCFPI Forecast. The variance above is due to lower than forecast collection and a timing difference with respect to reimbursement for amounts disbursed on behalf of Bowater Mersey Paper Company Ltd. (“Mersey”), a joint venture partially owned by BI.

 

- 17 -

  (iii) Amounts received related to Other Inflows were approximately $16.7 million during the Reporting Period. Such receipts primarily represent amounts related to the receipt of road tax credits from the Quebec provincial government and mill level deposits.

Disbursements

 

44. Details regarding BCFPI’s disbursements related to Net Trade Disbursements are summarized in the following table:

 

           US$000        
     Para.     Actual     Forecast     Variance     Variance %  

Trade Payables

    45 (i)    $ (28,940 )    $ (27,018 )    $ (1,922 )    (7 %) 

Intercompany A/P Settlements - Receipts

    45 (i)      5,423        —          5,423      N/A   

Intercompany A/P Settlements - Disbursements

    45 (ii)      (3,546 )      —          (3,546 )    N/A   

Capital Expenditures

    45 (iii)      —          (1,808 )      1,808      100 % 

Payments on Behalf of Affiliates

    45 (iv)      (10,524 )      —          (10,524 )    N/A   
                                

Net Trade Disbursements

      $ (37,587 )    $ (28,826 )    $ (8,761 )    (30 %) 
                                

 

45. The variance analysis with respect to BCFPI’s disbursements has been compiled based on discussions with Management and the following represents a summary of the reasons provided for these variances:

 

  (i) Disbursements related to Trade Payables were approximately $1.9 million greater than projected during the Reporting Period. This variance is due to the following:

 

  (a) The BCFPI Forecast did not contemplate any activity related to the restart of the newsprint machine at BCFPI’s Thunder Bay facility. In order to prepare for the restart of this machine, it was necessary to purchase inventory and supplies in advance of this restart. This restart contributed approximately $3.0 million to the negative variance noted above.

 

- 18 -

Receipts related to Intercompany A/P Settlements - Receipts were approximately $5.4 million during the Reporting Period. Such amounts represent reimbursement for amounts disbursed on behalf of Mersey, which is a joint venture partially owned by BI.

 

  (ii) Intercompany A/P Settlements - Disbursements represent BCFPI reimbursing related entities for payments made on its behalf. During the Reporting Period, such payments totalled approximately $3.5 million and are primarily reimbursements to the ACI Group for freight costs. The majority of such freight costs were incurred in November and December, 2009.

 

  (iii) Capital Expenditures are not tracked on a weekly basis. As such, disbursements for this line item have been included in Trade Payables. The Monitor has been advised that capital expenditures for December, 2009 were approximately $0.7 million.

 

  (iv) Payments on Behalf of Affiliates were $10.5 million during the Reporting Period. These payments primarily represent disbursements made by BCFPI on behalf of Mersey. Due to the integrated nature of the operations of the Petitioners and the Cash Management System, such payments occur on a regular basis. BCFPI does not typically forecast such payments, nor does it typically forecast the repayment of these items.

 

46. Actual receipts and disbursements related to intercompany accounts receivable transactions are summarized in the table below:

 

           US$000      
     Para.     Actual     Forecast    Variance     Variance %

A/R Collections - Affiliates

    46 (i)    $ 4,376      $ —      $ 4,376      N/A

Intercompany A/R Settlements

    46 (ii)      (2,837 )      —        (2,837 )    N/A
                             
     $ 1,539      $ —      $ 1,539      N/A
                             

 

- 19 -

  (i) Receipts related to A/R Collections – Affiliates totalled approximately $4.4 million during the Reporting Period. Such amounts are regularly collected by BCFPI as part of the operation of the Cash Management System.

 

  (ii) Payments for Intercompany A/R Settlements totalled approximately $2.8 million during the Reporting Period. Intercompany A/R Settlements represent payments made by BCFPI to reimburse related entities for accounts receivable incorrectly paid to BCFPI by ABH-affiliated customers.

 

47. Disbursements for “Other” items are as follows and are summarized in the table below:

 

           US$000       
     Para.     Actual     Forecast     Variance    Variance %  

Freight

    47 (i)    $ (3,506 )    $ (4,036 )    $ 530    13 % 

Intercompany SG&A Allocation

    47 (ii)      —          (400 )      400    100 % 

Payroll and Benefits

    47 (iii)      (10,169 )    $ (12,076 )      1,907    16 % 
                               
     $ (13,675 )    $ (16,512 )    $ 2,837    17 % 
                               

 

  (i) Disbursements for Freight totalled approximately $3.5 million during the Reporting Period. This compares to an amount of approximately $4.0 million in the BCFPI Forecast.

 

  (ii) Amounts related to the Intercompany SG&A Allocation were not settled during the Reporting Period. Such amounts are now forecast to be paid in February, 2010.

 

  (iii) During the Reporting Period, payments in respect of Payroll and Benefits totalled approximately $10.2 million. The BCFPI Forecast projected disbursements in the amount of $12.1 million. The reason for this variance is primarily due to a timing difference with respect to certain benefit and payroll withholding payments.

 

- 20 -

Financing

 

48. Details regarding financing are summarized in the following table:

 

Financing

    Para.    US$000     Variance %  
      Actual     Forecast     Variance    

Interest

    49    $ (1,287 )    $ (2,080 )    $ 793      38 % 

Restructuring Costs

    50      (547 )      (1,172 )      625      53 % 

Foreign Exchange Translation

    51      (1,585 )      —          (1,585 )    N/A   
                                 

Cash Flow from Financing/Restructuring

       $ (3,419 )    $ (3,252 )    $ (167 )    (5 %) 
                                 

 

49. Disbursements related to Interest, which were forecast to be approximately $2.1 million, were approximately $1.3 million. This variance is primarily due to the timing of receipt of certain invoices for interest, as such amounts are not paid until the interest invoice is received.

 

50. Restructuring Costs were approximately $0.5 million compared to a forecast amount of approximately $1.2 million. This variance is primarily due to the timing of receipts from various professional service firms.

 

51. Amounts on the Foreign Exchange Translation line represent the difference between the actual exchange rate at the time of conversion between Canadian and U.S. dollars as compared to the forecast rate of CDN$1.00=US$0.90.

CURRENT LIQUIDITY POSITION AND THE 13-WEEK CASH FLOW FORECASTS

 

52. Attached as Appendices “G” and “H”, respectively, are the updated 13-week cash flow forecasts of the ACI Group (including DCorp) and BCFPI through May 2, 2010.

 

53. As at January 31, 2010, the ACI Group had cash on hand of approximately $247.8 million. In addition to this amount, the ACI Group also has available the ULC DIP Facility Available Upon Notice ($45 million) and the ULC DIP Facility Available Upon Court Approval (a further $45 million) available as liquidity. The ACI Group also held $11.3 million representing the Recycling Proceeds.

 

- 21 -

54. The ACI Group’s actual liquidity to January 31, 2010 and forecast total Immediately Available Liquidity for the 13 weeks ending May 2, 2010 is set forth in Appendix “G” and is summarized in the graph below.

LOGO

 

55. The ACI Group’s Immediately Available Liquidity at May 2, 2010, which is the end of the 13-week period in the forecast in Appendix “G”, is projected to be approximately $216.1 million.

 

56. The projected Immediately Available Liquidity in the graph above excludes certain items including the ULC DIP Facility Available Upon Court Approval ($45 million), approximately $20.5 million forecast to be received from the sale of DCorp’s Lufkin facility (the “Lufkin Proceeds”) and the Recycling Proceeds ($11.3 million). Thus, the ACI Group’s Total Available Liquidity at May 2, 2010 is projected to be approximately $292.9 million.

 

57. Actual results since the date of the issuance of the Initial Order and BCFPI’s forecast liquidity for the 13 weeks ended May 2, 2010, which includes the projected advance of intercompany funding from BI in the amount of $10.0 million, is set forth in Appendix “H” and is summarized in the graph below. The estimate of liquidity in the following graph assumes that a minimum cash balance of $10.0 million will be maintained and funds will be transferred from BI, as necessary, on that basis.

 

- 22 -

LOGO

 

58. On August 26, 2009 and September 1, 2009, this Honourable Court and the U.S. Bankruptcy Court, respectively, approved certain agreements between the ACI Group, BCFPI and Smurfit-Stone Container Canada Inc. (“Smurfit”) relating to the sale of certain timberlands by Smurfit, which will result in BCFPI receiving net proceeds in the amount of approximately $25.9 million (the “Smurfit Timberland Proceeds”). The Smurfit Timberland Proceeds were paid to the Monitor’s trust account in the week ended October 25, 2009 and are to be held in trust by the Monitor pending further order of this Honourable Court. For purposes of the forecast, the proceeds are reflected as being held in trust by the Monitor and are not used for operating purposes due to the uncertainty regarding the timing of the release of these funds.

 

59. BCFPI’s liquidity as at May 2, 2010 is projected to be approximately $10.1 million, not including the Smurfit Timberland Proceeds.

 

- 23 -

60. Management has informed the Monitor that BCFPI’s forecast cash requirements will be supported by BI through intercompany advances, if necessary.

KEY PERFORMANCE INDICATORS

 

61. As first reported in the Seventh Report, the Petitioners track certain key performance indicators in the course of managing their business. Appendix “I” contains certain key performance indicators which have been updated through December 31, 2009, the most current data available as at the date of this Thirty-Third Report.

All of which is respectfully submitted.

ERNST & YOUNG INC.

in its capacity as the Court-Appointed Monitor

of the Petitioners

Per:

Alex Morrison, CA, CIRP

Senior Vice President

John Barrett, CA, CIRP

Vice President

Todd Ambachtsheer, CA, CIRP

Vice President

 

- 24 -

APPENDIX “A”

ABITIBI PETITIONERS

 

1. Abitibi-Consolidated Company of Canada

 

2. Abitibi-Consolidated Inc.

 

3. 3224112 Nova Scotia Limited

 

4. Marketing Donohue Inc.

 

5. Abitibi-Consolidated Canadian Office Products Holding Inc.

 

6. 3834328 Canada Inc.

 

7. 6169678 Canada Inc.

 

8. 4042140 Canada Inc.

 

9. Donohue Recycling Inc.

 

10. 1508756 Ontario Inc.

 

11. 3217925 Nova Scotia Company

 

12. La Tuque Forest Products Inc.

 

13. Abitibi-Consolidated Nova Scotia Incorporated

 

14. Saguenay Forest Products Inc.

 

15. Terra Nova Explorations Ltd.

 

16. The Jonquière Pulp Company

 

17. The International Bridge and Terminal Company

 

18. Scramble Mining Ltd.

 

19. 9150-3383 Québec Inc.

 

20. Abitibi-Consolidated (U.K.) Inc.

 

- 25 -

APPENDIX “B”

BOWATER PETITIONERS

 

1. Bowater Canada Finance Corporation

 

2. Bowater Canadian Limited

 

3. Bowater Canadian Holdings. Inc.

 

4. 3231378 Nova Scotia Company

 

5. AbitibiBowater Canada Inc.

 

6. Bowater Canada Treasury Corporation

 

7. Bowater Canadian Forest Products Inc.

 

8. Bowater Shelburne Corporation

 

9. Bowater LaHave Corporation

 

10. St-Maurice River Drive Company Limited

 

11. Bowater Treated Wood Inc.

 

12. Canexel Hardboard Inc.

 

13. 9068-9050 Québec Inc.

 

14. Alliance Forest Products Inc. (2001)

 

15. Bowater Belledune Sawmill Inc.

 

16. Bowater Maritimes Inc.

 

17. Bowater Mitis Inc.

 

18. Bowater Guérette Inc.

 

19. Bowater Couturier Inc.

 

- 26 -

APPENDIX “C”

18.6 PETITIONERS

 

1. AbitibiBowater US Holding 1 Corp.

 

2. AbitibiBowater Inc.

 

3. Bowater Ventures Inc.

 

4. Bowater Incorporated

 

5. Bowater Nuway Inc.

 

6. Bowater Nuway Mid-States Inc.

 

7. Catawba Property Holdings LLC

 

8. Bowater Finance Company Inc.

 

9. Bowater South American Holdings Incorporated

 

10. Bowater America Inc.

 

11. Lake Superior Forest Products Inc.

 

12. Bowater Newsprint South LLC

 

13. Bowater Newsprint South Operations LLC

 

14. Bowater Finance II, LLC

 

15. Bowater Alabama LLC

 

16. Coosa Pines Golf Club Holdings, LLC

 

- 27 -

APPENDIX “D”

PARTNERSHIPS

 

1. Bowater Canada Finance Limited Partnership

 

2. Bowater Pulp and Paper Canada Holdings Limited Partnership

 

3. Abitibi-Consolidated Finance LP

 

- 28 -

APPENDIX “E”

ACI GROUP ACTUAL RECEIPTS AND DISBURSEMENTS

 

- 29 -

Abitibi-Consolidated Inc. and its Subsidiaries (the “ACI Group”)

Actual to Forecast Comparison

4 Weeks Ended January 31, 2010

US$000

 

     Actual  

Week Ended

    10-Jan-10     17-Jan-10     24-Jan-10     31-Jan-10     Total  

Opening Cash

    251,795      261,871      232,435      260,517      251,795   

Receipts

           

A/R Collections

    35,132      34,138      56,973      37,056      163,299   

Intercompany A/R Settlement

    8,003      4,241      974      3,552      16,770   

Joint Venture Remittances, Net

    —        (16,942 )    —        (3,215 )    (20,157 ) 

Collections on Behalf of Joint Ventures

    1,804      1,320      3,856      285      7,265   
                              

Net A/R Collections

    44,939      22,757      61,803      37,678      167,177   

Other Inflows

    2,623      2,516      17,602      7,924      30,665   
                              

Total Receipts

    47,562      25,273      79,405      45,602      197,842   

Disbursements

           

Trade Payables

    (22,482 )    (28,770 )    (30,787 )    (29,964 )    (112,003 ) 

Intercompany A/P Settlement - Receipts

    8,143      753      315      4,146      13,357   

Intercompany A/P Settlements - Disbursements

    (384 )    —        —        —        (384 ) 

Capital Expenditures

    —        —        —        —        —     
                              

Net A/P Variance

    (14,723 )    (28,017 )    (30,472 )    (25,818 )    (99,030 ) 

A/R Collections - Affiliates

    3,742      2,922      6,353      7,745      20,762   

Intercompany A/R Settlements

    (6,304 )    (4,985 )    (1,343 )    (5,770 )    (18,402 ) 
                              
   (2,562 )    (2,063 )    5,010      1,975      2,360   

Marine Freight Payments

    (1,350 )    (2,375 )    (1,783 )    (823 )    (6,331 ) 

Utility Payments

    (907 )    (11,471 )    (9,657 )    (4,902 )    (26,937 ) 

Payroll & Benefits

    (8,156 )    (10,544 )    (9,246 )    (15,472 )    (43,418 ) 
                              

Net Other Disbursements

    (10,413 )    (24,390 )    (20,686 )    (21,197 )    (76,686 ) 

Total Disbursements

    (27,698 )    (54,470 )    (46,148 )    (45,040 )    (173,356 ) 

Financing

           

Securitization Inflows / (Outflows)

    (9,098 )    2,748      (3,629 )    (6,778 )    (16,757 ) 

Adequate Protection by DCorp to ACCC Term Lenders

    —        —        —        (3,074 )    (3,074 ) 

Bridgewater Funding

    1,460      —        —        —        1,460   

Restructuring & Other Items

    (1,017 )    (807 )    (374 )    (1,333 )    (3,531 ) 

Foreign Exchange Translation

    (1,133 )    (2,180 )    (1,172 )    (2,120 )    (6,605 ) 
                              
   (9,788 )    (239 )    (5,175 )    (13,305 )    (28,507 ) 

Cash Flow From Operations

    10,076      (29,436 )    28,082      (12,743 )    (4,021 ) 

Opening Cash Balance

    251,795      261,871      232,435      260,517      251,795   

Cash Flow From Operations

    10,076      (29,436 )    28,082      (12,743 )    (4,021 ) 
                              

Ending Cash Balance

    261,871      232,435      260,517      247,774      247,774   
                              

Note: The above totals are subject to rounding adjustments

 

- 30 -

Abitibi-Consolidated Inc. and its Subsidiaries (the “ACI Group”)

Actual to Forecast Comparison

4 Weeks Ended January 31, 2010

US$000

 

     Forecast  

Week Ended

    10-Jan-10     17-Jan-10     24-Jan-10     31-Jan-10     Total  

Opening Cash

    251,795      266,492      233,538      234,129      251,795   

Receipts

           

A/R Collections

    45,683      36,332      37,862      35,447      155,324   

Intercompany A/R Settlement

    —        —        —        —        —     

Joint Venture Remittances, Net

    —        (18,369 )    —        (2,934 )    (21,303 ) 

Collections on Behalf of Joint Ventures

    4,370      4,370      4,370      4,370      17,480   
                              

Net A/R Collections

    50,053      22,333      42,232      36,883      151,501   

Other Inflows

    7,194      2,750      6,680      8,887      25,511   
                              

Total Receipts

    57,247      25,083      48,912      45,770      177,012   

Disbursements

           

Trade Payables

    (21,005 )    (28,205 )    (28,205 )    (30,095 )    (107,510 ) 

Intercompany A/P Settlement - Receipts

    —        —        —        —        —     

Intercompany A/P Settlements - Disbursements

    —        —        —        —        —     

Capital Expenditures

    (737 )    (737 )    (737 )    (737 )    (2,948 ) 
                              

Net A/P Variance

    (21,742 )    (28,942 )    (28,942 )    (30,832 )    (110,458 ) 

A/R Collections - Affiliates

    —        —        —        —        —     

Intercompany A/R Settlements

    —        —        —        —        —     
                              
   —        —        —        —        —     

Marine Freight Payments

    (1,500 )    (1,500 )    (1,500 )    (1,500 )    (6,000 ) 

Utility Payments

    (3,870 )    (7,870 )    (7,870 )    (7,870 )    (27,480 ) 

Payroll & Benefits

    (6,932 )    (11,609 )    (6,932 )    (18,343 )    (43,816 ) 
                              

Net Other Disbursements

    (12,302 )    (20,979 )    (16,302 )    (27,713 )    (77,296 ) 

Total Disbursements

    (34,044 )    (49,921 )    (45,244 )    (58,545 )    (187,754 ) 

Financing

           

Securitization Inflows / (Outflows)

    (7,506 )    (7,116 )    (2,077 )    847      (15,852 ) 

Adequate Protection by DCorp to ACCC Term Lenders

    —        —        —        (3,287 )    (3,287 ) 

Bridgewater Funding

    —        —        —        —        —     

Restructuring & Other Items

    (1,000 )    (1,000 )    (1,000 )    (1,250 )    (4,250 ) 

Foreign Exchange Translation

    —        —        —        —        —     
                              
   (8,506 )    (8,116 )    (3,077 )    (3,690 )    (23,389 ) 

Cash Flow From Operations

    14,697      (32,954 )    591      (16,465 )    (34,131 ) 

Opening Cash Balance

    251,795      266,492      233,538      234,129      251,795   

Cash Flow From Operations

    14,697      (32,954 )    591      (16,465 )    (34,131 ) 
                              

Ending Cash Balance

    266,492      233,538      234,129      217,664      217,664   
                              

Note: The above totals are subject to rounding adjustments

 

- 31 -

Abitibi-Consolidated Inc. and its Subsidiaries (the “ACI Group”)

Actual to Forecast Comparison

4 Weeks Ended January 31, 2010

US$000

 

     Variance  

Week Ended

    10-Jan-10     17-Jan-10     24-Jan-10     31-Jan-10     Total  

Opening Cash

    —        (4,621 )    (1,103 )    26,388      —     

Receipts

           

A/R Collections

    (10,551 )    (2,194 )    19,111      1,609      7,975   

Intercompany A/R Settlement

    8,003      4,241      974      3,552      16,770   

Joint Venture Remittances, Net

    —        1,427      —        (281 )    1,146   

Collections on Behalf of Joint Ventures

    (2,566 )    (3,050 )    (514 )    (4,085 )    (10,215 ) 
                              

Net A/R Collections

    (5,114 )    424      19,571      795      15,676   

Other Inflows

    (4,571 )    (234 )    10,922      (963 )    5,154   
                              

Total Receipts

    (9,685 )    190      30,493      (168 )    20,830   

Disbursements

           

Trade Payables

    (1,477 )    (565 )    (2,582 )    131      (4,493 ) 

Intercompany A/P Settlement - Receipts

    8,143      753      315      4,146      13,357   

Intercompany A/P Settlements - Disbursements

    (384 )    —        —        —        (384 ) 

Capital Expenditures

    737      737      737      737      2,948   
                              

Net A/P Variance

    7,019      925      (1,530 )    5,014      11,428   

A/R Collections - Affiliates

    3,742      2,922      6,353      7,745      20,762   

Intercompany A/R Settlements

    (6,304 )    (4,985 )    (1,343 )    (5,770 )    (18,402 ) 
                              
   (2,562 )    (2,063 )    5,010      1,975      2,360   

Marine Freight Payments

    150      (875 )    (283 )    677      (331 ) 

Utility Payments

    2,963      (3,601 )    (1,787 )    2,968      543   

Payroll & Benefits

    (1,224 )    1,065      (2,314 )    2,871      398   
                              

Net Other Disbursements

    1,889      (3,411 )    (4,384 )    6,516      610   

Total Disbursements

    6,346      (4,549 )    (904 )    13,505      14,398   

Financing

           

Securitization Inflows / (Outflows)

    (1,592 )    9,864      (1,552 )    (7,625 )    (905 ) 

Adequate Protection by DCorp to ACCC Term Lenders

    —        —        —        213      213   

Bridgewater Funding

    1,460      —        —        —        1,460   

Restructuring & Other Items

    (17 )    193      626      (83 )    719   

Foreign Exchange Translation

    (1,133 )    (2,180 )    (1,172 )    (2,120 )    (6,605 ) 
                              
   (1,282 )    7,877      (2,098 )    (9,615 )    (5,118 ) 

Cash Flow From Operations

    (4,621 )    3,518      27,491      3,722      30,110   

Opening Cash Balance

    —        (4,621 )    (1,103 )    26,388      —     

Cash Flow From Operations

    (4,621 )    3,518      27,491      3,722      30,110   
                              

Ending Cash Balance

    (4,621 )    (1,103 )    26,388      30,110      30,110   
                              

Note: The above totals are subject to rounding adjustments

 

- 32 -

APPENDIX “F”

BCFPI ACTUAL RECEIPTS AND DISBURSEMENTS

 

- 33 -

Bowater Canadian Forest Products Inc. (“BCFPI”)

Actual to Forecast Comparison

4 Weeks Ended January 31, 2010

US$000

 

     Actual  

Week Ended

    10-Jan-10     17-Jan-10     24-Jan-10     31-Jan-10     Total  

Opening Cash

    11,347      10,389      9,400      8,859      11,347   

Receipts

           

A/R Collections

    2,465      3,062      1,368      2,254      9,149   

Intercompany A/R Settlements

    4,836      21,428      3,000      6,749      36,013   
                              

Total A/R Collections

    7,301      24,490      4,368      9,003      45,162   

Advances from Bowater Inc.

    9,000      (22,000 )    10,000      (3,000 )    (6,000 ) 

Other Inflows

    810      1,337      567      13,994      16,708   
                              

Total Receipts

    17,111      3,827      14,935      19,997      55,870   

Disbursements

           

Trade Payables

    (6,531 )    (6,590 )    (8,436 )    (7,383 )    (28,940 ) 

Intercompany A/P Settlements - Receipts

    391      5,032      —        —        5,423   

Intercompany A/P Settlements - Disbursements

    (2,691 )    (47 )    (101 )    (707 )    (3,546 ) 

Capital Expenditures

    —        —        —        —        —     

Payments on Behalf of Affiliates

    (4,579 )    (585 )    (3,272 )    (2,088 )    (10,524 ) 
                              

Net A/P

    (13,410 )    (2,190 )    (11,809 )    (10,178 )    (37,587 ) 

A/R Collections - Affiliates

    1,033      1,224      580      1,539      4,376   

Intercompany A/R Settlements

    (797 )    (487 )    (184 )    (1,369 )    (2,837 ) 
                              
   236      737      396      170      1,539   

Intercompany SG&A Allocation

    —        —        —        —        —     

Freight

    (749 )    (1,021 )    (964 )    (772 )    (3,506 ) 

Payroll and Benefits

    (2,458 )    (1,982 )    (2,093 )    (3,636 )    (10,169 ) 
                              

Total Disbursements

    (16,381 )    (4,456 )    (14,470 )    (14,416 )    (49,723 ) 

Cash Flow From Operations

    730      (629 )    465      5,581      6,147   

Financing

           

Interest

    (888 )    —        (399 )    —        (1,287 ) 

Restructuring Costs

    (260 )    —        (170 )    (117 )    (547 ) 

Foreign Exchange Translation

    (540 )    (360 )    (437 )    (248 )    (1,585 ) 
                              

Cash Flow from Financing/Restructuring

    (1,688 )    (360 )    (1,006 )    (365 )    (3,419 ) 

Net Cash Flows

    (958 )    (989 )    (541 )    5,216      2,728   

Opening Cash Balance

    11,347      10,389      9,400      8,859      11,347   

Cash Flow From Operations

    (958 )    (989 )    (541 )    5,216      2,728   
                              

Ending Cash Balance

    10,389      9,400      8,859      14,075      14,075   
                              

Note: The above totals are subject to rounding adjustments

 

- 34 -

Bowater Canadian Forest Products Inc. (“BCFPI”)

Actual to Forecast Comparison

4 Weeks Ended January 31, 2010

US$000

 

     Forecast  

Week Ended

    10-Jan-10     17-Jan-10     24-Jan-10     31-Jan-10     Total  

Opening Cash

    11,347      10,047      10,028      10,626      11,347   

Receipts

           

A/R Collections

    6,509      15,912      14,904      13,221      50,546   

Intercompany A/R Settlements

    —        —        —        —        —     
                              

Total A/R Collections

    6,509      15,912      14,904      13,221      50,546   

Advances from Bowater Inc.

    4,000      (20,000 )    (3,000 )    —        (19,000 ) 

Other Inflows

    250      15,362      250      250      16,112   
                              

Total Receipts

    10,759      11,274      12,154      13,471      47,658   

Disbursements

           

Trade Payables

    (6,744 )    (6,786 )    (6,744 )    (6,744 )    (27,018 ) 

Intercompany A/P Settlements - Receipts

    —        —        —        —        —     

Intercompany A/P Settlements - Disbursements

    —        —        —        —        —     

Capital Expenditures

    (452 )    (452 )    (452 )    (452 )    (1,808 ) 

Payments on Behalf of Affiliates

    —        —        —        —        —     
                              

Net A/P

    (7,196 )    (7,238 )    (7,196 )    (7,196 )    (28,826 ) 

A/R Collections - Affiliates

    —        —        —        —        —     

Intercompany A/R Settlements

    —        —        —        —        —     
                              
   —        —        —        —        —     

Intercompany SG&A Allocation

    —        —        —        (400 )    (400 ) 

Freight

    (1,009 )    (1,009 )    (1,009 )    (1,009 )    (4,036 ) 

Payroll and Benefits

    (2,685 )    (2,753 )    (2,685 )    (3,953 )    (12,076 ) 
                              

Total Disbursements

    (10,890 )    (11,000 )    (10,890 )    (12,558 )    (45,338 ) 

Cash Flow From Operations

    (131 )    274      1,264      913      2,320   

Financing

           

Interest

    (876 )    —        (373 )    (831 )    (2,080 ) 

Restructuring Costs

    (293 )    (293 )    (293 )    (293 )    (1,172 ) 

Foreign Exchange Translation

    —        —        —        —        —     
                              

Cash Flow from Financing/Restructuring

    (1,169 )    (293 )    (666 )    (1,124 )    (3,252 ) 

Net Cash Flows

    (1,300 )    (19 )    598      (211 )    (932 ) 

Opening Cash Balance

    11,347      10,047      10,028      10,626      11,347   

Cash Flow From Operations

    (1,300 )    (19 )    598      (211 )    (932 ) 
                              

Ending Cash Balance

    10,047      10,028      10,626      10,415      10,415   
                              

Note: The above totals are subject to rounding adjustments

 

- 35 -

Bowater Canadian Forest Products Inc. (“BCFPI”)

Actual to Forecast Comparison

4 Weeks Ended January 31, 2010

US$000

 

    Variance  

Week Ended

   10-Jan-10     17-Jan-10     24-Jan-10     31-Jan-10     Total  

Opening Cash

   —        342      (628 )    (1,767 )    —     

Receipts

          

A/R Collections

   (4,044 )    (12,850 )    (13,536 )    (10,967 )    (41,397 ) 

Intercompany A/R Settlements

   4,836      21,428      3,000      6,749      36,013   
                             

Total A/R Collections

   792      8,578      (10,536 )    (4,218 )    (5,384 ) 

Advances from Bowater Inc.

   5,000      (2,000 )    13,000      (3,000 )    13,000   

Other Inflows

   560      (14,025 )    317      13,744      596   
                             

Total Receipts

   6,352      (7,447 )    2,781      6,526      8,212   

Disbursements

          

Trade Payables

   213      196      (1,692 )    (639 )    (1,922 ) 

Intercompany A/P Settlements - Receipts

   391      5,032      —        —        5,423   

Intercompany A/P Settlements - Disbursements

   (2,691 )    (47 )    (101 )    (707 )    (3,546 ) 

Capital Expenditures

   452      452      452      452      1,808   

Payments on Behalf of Affiliates

   (4,579 )    (585 )    (3,272 )    (2,088 )    (10,524 ) 
                             

Net A/P

   (6,214 )    5,048      (4,613 )    (2,982 )    (8,761 ) 

A/R Collections - Affiliates

   1,033      1,224      580      1,539      4,376   

Intercompany A/R Settlements

   (797 )    (487 )    (184 )    (1,369 )    (2,837 ) 
                             
  236      737      396      170      1,539   

Intercompany SG&A Allocation

   —        —        —        400      400   

Freight

   260      (12 )    45      237      530   

Payroll and Benefits

   227      771      592      317      1,907   
                             

Total Disbursements

   (5,491 )    6,544      (3,580 )    (1,858 )    (4,385 ) 

Cash Flow From Operations

   861      (903 )    (799 )    4,668      3,827   

Financing

          

Interest

   (12 )    —        (26 )    831      793   

Restructuring Costs

   33      293      123      176      625   

Foreign Exchange Translation

   (540 )    (360 )    (437 )    (248 )    (1,585 ) 
                             

Cash Flow from Financing/Restructuring

   (519 )    (67 )    (340 )    759      (167 ) 

Net Cash Flows

   342      (970 )    (1,139 )    5,427      3,660   

Opening Cash Balance

   —        342      (628 )    (1,767 )    —     

Cash Flow From Operations

   342      (970 )    (1,139 )    5,427      3,660   
                             

Ending Cash Balance

   342      (628 )    (1,767 )    3,660      3,660   
                             

Note: The above totals are subject to rounding adjustments

 

- 36 -

APPENDIX “G”

ACI GROUP CASH FLOW FORECAST

 

- 37 -

Abitibi Consolidated Inc. and its subsidiaries (the “ACI Group”)

Weekly Cash Flow Forecast

13 Weeks Ending May 2, 2010

US$000

 

Week ended

   Notes   7-Feb-10     14-Feb-10     21-Feb-10     28-Feb-10     7-Mar-10     14-Mar-10     21-Mar-10     28-Mar-10     4-Apr-10     11-Apr-10     18-Apr-10     25-Apr-10     2-May-10     Total  

Opening Cash

   1   247,774      252,300      236,005      214,286      197,143      203,992      207,437      189,911      191,038      197,168      199,257      179,070      174,323      247,774   

Receipts

                              

Total A/R Collections

   3   38,642      34,526      32,970      36,535      32,837      36,026      36,087      34,625      38,611      33,896      35,196      32,476      35,893      458,319   

Collections on Behalf of Joint Ventures

   4   4,980      4,980      4,980      4,980      3,978      3,978      3,978      3,978      4,391      4,700      4,700      4,700      4,620      58,940   

Other Inflows

   5   2,825      2,825      2,750      4,750      6,585      6,779      2,750      8,631      13,689      2,821      2,750      2,750      4,819      64,723   
                                                                                     

Total Receipts

     46,447      42,330      40,699      46,264      43,400      46,782      42,814      47,234      56,691      41,417      42,646      39,926      45,332      581,982   

Disbursements

                              

Trade Payables

   6   (27,239 )    (29,129 )    (27,239 )    (27,239 )    (23,215 )    (23,215 )    (23,215 )    (23,215 )    (24,510 )    (25,481 )    (25,481 )    (25,481 )    (24,392 )    (329,053 ) 

Capital Expenditures

   7   (813 )    (813 )    (813 )    (813 )    (736 )    (736 )    (736 )    (736 )    (810 )    (866 )    (866 )    (866 )    (858 )    (10,460 ) 

Marine Freight Payments

   8   (1,500 )    (1,500 )    (1,500 )    (1,500 )    (1,500 )    (1,500 )    (1,500 )    (1,500 )    (1,500 )    (1,500 )    (1,500 )    (1,500 )    (1,500 )    (19,500 ) 

Utility Payments

   9   —        (7,870 )    (7,870 )    (7,870 )    (3,870 )    (7,870 )    (7,870 )    (7,870 )    (5,584 )    (3,870 )    (7,870 )    (7,870 )    (6,727 )    (83,011 ) 

Payroll & Benefits

   10   (7,288 )    (11,305 )    (7,638 )    (18,388 )    (6,903 )    (11,099 )    (7,253 )    (9,903 )    (15,233 )    (6,993 )    (11,539 )    (6,993 )    (15,213 )    (135,748 ) 

Joint Venture Remittances, Net

   11   —        —        (18,157 )    (2,925 )    —        —        (19,858 )    (2,940 )    —        —        (17,545 )    (2,929 )    —        (64,355 ) 

Restructuring & Other Items

   12   (1,000 )    (1,000 )    (1,000 )    (1,250 )    (1,000 )    (1,000 )    (1,000 )    (1,000 )    (1,250 )    (1,000 )    (1,000 )    (1,000 )    (1,250 )    (13,750 ) 
                                                                                     

Total Disbursements

     (37,840 )    (51,616 )    (64,217 )    (59,985 )    (37,224 )    (45,420 )    (61,433 )    (47,164 )    (48,888 )    (39,710 )    (65,801 )    (46,639 )    (49,940 )    (655,876 ) 

Financing

                              

Securitization Inflows / (Outflows)

   13   (4,081 )    (7,009 )    1,799      (454 )    674      2,083      1,092      1,058      1,613      382      2,968      1,966      4,569      6,661   

Adequate Protection and Fees by DCorp to ACCC Term Lenders

   14   —        —        —        (2,969 )    —        —        —        —        (3,287 )    —        —        —        (3,181 )    (9,436 ) 
                                                                                     

Total Financing

     (4,081 )    (7,009 )    1,799      (3,423 )    674      2,083      1,092      1,058      (1,674 )    382      2,968      1,966      1,388      (2,776 ) 

Total Change in Cash

     4,526      (16,295 )    (21,719 )    (17,144 )    6,849      3,445      (17,526 )    1,128      6,130      2,089      (20,187 )    (4,747 )    (3,220 )    (76,670 ) 
                                                                                     

Ending Cash Balance

     252,300      236,005      214,286      197,143      203,992      207,437      189,911      191,038      197,168      199,257      179,070      174,323      171,104      171,104   
                                                                                     

Ending Cash Balance

     252,300      236,005      214,286      197,143      203,992      207,437      189,911      191,038      197,168      199,257      179,070      174,323      171,104      171,104   

ULC DIP Facility Available Upon Notice

   15   45,000      45,000      45,000      45,000      45,000      45,000      45,000      45,000      45,000      45,000      45,000      45,000      45,000      45,000   
                                                                                     

Immediately Available Liquidity

     297,300      281,005      259,286      242,143      248,992      252,437      234,911      236,038      242,168      244,257      224,070      219,323      216,104      216,104   

ULC DIP Facility Available Upon Court Approval

   15   45,000      45,000      45,000      45,000      45,000      45,000      45,000      45,000      45,000      45,000      45,000      45,000      45,000      45,000   

Lufkin Proceeds Held in Trust

   16   —        —        20,500      20,500      20,500      20,500      20,500      20,500      20,500      20,500      20,500      20,500      20,500      20,500   

Recycling Proceeds Held in Trust

   16   11,265      11,265      11,265      11,265      11,265      11,265      11,265      11,265      11,265      11,265      11,265      11,265      11,265      11,265   
                                                                                     

Total Available Liquidity

   15, 16   353,565      337,270      336,051      318,908      325,757      329,202      311,676      312,803      318,933      321,022      300,835      296,088      292,869      292,869   
                                                                                     

Securitization Schedule

   17                            

Allowable Receivable Pool Balance

     121,998      115,816      117,615      117,161      117,835      120,714      121,806      122,865      124,478      124,860      128,634      130,601      135,169      135,169   

Interest and Fees

   18   —        (827 )    —        —        —        (796 )    —        —        —        —        (807 )    —        —        (2,430 ) 

Amount Drawn Under Facility

     126,079      121,998      115,816      117,615      117,161      117,835      120,714      121,806      122,865      124,478      124,860      128,634      130,601      126,079   
                                                                                     

Availability / (Required Repayment)

     (4,081 )    (7,009 )    1,799      (454 )    674      2,083      1,092      1,058      1,613      382      2,968      1,966      4,569      6,661   

Restricted ULC Reserve Deposit

   19   47,070      47,070      47,070      47,070      47,070      47,070      47,070      47,070      47,070      47,070      47,070      47,070      47,070      47,070   

Lufkin Proceeds Held in Trust

   16   —        —        20,500      20,500      20,500      20,500      20,500      20,500      20,500      20,500      20,500      20,500      20,500      20,500   

Recycling Proceeds Held in Trust

   16   11,265      11,265      11,265      11,265      11,265      11,265      11,265      11,265      11,265      11,265      11,265      11,265      11,265      11,265   

The above forecast uses an exchange rate of CDN$1.00=US$0.90.

Note: The above totals are subject to rounding adjustments in the underlying balances.

The information and analysis in this document have not been audited or reviewed and, accordingly, no assurances are provided thereon. In addition, because forecasts are dependent upon numerous assumptions regarding future events, actual results will be different than forecast, and such differences may be material.

 

- 38 -

Abitibi Consolidated Inc. and its subsidiaries (the “ACI Group”)

Notes to Weekly Cash Flow Forecast

13 Weeks Ending May 2, 2010

US$000

 

1. Opening Cash in the forecast includes cash on hand.

 

2. The cash flow forecast includes mills owned by the ACI Group and its subsidiaries and includes the operations of the DCorp Group. This weekly cash flow forecast may differ from the ACI Monthly Forecast as the underlying assumptions are updated weekly and will vary with the ongoing operations of the ACI Group, whereas the ACI Monthly Forecast is based on longer-term assumptions used to forecast future monthly cash flow.

 

3. Total A/R Collections represent amounts estimated to be collected from the ACI Group’s customers. The timing of collections is based on the ACI Group’s collection terms with its customers and the latest sales forecast.

 

4. Collections on Behalf of Joint Ventures represent amounts estimated to be collected by the ACI Group on behalf of its joint venture partners. The ACI Group has agreements with its joint venture partners whereby the ACI Group collects the joint venture partners’ accounts receivable (for a fee) and remits these funds to the joint venture in accordance with their agreement.

 

5. Other Inflows represent miscellaneous receipts including, but not limited to, such items as tax refunds, insurance proceeds or collection/management fees received from Joint Ventures, as estimated by the ACI Group.

 

6. Trade Payables represent amounts estimated to be paid to suppliers for the purchase of the ACI Group’s raw materials, repairs and maintenance and other goods and services related to production. This line also includes amounts necessary to fund the DCorp Group’s recycling operations and a disbursement of $1.8 million in the week ending February 14, 2010 representing the settlement of intercompany SG&A incurred during Q2, 2009.

 

7. Capital Expenditures represent amounts estimated to be paid pursuant to the ACI Group’s most recent capital expenditure budget.

 

8. Marine Freight Payments represent amounts estimated to be paid to the ACI Group’s outbound marine freight suppliers.

 

9. Utility Payments represent amounts estimated to be payable to the ACI Group’s utility suppliers.

 

10. Payroll and Benefits represent estimated amounts for salaries, wages, benefits and current service pension costs.

 

11. Joint Venture Remittances, Net represent the estimated payment of accounts receivable funds collected by the ACI Group on behalf of the respective joint venture, net of any collection/management fees.

 

12. Restructuring and Other Items represent amounts estimated by the ACI Group for restructuring costs and other miscellaneous payments.

 

13. Securitization Inflows/(Outflows) represent the estimated net availability or repayment (including interest and/or fees) of funds under the ACI Group’s Amended Securitization Program.

 

14. Adequate Protection and fees by DCorp to ACCC Term Lenders represents an estimate of payments pursuant to the adequate protection order issued by the U.S. Bankruptcy Court.

 

15. Immediately Available Liquidity is calculated as cash on hand plus the portion of the ULC DIP Facility that is available upon notice ($45 million). Total Available Liquidity includes an additional $45 million of the ULC Reserve, which availability is subject to Court approval, as well as the Lufkin Proceeds Held in Trust and Recycling Proceeds Held in Trust, available upon 10 days notice to the agent for the ACCC Term Lenders.

 

16. The estimated net proceeds from the sale of the Lufkin mill and the sale of recycling assets are approximately $20.5 million and $11.3 million, respectively. These proceeds will be held in escrow or a designated account and are only available upon 10 days’ notice to the agent for the ACCC Term Lenders.

 

17. The Securitization Summary represents the ACI Group’s estimated calculation of amounts owing or available under the Amended Securitization Program based on the eligible accounts receivable (net of any fees, interest or allowances).

 

18. The Interest and Fees represent interest and fees related to the Amended Securitization Program.

 

19. Of the $254.1 million paid to the ULC Reserve, the Company drew $117 million as of the date of closing of the MPCo sale and has $45 million immediately available for liquidity purposes, with an additional $45 million availability subject to Court approval. The remaining $47.1 million of the ULC Reserve will be held in cash, but will not be made available to the Company.

APPENDIX “H”

BCFPI CASH FLOW FORECAST

 

- 40 -

Bowater Canadian Forest Products Inc.

Chapter 11/CCAA Cash Flow

13 Week Period Ending May 2, 2010

US$000s

 

Week Ended

         7-Feb-10     14-Feb-10     21-Feb-10     28-Feb-10     7-Mar-10     14-Mar-10     21-Mar-10     28-Mar-10     4-Apr-10     11-Apr-10     18-Apr-10     25-Apr-10     2-May-10     Total  

Receipts

    Notes                             

Trade Receipts

    1, 2    9,404      14,997      8,252      12,045      8,988      20,161      9,246      9,071      10,827      18,287      8,033      7,095      10,075      146,481   

Intercompany A/P Settlements

    3    —        6,000      —        —        —        —        —        —        —        —        —        —        —        6,000   

Advances/(Repayments) from Bowater Inc.

    4    3,000      (16,000 )    6,000      2,000      4,000      (11,000 )    4,000      2,000      5,000      (8,000 )    7,000      5,000      7,000      10,000   

Other Receipts

    5    350      5,012      350      350      350      1,600      350      350      350      1,600      350      350      350      11,712   
                                                                                       

Total Receipts

       12,754      10,008      14,602      14,395      13,338      10,761      13,596      11,421      16,177      11,887      15,383      12,445      17,425      174,193   

Disbursements

                                

Trade Payables

    6    (8,224 )    (8,224 )    (8,224 )    (8,224 )    (7,547 )    (7,547 )    (7,547 )    (7,547 )    (8,238 )    (8,994 )    (8,994 )    (8,994 )    (8,554 )    (106,855 ) 

Intercompany SG&A Allocation

    7    —        (400 )    —        —        —        —        —        —        —        —        —        —        —        (400 ) 

Freight

    8    (1,158 )    (1,158 )    (1,158 )    (1,158 )    (1,073 )    (1,073 )    (1,073 )    (1,073 )    (1,226 )    (1,340 )    (1,340 )    (1,340 )    (1,250 )    (15,422 ) 

Payroll and Benefits

    9    (3,884 )    (1,356 )    (4,041 )    (3,760 )    (3,565 )    (1,336 )    (4,104 )    (1,307 )    (5,447 )    (1,325 )    (4,121 )    (1,133 )    (6,051 )    (41,428 ) 

Capital Expenditures

    10    (500 )    (500 )    (500 )    (500 )    (452 )    (452 )    (452 )    (452 )    (460 )    (467 )    (467 )    (467 )    (462 )    (6,129 ) 
                                                                                       

Total Disbursements

       (13,766 )    (11,638 )    (13,923 )    (13,642 )    (12,636 )    (10,407 )    (13,175 )    (10,378 )    (15,371 )    (12,125 )    (14,921 )    (11,933 )    (16,317 )    (170,235 ) 

Net Cash Flow From Operations

       (1,012 )    (1,630 )    679      753      702      354      421      1,042      806      (238 )    461      512      1,108      3,958   

Financing and Restructuring

                                

Interest

    11    (703 )    —        —        (1,126 )    —        —        —        (338 )    (831 )    —        —        (374 )    (810 )    (4,181 ) 

Restructuring Costs

    12    (293 )    (293 )    (293 )    (293 )    (293 )    (293 )    (293 )    (293 )    (293 )    (293 )    (293 )    (293 )    (293 )    (3,803 ) 
                                                                                       

Cash Flow From Financing/Restructuring

       (996 )    (293 )    (293 )    (1,419 )    (293 )    (293 )    (293 )    (630 )    (1,124 )    (293 )    (293 )    (666 )    (1,103 )    (7,984 ) 

Net Cash Flow

       (2,007 )    (1,922 )    386      (666 )    409      61      128      412      (317 )    (531 )    169      (154 )    5      (4,026 ) 
                                                                                       

Opening Bank Balance

       14,077      12,070      10,148      10,534      9,869      10,278      10,339      10,468      10,880      10,562      10,032      10,200      10,046      14,077   

Cash Flow

       (2,007 )    (1,922 )    386      (666 )    409      61      128      412      (317 )    (531 )    169      (154 )    5      (4,026 ) 
                                                                                       

Closing Bank Balance

    2    12,070      10,148      10,534      9,869      10,278      10,339      10,468      10,880      10,562      10,032      10,200      10,046      10,051      10,051   
                                                                                       

Settlement Proceeds Held in Trust by Monitor

    13    25,868      25,868      25,868      25,868      25,868      25,868      25,868      25,868      25,868      25,868      25,868      25,868      25,868      25,868   
                                                                                       

Closing Bank Balance Including Settlement Proceeds

       37,938      36,016      36,402      35,737      36,146      36,207      36,336      36,748      36,430      35,900      36,068      35,914      35,919      35,919   
                                                                                       

Current Revolving Credit Facility

                                

Current Credit Facility Balance, Opening

       94,576      94,576      94,576      94,576      94,576      94,576      94,576      94,576      94,576      94,576      94,576      94,576      94,576      94,576   
                                                                                       

Current Balance, Closing

       94,576      94,576      94,576      94,576      94,576      94,576      94,576      94,576      94,576      94,576      94,576      94,576      94,576      94,576   

Intercompany A/R Balance

    14                             

Ending Balance

       37,495      41,908      44,884      43,403      44,385      44,588      45,164      45,725      41,507      43,130      44,924      47,428      46,155      46,155   

Cumulative Advances from Bowater Inc.

                                

Opening Advance Balance

       23,000      26,000      10,000      16,000      18,000      22,000      11,000      15,000      17,000      22,000      14,000      21,000      26,000      23,000   

Advance / (Repayment)

    4    3,000      (16,000 )    6,000      2,000      4,000      (11,000 )    4,000      2,000      5,000      (8,000 )    7,000      5,000      7,000      10,000   
                                                                                       

Closing Advance Balance

       26,000      10,000      16,000      18,000      22,000      11,000      15,000      17,000      22,000      14,000      21,000      26,000      33,000      33,000   
                                                                                       

The above forecast uses an exchange rate of CDN$1.00=US$0.90

Amounts in the above table are subject to rounding adjustments from the underlying balances

The information and analysis in this document have not been audited or reviewed and, accordingly, no assurances are provided thereon. In addition, because forecasts are dependent upon numerous assumptions regarding future events, actual results will be different than forecast, and such difference may be material.

 

- 41 -

Bowater Canadian Forest Products Inc. (“BCFPI”)

Notes to CCAA Cash Flow

13 Week Period Ending May 2, 2010

US$000s

 

1. Trade Receipts are based on BCFPI’s estimate of collection terms and BCFPI’s latest sales forecast.

 

2. The cash flows included in the forecast include only those BCFPI mills in Canada. No funding or dividends from foreign subsidiaries are included in the forecast.

 

3. Intercompany A/P Settlements represents the reimbursement of funds disbursed on behalf of Bowater Mersey.

 

4. Advances/(Repayments) from Bowater Inc. represents amounts received pursuant to the BI/BCFPI DIP Facility to maintain sufficient liquidity.

 

5. Other Receipts include sundry mill level deposits and sales tax refunds.

 

6. Trade Payables represent payments for raw materials, repairs and maintenance, utilities and other production items.

 

7. Intercompany SG&A Allocation represents expenses incurred by BCFPI’s parent company on behalf of BCFPI which are charged to BCFPI in the week ended February 14, 2010, pursuant to its normal process for the allocation of such costs.

 

8. Freight represents disbursements in respect of costs to deliver product to customers.

 

9. Payroll and Benefits represent amounts paid to employees for salaries and wages (including the related withholdings), pension payments and other benefits due under employee benefit programs. The forecast assumes that only those pension payments in respect of current service costs will be paid.

 

10. Capital Expenditures are costs scheduled to be made in accordance with agreements with BCFPI’s various capital equipment suppliers and reflect requirements pursuant to BCFPI’s most recent capital expenditure budget.

 

11. Interest represents interest costs for the company’s senior secured revolving facility, the existing secured term loan and the BI/BCFPI DIP facility. Interest on Advances from Bowater Inc. are accrued at the 1 month LIBOR rate plus 2%.

 

12. Restructuring Costs represent costs related to the restructuring including transaction fees related to the new DIP facility.

 

13. Settlement Proceeds Held in Trust represent funds received by BCFPI pursuant to an agreement it had with Smurfit-Stone Container Canada Inc. The amount held in trust by the Monitor does not form part of the Closing Bank Balance.

 

14. The Intercompany A/R Balance represents pre-filing and post-filing sales to paper customers in the United States by BCFPI through Bowater America Inc. This amount is assumed not to be stayed and is collected by BCFPI from Bowater America Inc. in the normal course. This balance represents trade A/R only and does not represent any amounts funded from BI to BCFPI pursuant to the BI/BCFPI DIP Facility.

 

- 42 -

APPENDIX “I”

KEY PERFORMANCE INDICATORS

 

- 43 -

ACI Group

KPI Analysis

Newsprint, Specialty Paper & Pulp

 

Sales tonnage (MT)

    Jan-09    Feb-09    Mar-09    Apr-09    May-09    Jun-09    Jul-09    Aug-09

Newsprint

    95,561    109,805    115,877    96,250    99,548    107,024    98,331    86,853

Specialty Paper

    99,378    84,047    91,929    82,694    84,284    91,139    103,444    112,041

Pulp

    2,573    4,364    2,645    3,332    4,392    3,882    4,619    6,793
                                       
   197,512    198,215    210,450    182,276    188,223    202,044    206,393    205,687
                                       

Net sales (US$000)

    154,055    153,360    161,003    127,136    127,879    139,103    133,736    131,245

Net selling price per tonne (US$)

    780    774    765    697    679    688    648    638

Mill Uptime (%)

    70    78    76    78    78    76    77    82

Lumber

                        

Sales (mbf)

    58    60    68    61    62    64    62    69

Net sales (US$000)

    15,153    14,356    16,868    16,161    16,893    18,261    18,933    21,022

Sales per mbf (US$)

    260    241    249    265    271    285    306    304

 

- 44 -

ACI Group

KPI Analysis

Newsprint, Specialty Paper & Pulp

 

Sales tonnage (MT)

    Sep-09    Oct-09    Nov-09    Dec-09    Jan-10    Total

Newsprint

    123,303    134,539    134,309    142,165    121,084    1,464,648

Specialty Paper

    108,382    106,850    102,796    91,047    89,914    1,247,942

Pulp

    2,478    4,726    5,347    5,513    4,270    54,933
                             
   234,163    246,115    242,451    238,725    215,267    2,767,523
                             

Net sales (US$000)

    143,566    146,853    144,830    139,663    130,193    1,832,622

Net selling price per tonne (US$)

    613    597    597    585    605    662

Mill Uptime (%)

    76    78    78    75    72    77
Lumber                  

Sales (mbf)

    66    63    81    68    64    846

Net sales (US$000)

    19,739    18,932    22,071    18,907    19,048    236,343

Sales per mbf (US$)

    297    301    273    280    296    279

 

- 45 -

Bowater Canadian Forest Products Inc.

KPI Analysis

Newsprint, Specialty Paper & Pulp

 

Sales tonnage (MT)

    January    February    March    April    May    June    July    August

Newsprint

    40,281    16,277    37,216    35,685    37,851    32,488    39,356    33,141

Specialty Paper

    19,605    17,960    18,644    20,608    20,242    12,758    6,191    4,843

Pulp

    23,816    17,478    18,914    20,083    24,923    20,243    36,817    29,269
                                       
   83,703    51,715    74,774    76,376    83,016    65,489    82,364    67,253
                                       

Net sales (US$000)

    57,535    34,757    49,972    47,329    48,904    37,331    45,102    36,073

Net selling price per tonne (US$)

    687    672    668    620    589    570    548    536

Mill Uptime (%)

    83    80    84    84    84    85    83    83
Lumber                        

Sales (mbf)

    27    30    34    27    35    34    32    30

Net sales (US$000)

    5,514    6,049    7,095    5,694    7,621    7,997    8,020    7,372

Sales per mbf (US$)

    206    199    206    207    221    235    250    245

 

- 46 -

Bowater Canadian Forest Products Inc.

KPI Analysis

Newsprint, Specialty Paper & Pulp

 

Sales tonnage (MT)

    September    October    November    December    January    Total

Newsprint

    21,734    21,538    22,681    20,217    16,002    374,466

Specialty Paper

    6,588    5,603    5,702    4,986    5,348    149,077

Pulp

    25,279    26,584    24,075    32,379    23,094    322,954
                             
   53,601    53,724    52,458    57,582    44,444    846,497
                             

Net sales (US$000)

    29,188    30,076    30,592    34,018    26,416    507,293

Net selling price per tonne (US$)

    545    560    583    591    594    599

Mill Uptime (%)

    80    73    81    80    77    82
Lumber                  

Sales (mbf)

    34    38    41    32    33    428

Net sales (US$000)

    8,510    9,509    10,188    8,337    8,472    100,378

Sales per mbf (US$)

    250    250    249    257    259    234

 

- 47 -