AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 10, 2001
REGISTRATION NO. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
BOWATER CANADA FINANCE CORPORATION
(Exact name of registrant as specified in its charter)
Nova Scotia, Canada 2621 None
(State or other jurisdiction of (Primary Standard (I.R.S. employer
incorporation or organization) Industrial Classification identification no.)
Code Number)
BOWATER INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 2621 62-0721803
(State or other jurisdiction of (Primary Standard (I.R.S. employer
incorporation or organization) Industrial Classification identification no.)
Code Number)
55 EAST CAMPERDOWN WAY
POST OFFICE BOX 1028
GREENVILLE, S.C. 29602
(864) 271-7733
(Address, including ZIP Code, and
telephone number, including area code, of
registrant's principal executive offices)
ANTHONY H. BARASH, ESQ.
SENIOR VICE PRESIDENT--CORPORATE AFFAIRS,
GENERAL COUNSEL AND SECRETARY
BOWATER INCORPORATED
55 EAST CAMPERDOWN WAY
POST OFFICE BOX 1028
GREENVILLE, S.C. 29602
(864) 271-7733
(Name, address, including ZIP Code, and
telephone number, including area
code, of agent for service)
Copy To:
PETER GATES, ESQ.
CARTER LEDYARD & MILBURN
2 WALL STREET
NEW YORK, N.Y. 10005
(212) 732-3200
Approximate date of commencement of proposed sale to the public: as soon
as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------
Proposed maximum
Title of each offering
class of Amount to be price per Note Proposed maximum Amount of
securities to be registered (1) aggregate offering registration
registered price (1) fee
- -------------------------------------------------------------------------------------------
7.95% Notes due
2011 (2) $600,000,000 100% $600,000,000 $143,400
- -------------------------------------------------------------------------------------------
Guarantees of
7.95% Notes due
2011 (2) (3) (3) (3) (3)
- -------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f) under the Securities Act of 1933, as amended.
(2) The notes will be issued by Bowater Canada Finance Corporation and
unconditionally guaranteed by Bowater Incorporated.
(3) Pursuant to Rule 457(n) under the Securities Act, no separate fee is
payable with respect to the guarantees of the notes.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
PROSPECTUS
SUBJECT TO COMPLETION. DATED DECEMBER 10, 2001
BOWATER CANADA FINANCE CORPORATION
OFFER TO EXCHANGE
7.95% NOTES DUE 2011
UNCONDITIONALLY GUARANTEED BY
BOWATER INCORPORATED
--------------------
Terms of the Exchange Offer
o We are offering to exchange $600,000,000 total principal amount of our
new 7.95% Notes due 2011, which we refer to as the "exchange notes,"
for any and all of our outstanding 7.95% Notes due 2011, which we
refer to as the "original notes."
o The exchange offer expires at 5:00 p.m., New York City time, on
January , 2002, unless we extend it.
o We will exchange all original notes that are validly tendered and
not validly withdrawn.
o You may withdraw tenders of original notes at any time before the
exchange offer expires.
o We will not receive any proceeds from the exchange offer.
o The terms of the exchange notes are substantially identical to those
of the original notes, except for transfer restrictions, registration
rights and liquidated damages relating to the original notes.
o The exchange notes are evidence of the same indebtedness as the
original notes.
o The exchange of original notes for exchange notes will not be a
taxable event for U.S. federal or Canadian federal income tax
purposes.
There is no existing market for the exchange notes and we do not intend
to apply for their listing on any securities exchange.
----------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 12 TO READ ABOUT CERTAIN FACTORS
YOU SHOULD CONSIDER ABOUT US, BOWATER INCORPORATED AND THE EXCHANGE NOTES.
----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.
The date of this prospectus is December , 2001.
----------------------
TABLE OF CONTENTS
Page
----
Forward Looking Statements................................................1
Where You Can Find More Information about Bowater Incorporated............1
Summary...................................................................3
Risk Factors.............................................................12
Use of Proceeds..........................................................18
Capitalization...........................................................19
Selected Summary Financial Data..........................................21
Exchange Offer...........................................................25
Business and Properties..................................................37
Description of the Exchange Notes........................................41
United States Federal and Canadian Income Tax Considerations.............58
Plan of Distribution.....................................................64
Legal and Tax Matters....................................................65
Experts..................................................................65
================================================================================
FORWARD-LOOKING STATEMENTS
We and Bowater have made forward-looking statements within the meaning
of Sections 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended, in this prospectus and in the
documents incorporated by reference in this prospectus. These forward-looking
statements include, for example, statements about Bowater's business outlook,
assessment of market conditions, strategies, future plans, future sales, prices
of Bowater's major products, inventory levels, capital spending and tax rates.
These forward-looking statements are not guarantees of future performance. For
these statements, we and Bowater claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995. These statements are based on the expectations of Bowater's
management and involve a number of business risks and uncertainties, any of
which could cause actual results to differ materially from those expressed in or
implied by the forward-looking statements. For further discussion of these
risks, see "Risk Factors" beginning on page 12 of this prospectus. Other
risks besides those listed in "Risk Factors" also could adversely affect us or
Bowater. Neither we nor Bowater undertakes any obligation to publicly update or
revise any forward-looking statements.
You should consult any additional disclosures Bowater makes in its
periodic reports filed with the SEC. See "Where You Can Find More Information
About Bowater Incorporated."
WHERE YOU CAN FIND MORE INFORMATION
ABOUT BOWATER INCORPORATED
Bowater files annual, quarterly and current reports, proxy statements
and other information with the SEC. Its SEC filings are available over the
Internet at the SEC's website at http://www.sec.gov. You may also read and copy
any document Bowater files with the SEC at its public reference facilities:
Public Reference Room Office Northeast Regional Office Midwest Regional Office
450 Fifth Street, N.W. 233 Broadway Citicorp Center
Room 1024 New York, New York 10007 500 West Madison Street
Washington, D.C. 20549 Suite 1400
Chicago, Illinois 60661-251
You may also obtain copies of the documents at prescribed rates by
writing to the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549. Please call 1-800-SEC-0330 for further
information on the operations of the public reference facilities. Bowater's SEC
filings are also available at the office of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
1
WE "INCORPORATE BY REFERENCE" IN THIS PROSPECTUS CERTAIN INFORMATION
FILED BY BOWATER WITH THE SEC, WHICH MEANS THAT WE DISCLOSE IMPORTANT BUSINESS
AND FINANCIAL INFORMATION TO YOU BY REFERRING TO THOSE DOCUMENTS. THE
INFORMATION INCORPORATED BY REFERENCE IS AN IMPORTANT PART OF THIS PROSPECTUS,
AND INFORMATION THAT BOWATER SUBSEQUENTLY FILES WITH THE SEC WILL AUTOMATICALLY
UPDATE AND SUPERCEDE THE INFORMATION IN THIS PROSPECTUS AND IN BOWATER'S OTHER
FILINGS WITH THE SEC. We incorporate by reference the documents listed below,
which Bowater has already filed with the SEC, and any future filings Bowater
makes with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act until the offering of the notes contemplated by this prospectus is
terminated:
o Bowater's Annual Report on Form 10-K for the year ended December 31,
2000 (including Amendment No. 1 to that report);
o Bowater's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2001 (including Amendment No. 1 to that report), June 30,
2001 and September 30, 2001;
o Bowater's Current Reports on Form 8-K filed on April 4, 2001
(including Amendments No. 1 and No. 2 to that report), on October 9,
2001 (including Amendment No. 1 to that report) and on October 23,
2001; and
o The audited consolidated financial statements of Alliance Forest
Products Inc. (now known as "Bowater Canadian Forest Products Inc.")
on pages F-1 to F-32 of the prospectus included in Bowater's
registration statement on Form S-3 (Registration No. 333-62348).
THIS INFORMATION IS AVAILABLE WITHOUT CHARGE TO HOLDERS OF ORIGINAL
NOTES UPON WRITTEN OR ORAL REQUEST. YOU MAY REQUEST THIS INFORMATION BY WRITING
TO BOWATER INCORPORATED AT 55 EAST CAMPERDOWN WAY, GREENVILLE, SOUTH CAROLINA
29601 (ATTENTION: INVESTOR RELATIONS DEPARTMENT) OR BY CALLING (864) 271-7733.
TO OBTAIN TIMELY DELIVERY, HOLDERS MUST REQUEST THE INFORMATION NO LATER THAN
FIVE BUSINESS DAYS BEFORE THE EXPIRATION DATE OF THE EXCHANGE OFFER.
2
SUMMARY
You should read the following summary together with the more detailed
information included or incorporated by reference in this prospectus about us,
our parent company, Bowater Incorporated, and this offering. Unless the context
requires otherwise: (1) "Bowater" refers to our parent company, Bowater
Incorporated, and its subsidiaries; (2) "we," "us" and "our" each refers to
Bowater Canada Finance Corporation; and (3) the term "notes" refers to the
original notes and the exchange notes collectively.
BOWATER INCORPORATED
Bowater is a global leader in the manufacture, sale and distribution of
newsprint. Bowater also manufactures, sells and distributes uncoated groundwood
specialty paper, coated groundwood paper, market pulp and lumber. As a result of
Bowater's acquisition of Alliance Forest Products Inc., Bowater has 12 pulp and
paper mills in the United States, Canada and South Korea and 13 North American
sawmills that produce softwood and hardwood lumber. Bowater manages and controls
approximately 1.6 million acres of timberlands in the United States and Canada
and has 32 million acres of timber cutting rights in Canada to support these
facilities. Bowater has agreed to sell approximately 112,000 acres and leasehold
interests in approximately 5,000 acres of timberlands for aggregate
consideration of approximately $108 million.
The principal offices of Bowater are at 55 East Camperdown Way,
Greenville, South Carolina 29601, and its telephone number at that address is
(864) 271-7733.
ACQUISITION OF ALLIANCE FOREST PRODUCTS INC.
Bowater completed the acquisition of all of the outstanding capital
stock of Alliance on September 24, 2001. Following this acquisition, Bowater
changed Alliance's name to Bowater Canadian Forest Products Inc.
The aggregate purchase price to shareholders for the acquisition was
approximately $486 million, consisting of 5,035,863 shares of Bowater's common
stock (including Toronto Stock Exchange listed shares exchangeable on a
one-for-one basis for shares of Bowater's common stock) and $251 million in
cash. Bowater also repaid approximately $273 million of Alliance's outstanding
debt. Bowater financed the cash portion of the purchase price and the debt
repayment with $500 million of borrowings under a bridge credit agreement.
Bowater expects that the acquisition will increase earnings. Bowater
expects to achieve annual cost savings and operating synergies in connection
with the acquisition of approximately $60 million by the end of 2002. Through
this acquisition, Bowater has increased its annual newsprint, coated and
uncoated groundwood specialty papers capacity to approximately 4.6 million
metric tons, and Bowater has increased its annual lumber capacity to
approximately 1.0 billion board feet.
3
BOWATER CANADA FINANCE CORPORATION
We are an unlimited liability company organized under the laws of the
Province of Nova Scotia, Canada, and a wholly-owned subsidiary of Bowater.
Bowater formed us for the purpose of providing financing to Bowater in Canada.
We have no independent operations, our only material liabilities consist of the
original notes, and our only material assets consist of our ownership interests
in indirect wholly-owned subsidiaries of Bowater.
Our principal offices are c/o Bowater Incorporated at 55 East Camperdown
Way, Greenville, South Carolina 29601, and our telephone number at that address
is (864) 271-7733.
RECENT DEVELOPMENTS
In November 2001, Bowater completed the sale of four subsidiaries that
own or lease approximately 147,000 acres of timberland in North Carolina, South
Carolina, Georgia and Tennessee, for aggregate consideration of $121.6 million,
to two purchasers in separate transactions.
On January 1, 2002, Bowater anticipates amalgamating Alliance with its
wholly-owned indirect subsidiary, Bowater Pulp and Paper Canada Inc. The
resulting amalgamated company will be called "Bowater Canadian Forest Products
Inc."
4
SUMMARY OF EXCHANGE OFFER
The following summary is provided solely for your convenience. This
summary is not intended to be complete. You should read the full text and more
specific details contained in the "Exchange Offer" section of this prospectus.
The Exchange Offer................ We are offering to issue up to $600,000,000
aggregate principal amount of exchange
notes in exchange for a like principal
amount of original notes. This exchange
offer will satisfy our obligations under
the exchange and registration rights
agreement that we entered into when we
sold the original notes. We will issue the
exchange notes on or promptly after the
expiration date of the exchange offer.
Expiration Date; Tenders......... The exchange offer will expire at
5:00 p.m., New York City time, on Janury
, 2002, unless we extend it, in which
case the expiration date will mean the
latest date and time to which we extend the
exchange offer.
By tendering your original notes,
you represent to us that:
o you are not our "affiliate," as
defined in Rule 405 under the
Securities Act of 1933;
o any exchange notes you receive in
the exchange offer are being
acquired by you in the ordinary
course of your business;
o at the time of commencement
of the exchange offer, neither
you nor, to your knowledge, anyone
receiving exchange notes
from you, has any arrangement or
understanding with any person to
participate in the distribution, as
defined in the Securities
Act, of the exchange notes
in violation of the Securities Act;
o if you are not a participating
broker-dealer, you are not engaged
in, and do not intend to engage in,
the distribution of the exchange
notes, as defined in the Securities
Act; and
o if you are a broker-dealer, you will
receive
5
the exchange notes for your own
account in exchange for original
notes that were acquired by you
as a result of your market-making
or other trading activities and you
will deliver a prospectus
in connection with any resale of the
exchange notes in connection with
any resale of the exchange
notes you receive. For further
information regarding resales of the
exchange notes by participating
broker-dealers, see the discussion
below under the caption "Plan of
Distribution."
Resale........................... We believe that the exchange notes may be
offered for resale, resold and otherwise
transferred by you (unless you are our
"affiliate" within the meaning of Rule 405
under the Securities Act) without compliance
with the registration or prospectus delivery
provisions of the Securities Act if:
o you are acquiring the exchange
notes in the ordinary course of your
business; and
o you are not participating, do not
intend to participate, and have no
arrangement or understanding with any
person to participate, in
a distribution of the exchange notes.
Each participating broker-dealer that
receives exchange notes for its own
account under the exchange offer in
exchange for original notes that were
acquired by the broker-dealer as a result of
market-making or other trading
activity must acknowledge that it
will deliver a prospectus in
connection with any resale of the
exchange notes. See "Plan of Distribution."
Any holder of original notes who:
o is our "affiliate;"
o does not acquire exchange notes in
the ordinary course of its business;
or
o exchanges original notes in the
exchange offer with the intention to
participate, or for
6
the purpose of participating, in a
distribution of exchange notes,
must, in the absence of an
exemption, comply with the
registration and prospectus
delivery requirements of the
Securities Act in connection with
the resale of the exchange notes.
Conditions to Exchange Offer..... The exchange offer is not subject to
conditions other than that (1) it shall not
violate applicable law or any applicable
interpretation of the staff of the SEC and
(2) no governmental authority has suspended
or threatened to suspend the registration
of the exchange offer. The exchange offer is
not conditioned upon any minimum
principal amount of original notes being
tendered for exchange.
Procedures for Tendering
Original Notes................... If you wish to tender your
original notes for exchange notes
pursuant to the exchange offer,
you must transmit to The Bank of
New York, as exchange agent, on or
before the expiration date,
either:
o a properly completed
and duly executed letter
of transmittal, which
accompanies this
prospectus, or a facsimile
of the letter of
transmittal, together with
your original notes and
any other required
documentation, to the
exchange agent at its
address listed in this
prospectus and on the
front cover of the letter
of transmittal; or
o a computer-generated
agent's message
transmitted through The
Depository Trust Company's
Automated Tender Offer
Program system and
received by the exchange
agent and forming a part
of a confirmation of
book-entry transfer in
which you acknowledge and
agree to be bound by the
terms of the letter of
transmittal.
If you cannot satisfy either of
these procedures on or before the
expiration date, then you should
comply with the guaranteed
delivery procedures described
below.
7
Do not send letters of transmittal
or certificates representing
original notes to us.
Special Procedures for
Beneficial Owners................ If you are a beneficial owner whose original
notes are registered in the name of a broker,
dealer, commercial bank, trust company or
other nominee and you wish to tender your
original notes in the exchange offer, you
should contact the registered holder promptly
and instruct the registered holder to tender
on your behalf. If you wish to tender on
your own behalf, you must either (1) make
appropriate arrangements to register
ownership of the original notes in your
name or (2) obtain a properly completed bond
power from the registered holder, before
completing and executing the letter of
transmittal and delivering your original
notes.
Guaranteed Delivery
Procedures....................... If you wish to tender your original notes and
time will not permit the documents required
by the letter of transmittal to reach the
exchange agent before the expiration
date, or the procedure for book-entry
transfer cannot be completed before the
expiration date, you must tender your
original notes according to the
guaranteed delivery procedure described in
this prospectus under "Exchange Offer -
Procedures for Tendering Original Notes -
Guaranteed Delivery Procedures."
Acceptance of Original Notes and
Delivery of Exchange Notes....... Subject to the satisfaction or waiver of the
conditions to the exchange offer, we will
accept for exchange any and all original
notes which are validly tendered in the
exchange offer and not withdrawn before 5:00
p.m., New York City time, on the expiration
date.
Withdrawal Rights................ You may withdraw the tender of your original
notes at any time before 5:00 p.m., New York
City time, on the expiration date,
by complying with the procedures
for withdrawal described in this
prospectus under "Exchange Offer -
Withdrawal Rights."
Federal Income Tax
Considerations................... The exchange of original notes will not be a
taxable
8
event for United States federal
income tax purposes. For a discussion of
the material federal income tax consequences
relating to the exchange of original notes,
see "United States Federal and Canadian
Income Tax Considerations--United States
Federal Income Tax Consequences."
Exchange Agent................... The Bank of New York, the trustee under the
indenture governing the original notes, is
serving as the exchange agent.
Consequences of Failure to
Exchange Original Notes for
Exchange Notes................... If you do not exchange your original notes
for exchange notes, you will continue to be
subject to the restrictions on transfer
provided in the original notes and in the
indenture (which governs both the exchange
notes and the original notes). In general,
the original notes may not be offered
or sold, unless registered under, pursuant
to an exemption from, or in a transaction
not subject to, the Securities Act and
applicable state securities laws. We do not
currently plan to register the original notes
under the Securities Act.
Because we anticipate that most holders of
original notes will elect to exchange their
original notes, we expect that the
liquidity of the markets, if any, for the
original notes remaining outstanding after
the completion of the exchange offer will be
substantially limited.
Exchange and Registration
Rights Agreement................. The exchange and registration rights
agreement entitles you to an opportunity to
exchange your original notes for new
transferable notes with substantially
the identical terms. The exchange offer
satisfies this right. After the exchange
offer is completed and you have had the
opportunity to receive exchange notes, you
will no longer be entitled to any exchange or
registration rights with respect to your
original notes or to additional interest in
respect of the original notes.
9
SUMMARY DESCRIPTION OF THE EXCHANGE NOTES
The following summary of the terms of the exchange notes is not a
complete description. See "Description of the Exchange Notes" for further
information regarding the terms of the exchange notes.
Issuer.................. Bowater Canada Finance Corporation
Notes Offered........... $600 million in principal amount of 7.95% Notes
due 2011 and registered under the Securities Act.
Maturity................ November 15, 2011
Interest................ Interest will accrue from the issue date of the
exchange notes at a rate equal to 7.95% per
year. In addition, holders of the exchange notes
will be entitled to receive an amount equal to
the accrued, but unpaid, interest on the original
notes. We will pay interest on the exchange
notes on May 15 and November 15 of each year,
beginning on May 15, 2002. The payment of
interest on the exchange notes will be in lieu of
payment of any accrued but unpaid interest on
original notes tendered for exchange.
Ranking................. The exchange notes will be our senior obligations
and will rank equally with our existing and
future senior unsecured debt (including any
original notes that remain unexchanged). Upon
completion of this exchange offering, we will not
have any senior debt outstanding other than the
exchange notes and, to the extent that any remain
unexchanged, the original notes.
Guarantees.............. Our parent company, Bowater Incorporated, will
fully and unconditionally guarantee the
exchange notes. The guarantees of the exchange
notes will rank equally with the other senior
unsecured debt of Bowater, which totaled $1,843.8
million as of September 30, 2001 (including $62.8
million of guarantees).
Redemption By Us........ We may redeem all or a portion of the exchange
notes from time to time at a price equal to the
greater of:
o 100% of the principal amount thereof; or
10
o the sum of the present value of the
principal amount and interest on the
exchange notes being redeemed plus
a make-whole premium.
Restrictive Covenants... The indenture governing the notes restricts our
ability and the ability of Bowater to create
certain liens, enter into sale and leaseback
transactions and merge or consolidate.
Governing Law........... The exchange notes and the indenture governing
the notes are governed by the laws of the state
of New York.
Risk Factors............ You should carefully consider all of the
information contained in this prospectus,
including the discussions under the caption "Risk
Factors" beginning on page 12, regarding specific
risks about us, Bowater and the exchange notes.
11
RISK FACTORS
Before exchanging your original notes for exchange notes, you should
carefully consider the following risk factors as well as the other information
contained in or incorporated by reference into this prospectus.
RISKS RELATED TO THE EXCHANGE NOTES
We are a financing subsidiary with no independent operations and, accordingly,
will depend on the cash flow of Bowater and its subsidiaries to satisfy our
obligations under the notes.
We are a financing subsidiary with no independent operations, sources of
income or assets, other than our equity interests in our subsidiaries.
Accordingly, we will depend on payments on intercompany loans to our
subsidiaries or other distributions or payments to us by Bowater to make
payments on the notes. These subsidiaries are separate legal entities that have
no obligation to pay any amounts due pursuant to the notes. Consequently, we
cannot assure you that the amounts we receive from Bowater or our subsidiaries
will be sufficient to enable us to service our obligations on the notes.
Bowater's substantial indebtedness could adversely affect its financial health
and prevent us from fulfilling our obligations under the notes.
Bowater has a significant amount of indebtedness. As of September 30,
2001, after giving effect to the offering of the original notes, Bowater would
have had outstanding total debt of $2,375.4 million, a ratio of earnings to
fixed charges of 2.3x and stockholders' equity of $2,041.0 million.
Bowater's substantial amount of debt could have important consequences
for you. For example, it could:
o limit Bowater's ability to make payments to us to enable us to
satisfy our obligations with respect to the notes;
o limit Bowater's ability to obtain additional financing, if
needed, for working capital, capital expenditures, acquisitions,
debt service requirements or other purposes;
o increase Bowater's vulnerability to adverse economic and industry
conditions;
o require Bowater to dedicate a substantial portion of its cash
flow from operations to us so that we can make payments on our
debt, thereby reducing funds available for operations, future
business opportunities or other purposes;
o limit Bowater's flexibility in planning for, or reacting to,
changes in its business and its industry; and
12
o place Bowater at a competitive disadvantage compared to its
competitors that have less debt.
If an active trading market does not develop for the exchange notes, you may not
be able to resell the exchange notes.
There is no established market for the original notes, and we do not
intend to list the exchange notes on any securities exchange. The liquidity of
any market for the exchange notes will depend upon various factors, including:
o the number of holders of the exchange notes;
o the interest of securities dealers in making a market for the
exchange notes;
o the overall market for investment grade securities;
o our financial performance and prospects; and
o the prospects for companies in our industry generally.
We cannot assure you that any securities dealers will make a market in
the exchange notes or that any such market-making will continue for any period
of time. In addition, the liquidity of the trading market in the exchange notes,
and the market price quoted for the exchange notes, may be adversely affected by
changes in the overall market for fixed income securities generally. As a
result, an active trading market may not develop for the exchange notes. If no
active trading market develops, you may not be able to resell your exchange
notes at their fair market value or at all.
RISKS RELATED TO THE EXCHANGE OFFER
You must follow certain procedures to tender your original notes.
The exchange notes will be issued in exchange for original notes only
after timely receipt by the exchange agent of the original notes and a properly
completed and duly executed letter of transmittal (or, in the case of a
book-entry transfer, an agent's message) and all other required documents.
Therefore, if you desire to tender your original notes in exchange for the
exchange notes, you should allow sufficient time to ensure timely delivery. Your
failure to follow these procedures may result in delay in receiving exchange
notes on a timely basis or in your loss of the right to receive exchange notes.
Neither we nor the exchange agent is under any duty to give notification of
defects or irregularities with respect to tenders of original notes for
exchange. If you tender original notes in the exchange offer for the purpose of
participating in a distribution of the exchange notes, you will be required to
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. Each broker-dealer
that receives exchange notes for its own account in exchange for original notes,
where the original notes were acquired by the broker-dealer as a result of
market-making activities or any other
13
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of the exchange notes. See "Plan of Distribution."
If you do not exchange your original notes for exchange notes, your original
notes will continue to have restrictions on transfer.
If you do not exchange your original notes for exchange notes in the
exchange offer, or if your original notes are tendered but not accepted, your
original notes will continue to have restrictions on transfer, but will no
longer have exchange and registration rights or accrue additional interest
as liquidated damages. In general, you may offer or sell any original notes only
if the original notes are registered under the Securities Act and applicable
state laws, or resold under an exemption from, or in a transaction not subject
to, these laws. We do not intend to register any transfers of the original notes
under the Securities Act, other than in the limited circumstances described in
the exchange and registration rights agreement.
The issuance of the exchange notes may adversely affect the market for original
notes.
If any original notes are exchanged, any trading market for the original
notes that remain outstanding could be adversely affected.
RISKS RELATED TO BOWATER'S BUSINESS
Cyclical industry conditions may adversely affect Bowater's results of
operations and financial condition.
Bowater's operating results reflect the cyclical pattern of the forest
products industry. Most of Bowater's products are world-traded commodity
products. Prices for Bowater's products have been volatile historically, and
Bowater, like other participants in the forest products industry, has limited
direct influence over the timing and extent of price changes for its products.
Instead, these price changes depend primarily on industry supply and customer
demand. Industry supply depends primarily on available manufacturing capacity,
and customer demand depends on a variety of factors, including the health of the
economy in general and the strength of both print media advertising and new home
construction. A prolonged and severe weakness in the markets for one or more of
Bowater's principal products could seriously impair its results of operations
and adversely affect its financial condition.
Intense competition in the forest products industry could adversely affect
Bowater's operating results and financial condition.
The markets for Bowater's products are all highly competitive. Actions
by competitors can affect the ability of Bowater to sell its products and can
negatively affect the prices at which its products are sold. Bowater's industry
is capital intensive, which leads to high fixed costs. Some of Bowater's
competitors may be lower-cost producers in some of the businesses in which
Bowater operates, and accordingly these competitors may be less adversely
affected than Bowater by price declines.
14
Developments in electronic data transmission and storage could adversely
affect the demand for Bowater's products.
Bowater's newspaper, magazine and catalog publishing customers
increasingly may use, and compete with businesses that use, electronic data
transmission and storage instead of newsprint, coated paper, uncoated groundwood
specialty papers or other products made by Bowater. Bowater cannot predict the
timing or the extent of this trend; however, a continued shift to electronic
transmission could cause a decline in demand for these products and,
accordingly, Bowater's sales.
Changes in laws and regulations could require substantial additional
expenditures by Bowater to comply with these laws and regulations.
Bowater is subject to a variety of national and local laws and
regulations dealing with trade, transportation, currency controls or the
environment. Changes in these laws or regulations have required in the past, and
could require in the future, substantial expenditures by Bowater. For example,
changes in environmental laws and regulations could require Bowater 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 more stringent.
Consequently, Bowater's compliance and remediation costs could increase
materially. For example, in April 1998, the Environmental Protection Agency
promulgated new air and water quality standards for the paper industry, known as
the "Cluster Rule," aimed at further reductions of pollutants. Bowater
anticipates spending approximately $160 million to enable its Catawba, South
Carolina, facility to comply with the Cluster Rule and anticipates completing
this work by April 2004.
Bowater may be subject to unforeseen environmental liabilities.
As an owner and operator of real estate and manufacturing and processing
facilities, Bowater may be liable under environmental laws for cleanup and other
costs and damages, including tort liability, resulting from past or present
spills or releases of hazardous or toxic substances on or from its properties.
Bowater may incur liability under these laws without regard to whether Bowater
knew of, was responsible for or owned the property at the time of, any spill or
release of hazardous or toxic substances on its property. In some cases, this
liability may not be limited to the value of the property.
Bowater is exposed to currency fluctuations.
Certain of Bowater's products are sold in currencies other than the U.S.
dollar and nearly half of its manufacturing costs and certain financial
liabilities are denominated in Canadian dollars. Accordingly, changes in
currency exchange rates will impact Bowater's revenues and costs. Increases in
the value of the Canadian dollar versus the U.S. dollar would reduce Bowater's
earnings, which are reported in U.S. dollars.
15
Bowater competes with North American, European and Asian producers in
most of its product lines. Variations in the exchange rates between the U.S.
dollar and other currencies, particularly those of Canada, Sweden, Finland, and
certain Asian countries, significantly affect the competitive position of
Bowater compared to many of its competitors.
Bowater is exposed to changes in banking and capital markets and changes in
interest rates.
Bowater requires both short-term and long-term financing to fund its
operations, including capital expenditures. Changes in the banking or capital
markets could adversely affect the cost or availability of financing. In
addition, Bowater is exposed to changes in interest rates with respect to its
floating rate debt and all new debt issues. Changes in the capital markets or
prevailing interest rates can increase the cost or decrease the availability of
financing for Bowater.
Changes in the political or economic conditions in the United States or other
countries in which Bowater's products are manufactured or sold can adversely
affect Bowater's results of operations.
Bowater manufactures its products in the United States, Canada and South
Korea, and sells its products throughout the world. The economic and political
climate of each region has a significant impact on costs, prices of and demand
for Bowater's products. Changes in regional economies or political stability can
adversely affect the cost of manufacturing and distributing Bowater's products,
pricing and sales volume, directly affecting Bowater's results of operations.
These changes could also affect the availability or cost of insurance for its
facilities.
High costs of raw materials and energy could seriously harm Bowater's operating
results.
Bowater buys energy, chemicals, wood fiber, recycled paper and other raw
materials on the open market. The prices for these raw materials are volatile
and may change rapidly, directly affecting Bowater's results of operations.
Bowater is a major user of renewable natural resources, specifically water and
wood fiber. Accordingly, significant changes in climate and agricultural
diseases or infestation could adversely affect the financial condition and
results of operations of Bowater.
Bowater does not maintain insurance for losses to its standing timber from
natural disasters or other causes.
The volume and value of timber that Bowater can harvest from its lands
may be limited by natural disasters such as fire, insect infestation, disease,
ice storms, wind storms, flooding and other weather conditions and other causes.
As is typical in the industry, Bowater does not maintain insurance for any loss
to its standing timber from natural disasters or other causes.
16
Bowater may not be able to integrate acquisitions successfully.
As part of its business strategy, Bowater has consummated several
acquisitions, including the acquisition of Alliance, and may seek additional
acquisition opportunities. Bowater may not succeed in integrating acquired
operations. Successful integration of acquired operations, including those of
Alliance, will depend primarily on Bowater's ability to consolidate operations,
systems and procedures and to eliminate redundancies and excess costs.
Acquisitions also may have an adverse effect on Bowater's operating results,
particularly in the fiscal quarters immediately following the acquisition while
Bowater integrates the acquired operations. Even after Bowater integrates these
operations, their revenues and profits may be less than Bowater expects. In
addition, Bowater may not realize expected synergies and cost savings in
connection with the Alliance acquisition or other future acquisitions.
17
USE OF PROCEEDS
This exchange offer will satisfy our obligations under the exchange
and registration rights agreement that we entered into when we sold
the original notes. We will not receive any proceeds from the exchange offer.
In exchange for the exchange notes, we will receive original notes of
like principal amount, the terms of which are identical in all material
respects to the exchange notes, except that the exchange notes will not be
subject to transfer restrictions, and will not have registration rights or
accrue additional interest as liquidated damages. The exchange notes will
evidence the same indebtedness as the original notes. We will retire and cancel
the original notes that we receive in the exchange offer. Accordingly, issuance
of the exchange notes will not result in any increase in our indebtedness.
We have agreed to bear the expenses of the exchange offer. No underwriter is
being used in connection with the exchange offer.
The net proceeds that we received from the sale of the original notes on
November 6, 2001 were approximately $593.2 million, after deducting the
underwriting discount and offering expenses payable by us. We used the proceeds
from the sale of the original notes to acquire 99% of Bowater Canada Finance
Limited Partnership from Bowater and to capitalize our wholly-owned subsidiary,
Bowater Canada Treasury Corporation, which then acquired the remaining 1% of
Bowater Canada Finance Limited Partnership from Bowater Ventures Inc., a
wholly-owned subsidiary of Bowater. Bowater and Bowater Ventures Inc. used the
proceeds from that sale to repay (1) all amounts outstanding under a bridge
credit agreement (plus accrued interest of $0.6 million) used to finance the
cash portion of the purchase price of the Alliance acquisition and the payment
of certain items of Alliance's outstanding debt, (2) bankers acceptance assumed
in connection with the Alliance acquisition and (3) other short term borrowings
of Bowater.
18
CAPITALIZATION
The following table sets forth the capitalization of Bowater and its
subsidiaries at September 30, 2001 on an actual basis and on a pro forma as
adjusted basis giving effect to the sale of the original notes and the
application of the proceeds. The following information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and the
notes related to those financial statements incorporated by reference in this
prospectus.
AT SEPTEMBER 30, 2001
-----------------------
PRO FORMA
ACTUAL AS ADJUSTED
--------- ------------
(Dollars in millions)
Short term bank debt:
Bridge credit agreement(a)........................... $ 500.0 $ --
Short term bank debt(a).............................. 509.5 442.2
----------------------
Total short term bank debt......................... 1,009.5 442.2
Total debt, including current installments:
7.95% Notes due 2011(a).............................. -- 600.0
9.00% Debentures due 2009............................ 250.0 250.0
9.38% Debentures due 2021............................ 200.0 200.0
10.62% Notes due 2010................................ 98.0 98.0
10.50% Notes due at various dates from 2002 to 2010.. 91.8 91.8
9.50% Debentures due in 2012......................... 125.0 125.0
10.85% Debentures due 2014........................... 79.2 79.2
9.25% Debentures due 2002............................ 59.1 59.1
10.60% Notes due 2011................................ 70.0 70.0
7.75% recycling facilities revenue bonds due 2022.... 62.0 62.0
7.40% recycling facilities revenue bonds due 2022.... 39.5 39.5
7.62% recycling facilities revenue bonds due 2016.... 30.0 30.0
Bankers acceptance(a)................................ 25.3 --
10.26% Notes due at various dates from 2002 to 2011.. 22.0 22.0
Government of Quebec Note due 2008................... 9.4 9.4
Pollution control revenue bonds due at various dates
from 2002 to 2010 with interest at varying rates
from 7.4% to 7.62%............................... 13.4 13.4
Industrial revenue bonds due 2029 with interest at
floating rates................................... 33.5 33.5
8.50% Notes due 2001................................. 18.1 18.1
Bank term loan at floating rates due 2001............ 11.0 11.0
10.25% Debentures due 2003........................... 7.4 7.4
UDAG loan agreement due 2010 with interest
varying rates from 5% to 6.5% .................... 7.6 7.6
11.00% Subordinated Debt due 2003.................... 3.8 3.8
----------------------
Total principal amount of long term debt, including
current installments.............................. 1,256.1 1,830.8
----------------------
Net premiums principally from assumed debt of a prior
acquisition....................................... 104.3 102.4
----------------------
Total long term debt, including current installments 1,360.4 1,933.2
----------------------
Minority interests in subsidiaries........................ 86.7 86.7
----------------------
19
AT SEPTEMBER 30, 2001
-----------------------
PRO FORMA AS
ACTUAL ADJUSTED
--------- -----------
(Dollars in millions)
Shareholders' equity:
Common Stock, $1.00 par value, 100,000,000 shares
authorized, and 66,238,911 shares issued
at September 30, 2001, historical and
pro forma as adjusted, respectively..................... 66.2 66.2
Exchangeable shares, no par value, unlimited shares
authorized, and 2,045,669 shares issued and outstanding
at September 30, 2001, historical and pro forma
as adjusted, respectively.............................. 97.8 97.8
Additional paid-in capital............................. 1,566.0 1,566.0
Retained earnings...................................... 833.2 833.2
Accumulated other comprehensive income (loss).......... (35.8) (35.8)
Treasury stock, at cost................................ (486.4) (486.4)
----------------------
Total shareholders' equity...................... 2,041.0 2,041.0
----------------------
Total capitalization......................... $4,497.6 $4,503.1
======================
(a) As reflected in the "Pro forma as adjusted" column, the net proceeds of the
7.95% Notes due 2011 of $593.2 million were used to repay (1) all amounts
outstanding under the bridge credit agreement (plus accrued interest of
$0.6 million) used to finance the cash portion of the purchase price of the
Alliance acquisition and the payment of certain items of Alliance's outstanding
debt, (2) bankers acceptance assumed in connection with the Alliance acquisition
and (3) other short term bank debt.
20
SELECTED SUMMARY FINANCIAL DATA
BOWATER SELECTED CONSOLIDATED FINANCIAL DATA
The selected income statement data and balance sheet data set forth in
the following table for, and at the end of, each of the years in the five-year
period ended December 31, 2000, are derived from the consolidated financial
statements of Bowater and its subsidiaries, which financial statements have
been audited by KPMG LLP, independent accountants. The selected financial
data presented below as of and for the nine-month periods ended
September 30, 2000 and 2001 are derived from the unaudited consolidated
financial statements of Bowater and its subsidiaries and, in Bowater's opinion,
reflect all adjustments (consisting of normal accruals) necessary to present
fairly the data for those periods. Bowater's results of operations for the
nine months ended September 30, 2001 may not be indicative of results that may
be expected for the full year. You should read the table below in conjunction
with Bowater's consolidated financial statements and the related notes to
those financial statements and management's discussion and analysis,
included in Bowater's annual report on Form 10-K for the year ended December
31, 2000, as amended, and quarterly report on Form 10-Q for the quarter ended
September 30, 2001. See "Where You Can Find More Information about
Bowater Incorporated."
The following table also sets forth selected unaudited pro forma
combined income statement data for Bowater and its subsidiaries for the year
ended December 31, 2000, and for the nine-month period ended September 30, 2001,
which give effect to Bowater's acquisition of Alliance as if the acquisition had
been consummated on January 1, 2000. The unaudited pro forma combined income
statement data do not purport to represent what the results of operations of
Bowater would actually have been if the acquisition had in fact occurred on
the assumed dates and they do not project the results of operations of Bowater
for any future date or period. The selected unaudited pro forma combined
income statement data do not reflect the cost savings and operating synergies
Bowater expects to realize in connection with the acquisition. The unaudited
pro forma combined financial statements of Bowater are an exhibit to the
registration statement of which this prospectus is a part, and we incorporate
them by reference into this prospectus.
NINE MONTHS ENDED AND
AT SEPTEMBER 30,
YEAR ENDED AND AT DECEMBER 31, (UNAUDITED)
------------------------------------------------------------- ----------------------------
PRO
FORMA PRO
2000 FORMA
1996 1997 1998(1)(4) 1999(1)(2) 2000(1) (3) 2000(1) 2001(1) 2001(3)
---- ---- ---------- ---------- ------ ------ ------- ------- -------
(in millions, except per share amounts and ratios)
INCOME STATEMENT DATA:
Sales.............................. $1,839.2 $1,598.9 $2,142.7 $2,311.7 $2,500.3 $3,299.9 $1,842.4 $1,748.9 $2,340.7
Costs of Sales..................... 1,149.6 1,106.8 1,422.2 1,625.2 1,549.9 2,163.8 1,150.5 1,155.1 1,586.6
Depreciation, amortization and
cost of timber harvested........ 174.4 169.8 229.6 300.2 295.2 349.0 217.0 228.6 274.5
Distribution costs................. 120.9 114.4 147.7 177.0 166.6 235.3 127.2 120.1 167.8
Selling and administrative expense. 93.1 72.2 82.6 98.7 132.6 154.1 86.8 77.1 99.1
Impairment of assets............... -- -- 119.6 92.0 -- 42.3 -- -- --
Net gain on sale of assets......... 98.1 0.8 21.1 225.4 7.3 14.7 3.4 83.5 88.9
Operating income................... 399.3 136.5 162.1 244.0 363.3 370.1 264.3 251.5 301.6
Income before income taxes and
minority interests.............. 353.2 89.5 15.6 155.8 239.2 210.7 169.1 162.1 176.7
Net income (loss).................. 200.2 53.7 (18.5) 78.7 159.4 140.9 100.9 54.5 67.1
Diluted earnings (loss) per common
share........................... 4.55 1.25 (0.44) 1.41 3.02 2.44 1.90 1.05 1.18
Dividends declared per common share 0.80 0.80 0.80 0.80 0.80 0.60 0.60
21
NINE MONTHS ENDED AND
AT SEPTEMBER 30,
YEAR ENDED AND AT DECEMBER 31, (UNAUDITED)
-------------------------------------------------------- ---------------------
1996 1997 1998(1)(4) 1999(1)(2) 2000(1) 2000(1) 2001(3)
---- ---- ---------- ---------- ------- ------- -------
BALANCE SHEET DATA:
Cash and cash equivalents................ $ 85.3 $ 228.7 $ 58.3 $ 24.7 $ 20.0 $ 21.8 $15.8
Timber and timberlands................... 395.7 394.0 472.8 283.2 265.2 271.5 261.1
Fixed assets, net........................ 1,636.7 1,554.5 2,885.2 2,581.3 2,981.1 2,939.1 3,819.2
Total assets............................. 2,865.5 2,745.8 5,092.0 4,552.2 5,004.1 4,991.1 5,855.4
Total debt............................... 760.6 758.9 1,830.8 1,505.1 1,931.1 1,942.8 2,369.9
Long term debt, net of current
installments.......................... 759.0 757.1 1,534.6 1,454.6 1,304.7 1,450.3 1,232.3
Other long term liabilities.............. 171.7 169.5 356.3 326.1 319.2 345.3 332.2
ADDITIONAL INFORMATION:
Cash flow from operating
activities............................ $336.2 $195.6 $274.1 $147.0 $416.6 $273.5 $225.9
Cash invested in fixed assets, timber
and timberlands....................... (106.9) (99.6) (223.2) (198.5) (283.2) (164.5) (173.0)
EBITDA(5)................................ 573.7 306.3 391.7 544.2 658.5 481.3 480.1
Ratio of EBITDA to interest expense...... 8.0x 4.5x 4.0x 4.3x 4.9x 4.9x 4.7x
Ratio of total debt to EBITDA(6)......... 1.3x 2.5x 4.7x 2.8x 2.9x
Ratio of earnings to fixed charges(7).... 5.7x 2.3x 1.1x 2.0x 2.5x 2.5x 2.3x
- ------------------------------------------------
(1) In 2000, Bowater acquired a newsprint mill in Grenada, Mississippi.
In 1999, Bowater sold Great Northern Paper, Inc. In 1998, Bowater
acquired Avenor Inc. (now named Bowater Pulp and Paper Canada Inc.)
and a South Korean newsprint mill.
(2) Results for 1999 included a pre-tax net gain on sale of timberlands and
other assets of $225.4 million ($128.9 million after tax or $2.34 per
diluted share) and a pre-tax impairment charge of $92.0 million ($56.1
million after tax or $1.02 per diluted share).
(3) Bowater acquired Alliance (now named Bowater Canadian Forest Products
Inc.) in 2001.
(4) Results for 1998 included a pre-tax net gain on sale of timberlands of
$21.1 million ($6.7 million after tax or $.14 per diluted share) and a
pre-tax impairment charge of $119.6 million ($73.0 million after tax or
$1.53 per diluted share).
(5) EBITDA represents operating income plus depreciation, amortization and
cost of timber harvested. EBITDA is presented because it is a widely
accepted financial indicator of a company's ability to service
indebtedness. However, EBITDA should not be considered as an alternative
to income from operations or to cash flows from operating activities (as
determined in accordance with generally accepted accounting principles)
and should not be construed as an indication of Bowater's operating
performance or as a measure of liquidity. EBITDA as presented by Bowater
is not necessarily comparable with similarly-titled measures presented
by other companies.
(6) Not meaningful for nine month periods.
(7) The ratio of earnings to fixed charges is computed by dividing
"earnings" by fixed charges. Earnings consist of income before income
taxes and minority interests plus interest expense (excluding interest
capitalized during the period and amortization of previously capitalized
interest) plus the portion of rental expenses representative of the
interest factor. Fixed charges consist of total interest expense
(including interest capitalized during the period) plus the portion of
rental expense representative of the interest factor plus amortized
premium and discount related to indebtedness.
22
ALLIANCE SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data for,
and at the end of, each of the years in the five-year period ended December 31,
2000. The data are stated in Canadian dollars and are derived from the
consolidated financial statements of Alliance, which consolidated financial
statements have been audited by Raymond Chabot Grant Thornton General
Partnership, Chartered Accountants. The selected consolidated financial data as
of and for the six-month periods ended June 30, 2001 and 2000 are stated in
Canadian dollars and are derived from unaudited consolidated financial
statements of Alliance and, in Bowater's opinion, reflect all adjustments
(consisting of normal accruals) necessary to present fairly the data for those
periods. Bowater acquired Alliance on September 24, 2001. You should read the
table below in conjunction with Alliance's consolidated financial statements and
notes thereto incorporated by reference into this prospectus. See "Where You Can
Find More Information About Bowater Incorporated."
SIX MONTHS ENDED
AND AT JUNE 30(1),
YEAR ENDED AND AT DECEMBER 31, (UNAUDITED)
--------------------------------------------------------------------
1996 1997 1998 1999 2000 2000 2001
------ ------- -------- -------- -------- ------- -------
(in millions of Canadian dollars)
INCOME STATEMENT DATA(2):
Net sales.................. $424.0 $ 823.3 $1,085.1 $1,052.7 $1,085.1 $ 547.4 $ 577.5
Cost of goods sold......... 298.4 678.3 864.2 914.0 910.6 467.2 452.2
Selling, general and
administrative expenses.. 21.4 25.4 37.9 37.8 31.7 16.8 18.0
Depreciation, amortization
and depletion............ 22.2 60.8 87.3 89.4 78.7 39.7 46.3
Amortization of the
deferred gain............ -- -- -- -- (34.4) (15.0) (19.4)
Operating income........... 82.0 58.8 95.7 11.5 98.5 38.7 80.4
Earnings (loss) before
unusual items and income
taxes................... 80.5 38.2 35.5 (24.2) 87.1 33.4 67.7
Unusual items.............. -- -- -- -- (51.8) (51.8) 8.3
Net earnings (loss)........ 56.0 26.5 25.9 (16.2) (21.3) (10.2) 44.5
BALANCE SHEET DATA:
Fixed assets............... 365.6 1,346.7 1,369.7 1,367.1 1,257.5 1142.7 1311.2
Total assets............... 552.8 1,688.9 1,771.8 1,734.4 1,627.9 1530.0 1661.8
Long term debt(3).......... 41.7 501.7 556.4 484.8 330.4 249.6 378.8
Total debt(4).............. 77.3 530.9 567.9 537.7 347.5 259.1 423.6
Shareholders' equity....... 350.6 936.0 957.8 892.4 803.6 771.2 849.9
23
SIX MONTHS ENDED
AND AT JUNE 30(1),
YEAR ENDED AND AT DECEMBER 31, (UNAUDITED)
--------------------------------------------------------------------
1996 1997 1998 1999 2000 2000 2001
------ ------- -------- -------- -------- ------- -------
(in millions of Canadian dollars)
OTHER FINANCIAL DATA:
Cash flow from operating
activities............... $ 75.4 $ 78.0 $ 130.1 $ 122.8 $ $85.5 $ 43.0 $ 84.4
Acquisition of fixed assets (157.1) (214.1) (114.4) (120.6) (225.0) (101.2) (174.7)
EBITDA(5).................. 104.2 119.6 183.0 100.9 142.8 63.4 107.3
- --------------------
(1) Bowater acquired Alliance (now named Bowater Canadian Forest Products
Inc.) on September 24, 2001.
(2) Alliance's financial statements are prepared using Canadian GAAP.
(3) Includes long term debt and current portion of the long term debt.
(4) Includes long term debt, current portion of the long term debt and bank
indebtedness.
(5) EBITDA represents operating income plus depreciation, amortization and
depletion. EBITDA is presented because it is a widely accepted financial
indicator of a company's ability to service indebtedness. However,
EBITDA should not be considered as an alternative to income from
operations or to cash flows from operating activities (as determined in
accordance with generally accepted accounting principles) and should not
be construed as an indication of Alliance's operating performance or as
a measure of liquidity. EBITDA as presented by Alliance is not
necessarily comparable with similarly-titled measures presented by other
companies.
24
EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
On November 6, 2001, we sold $600,000,000 aggregate principal amount of
our 7.95% Notes due 2011 in transactions exempt from registration under the
Securities Act. In connection with the sale, we and Bowater entered into an
exchange and registration agreement on November 6, 2001 with representatives of
the several purchasers named in the original note purchase agreement, for the
benefit of the holders from time to time (including the initial purchasers) of
the original notes. In the exchange and registration rights agreement, we and
Bowater agreed, for the benefit of the holders of the original notes, to file
with the SEC a registration statement with respect to an issue of notes
evidencing the same indebtedness as the original notes, identical in all
material respects to the original notes, except that the exchange notes will not
be subject to transfer restrictions, and will not have registration rights or
accrue additional interest as liquidated damages. We and Bowater agreed to use
our best efforts to cause that registration statement to be declared effective
under the Securities Act by April 5, 2002. We and Bowater have filed the
registration statement of which this prospectus is a part for the purpose
of fulfilling our obligations under the exchange and registration rights
agreement. Bowater has filed a copy of the exchange and registration rights
agreement and we incorporate it by reference into this prospectus and as an
exhibit to the registration statement of which this prospectus is a part.
We are offering to holders of original notes the opportunity to exchange
all of their original notes for exchange notes, the exchange notes representing
new evidence of the same indebtedness as the original notes. For any original
notes validly tendered to us pursuant to the exchange offer, the holder of such
original notes will receive exchange notes which have a principal amount,
interest rate, maturity date and other terms substantially identical to the
principal amount, interest rate, maturity date and other terms of the tendered
original notes. We will issue the exchange notes on or promptly after the
expiration date of the exchange offer.
The exchange offer will expire at 5:00 p.m., New York City time, on
January , 2002, unless extended, in which case the expiration date will
mean the latest date and time to which we extend the exchange offer.
Each holder of original notes who wishes to exchange original notes for
exchange notes in the exchange offer will be required to represent that (1) it
is not an "affiliate" of ours within the meaning of the Securities Act, (2) the
exchange notes to be received by it were acquired in the ordinary course of its
business, (3) at the time of the exchange offer, it has not engaged in, does not
intend to engage in, and has no arrangement or understanding with any person to
participate in, the distribution of the exchange notes within the meaning of the
Securities Act. In addition, in connection with any resales of exchange notes,
any broker-dealer who acquired the original notes for its own account as a
result of market-making or other trading activities must deliver a prospectus
meeting the requirements of the Securities Act. We and Bowater believe, based on
positions taken by the SEC's staff in interpretive letters to third parties,
that these participating
25
broker-dealers may fulfill their prospectus delivery requirements with respect
to the exchange notes (other than a resale of unsold allotments from the
original sale of the original notes) with this prospectus. Under the exchange
and registration agreement, we are required to allow participating
broker-dealers to use this prospectus in connection with the resale of the
exchange notes for a period beginning when exchange notes are first issued in
the exchange offer and ending upon the earlier of the expiration of the 150th
day after the exchange offer has been completed or such time as such
participating broker-dealers no longer own any exchange notes.
If (1) on or prior to the time the exchange offer is completed existing
SEC staff interpretations are changed such that the exchange notes or the
related guarantee received by holders in the exchange offer for original notes
are not or would not be, upon receipt, transferable by each such holder without
restriction under the Securities Act, (2) the exchange offer has not been
completed by May 20, 2002 or (3) the exchange offer is not available to any
holder of original notes, then, in each case, we and Bowater will:
o in lieu of (or, in the case of clause (3) above, in addition to)
conducting the exchange offer, file under the Securities Act as soon as
practicable, but no later than 30 days after the time such obligation to
file arises, a "shelf" registration statement covering resales of the
original notes;
o use our best efforts to cause the shelf registration statement to be
declared effective no later than 150 days after we
and Bowater file it; and
o use our best efforts to keep effective the shelf registration statement
until the earlier of two years after it is declared effective or such
time as there are no longer any original notes outstanding.
If we and Bowater file a shelf registration statement, we will provide
to each applicable holder copies of the prospectus that is a part of the shelf
registration statement, notify each such holder when the shelf registration
statement has become effective and take certain other actions as are required to
permit unrestricted resales of the original notes. A holder that sells original
notes pursuant to the shelf registration statement will be required to be named
as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the exchange and registration rights agreement that
are applicable to such a holder (including certain indemnification rights and
obligations). If we and Bowater fail to comply with the provisions of the
exchange and registration rights agreement, as described above, then we must pay
additional interest on the original notes at the rate of 0.25% per year until we
cure the failure.
TERMS OF THE EXCHANGE OFFER
We are offering to exchange up to $600,000,000 total principal amount of
original notes for a like total principal amount of exchange notes. The original
notes must be tendered properly and not withdrawn on or before the expiration
date, which is 5:00 p.m.,
26
New York City time, on January , 2002, unless extended, in which case
the expiration date will be the date and time to which we have extended the
exchange offer. In exchange for original notes properly tendered and accepted,
we will issue a like total principal amount of up to $600,000,000 in exchange
notes.
The exchange offer is not conditioned upon holders tendering a minimum
principal amount of original notes. As of the date of this prospectus,
$600,000,000 aggregate principal amount of original notes is outstanding.
Holders of the original notes do not have any appraisal or dissenters'
rights in the exchange offer. If holders do not tender original notes or if
holders tender original notes that we do not accept, those original notes will
remain outstanding. Any original notes will be entitled to the benefits of the
indenture, but will not be entitled to any further registration rights under the
exchange and registration rights agreement or liquidated damages in the form of
additional interest on the original notes, except under limited circumstances.
After the expiration date, we will return to the holder any tendered
original notes that we did not accept for exchange due to, among other things,
an invalid tender. See "--Procedures for Tendering Original Notes."
Holders exchanging original notes will not have to pay brokerage
commissions or fees or transfer taxes if they follow the instructions in the
letter of transmittal, which describes the procedure for submitting original
notes pursuant to the exchange offer. We will pay our own expenses incurred in
connection with the performance of our obligations, other than certain taxes
described below, in the exchange offer. See "--Fees and Expenses" for further
information regarding fees and expenses.
Neither we, Bowater, nor our respective boards of directors recommends
that you tender or not tender original notes in the exchange offer. In addition,
we have not authorized anyone to make any recommendation. You must decide
whether to tender in the exchange offer and, if so, the aggregate amount of
original notes to tender.
We have the right, in accordance with applicable law, at any time:
o to delay the acceptance of the original notes;
o to terminate the exchange offer if we determine that any of the
conditions to the exchange offer have not occurred or have not been
satisfied;
o to extend the expiration date of the exchange offer and keep all
original notes tendered other than those original notes properly
withdrawn; and
o to waive any condition or amend the terms of the exchange offer.
If we materially change the exchange offer, or if we waive a material
condition of the exchange offer, we will promptly distribute a prospectus
supplement to the holders of
27
the original notes disclosing the change or waiver. We also will extend the
exchange offer as required by Rule 14e-1 under the Securities Exchange Act of
1934.
If we exercise any of the rights listed above, we will issue a release
to an appropriate news agency and we will promptly give oral or written notice
of the action to The Bank of New York, the exchange agent for this offer. In the
case of an extension, an announcement will be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
expiration date.
PROCEDURES FOR TENDERING ORIGINAL NOTES
Valid Tender
You may tender your original notes by book-entry transfer or, if you
hold certificated securities, by other means, as described below. For book-entry
transfer, you must deliver to the exchange agent either (1) a completed and
signed letter of transmittal in the form that we are providing with this
prospectus or (2) an Agent's Message. An "Agent's Message" means a message that:
o is transmitted by The Depository Trust Company, New York, New York
("DTC"), to and received by the exchange agent,
o forms a part of a book-entry confirmation (a confirmation of a
book-entry transfer of original notes into the exchange agent's
account at DTC), and
o states that DTC has received an express acknowledgment from the
tendering participant, which acknowledgment states that
o the tendering participant has received and agrees to be
bound by the letter of transmittal, and
o we may enforce the letter of transmittal against the
tendering participant.
You must deliver your letter of transmittal by mail, facsimile, hand
delivery or overnight carrier, or the Agent's Message, to the exchange agent on
or before the expiration date. In addition, to complete a book-entry transfer,
you must also either (1) have DTC transfer the original notes into the exchange
agent's account at DTC using the automated tender offer program procedures for
transfer, and obtain a confirmation of such a transfer or (2) follow the
guaranteed delivery procedures described below under "-- Guaranteed Delivery
Procedures."
If you tender less than all of your original notes, you should fill in
the principal amount of notes tendered in the appropriate box on the letter of
transmittal. If you do not indicate the amount tendered in the appropriate box,
we will assume you are tendering all original notes that you hold.
To tender your original notes other than by book-entry transfer, you
must deliver a completed and signed letter of transmittal to the exchange agent.
You must deliver the
28
letter of transmittal by mail, facsimile, hand delivery or overnight
courier to the exchange agent on or before the expiration date. In
addition, to complete a valid tender you must either (1) deliver your original
notes to the exchange agent on or before the expiration date, or (2) follow the
guaranteed delivery procedures set forth below under "--Guaranteed Delivery
Procedures."
Delivery of required documents by whatever method you choose is at your
sole risk. Delivery is complete when the exchange agent actually receives the
items to be delivered. Delivery of documents to DTC in accordance with DTC's
procedures does not constitute delivery to the exchange agent. If delivery is by
mail, then registered mail, return receipt requested, properly insured, or an
overnight delivery service is recommended. In all cases, you should allow
sufficient time to ensure timely delivery.
In tendering original notes, you must represent and warrant in the
letter of transmittal or in an Agent's Message that (1) you have
full power and authority to tender, exchange, sell, assign and transfer
original notes, (2) we will acquire good and unencumbered title to the tendered
original notes, free and clear of all liens, restrictions, charges and other
encumbrances, and (3) the original notes tendered for exchange are not subject
to any adverse claims or proxies. You also must warrant and agree that you will,
upon request, execute and deliver any additional documents we or the exchange
agent request to complete the exchange, sale, assignment and transfer of the
original notes and that you will comply with your obligations under the exchange
and registration rights agreement.
If you are a beneficial owner whose original notes are registered in the
name of a broker, dealer, commercial bank, trust company or other nominee and
you wish to tender your original notes in the exchange offer, you should contact
the registered holder promptly and instruct the registered holder to tender on
your behalf. If you wish to tender on your own behalf, you must either (1) make
appropriate arrangements to register ownership of the original notes in your
name or (2) obtain a properly completed bond power from the registered holder,
before completing and executing the letter of transmittal and delivering your
original notes.
Signature Guarantees
You do not need to endorse certificates for the original notes or
provide signature guarantees on the letter of transmittal unless (1) someone
other than the registered holder tenders the certificate or (2) you complete the
box entitled "Special Issuance Instructions" or "Special Delivery Instructions"
in the letter of transmittal. In the case of (1) or (2) above, you must sign
your original notes or provide a properly executed bond power, with the
signature on the bond power and on the letter of transmittal guaranteed by a
firm or other entity identified in Rule 17Ad-15 under the Exchange Act as an
"eligible guarantor institution." Eligible guarantor institutions include:
o a bank;
29
o a broker, dealer, municipal securities broker or dealer or government
securities broker or dealer;
o a credit union;
o a national securities exchange, registered securities association or
clearing agency; or
o a savings association that is a participant in a securities transfer
association.
Guaranteed Delivery Procedures
If you want to tender your original notes in the exchange offer and (1)
the certificates for the original notes are not immediately available or all
required documents are unlikely to reach the exchange agent on or before the
expiration date or (2) a book-entry transfer cannot be completed in time, you
may tender your original notes if you comply with the following guaranteed
delivery procedures:
o the tender is made by or through an eligible guarantor institution;
o you deliver a properly completed and signed notice of guaranteed
delivery in the form provided with the letter of transmittal to the
exchange agent on or before the Expiration Date; and
o you deliver the certificates or a confirmation of book-entry transfer
and a properly completed and signed letter of transmittal to the
exchange agent within three New York Stock Exchange trading days after
you execute the notice of guaranteed delivery.
You may deliver the notice of guaranteed delivery by hand, facsimile or
mail to the exchange agent, and you must include a guarantee by an eligible
guarantor institution in the form described in the notice.
Our acceptance of properly tendered original notes is a binding
agreement between the tendering holder and us upon the terms and subject to the
conditions of the exchange offer.
Determination of Validity
We will resolve all questions regarding the form of documents, validity,
eligibility (including time of receipt) and acceptance for exchange of any
tendered original notes. Our resolution of these questions as well as our
interpretation of the terms and conditions of the exchange offer (including the
letter of transmittal) is final and binding on all parties. A tender of original
notes is invalid until all irregularities have been cured or waived. Neither we,
the exchange agent nor any other person is under any obligation to give notice
of any irregularities in tenders nor will we or they be liable for failing to
give any such notice. We reserve the right, in our sole and absolute discretion,
to reject any tenders determined to be in improper form or unlawful. We also
reserve the right, in our
30
sole and absolute discretion, to waive any of the conditions of the exchange
offer or any condition or irregularity in the tender of original notes by any
holder. We need not waive similar conditions or irregularities in the case
of other holders.
If any letter of transmittal, endorsement, bond power, power of
attorney, or any other document required by the letter of transmittal is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
that person must indicate that capacity when signing. In addition, unless waived
by us, the person must submit proper evidence satisfactory to us, in our sole
and absolute discretion, of his or her authority to so act.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF EXCHANGE NOTES
We will issue exchange notes to the exchange agent for original notes
tendered and accepted and not withdrawn promptly after the expiration date. The
exchange agent might not deliver the exchange notes to all tendering holders at
the same time. The timing of delivery depends upon when the exchange agent
receives and processes the required documents.
We will be deemed to have exchanged original notes validly tendered and
not withdrawn when we give oral or written notice to the exchange agent of their
acceptance. The exchange agent is an agent for us for receiving tenders of
original notes, letters of transmittal and related documents. The exchange agent
is also an agent for tendering holders for receiving original notes, letters of
transmittal and related documents and transmitting exchange notes to validly
tendering holders. If, for any reason, we (1) delay the acceptance or exchange
of any original notes, (2) extend the exchange offer or (3) are unable to accept
or exchange original notes, then the exchange agent may, on our behalf and
subject to Rule 14e-1(c) under the Exchange Act, retain tendered original notes.
Original notes retained by the exchange agent may not be withdrawn, except
according to the withdrawal procedures outlined in the section entitled
"--Withdrawal Rights" below.
RESALES OF EXCHANGE NOTES
We are exchanging the original notes for exchange notes based upon the
position of the staff of the SEC set forth in interpretive letters to third
parties in other similar transactions. We will not seek our own interpretive
letter. As a result, we cannot assure you that the staff will take the same
position on this exchange offer as it did in interpretive letters to other
parties. Based on the staff's letters to other parties, we believe that holders
of exchange notes, other than broker-dealers, can offer the exchange notes
for resale, resell and otherwise transfer the exchange notes without delivering
a prospectus to prospective purchasers, other than as described below.
Any holder of original notes who is our "affiliate" within the meaning
of the Securities Act or who intends to distribute exchange notes, or any
broker-dealer who purchased original notes from us to resell pursuant to Rule
144A or any other available exemption under the Securities Act:
31
o cannot rely on the staff's interpretations in the above-mentioned
interpretive letters;
o cannot tender original notes in the exchange offer; and
o must comply with the registration and prospectus delivery requirements
of the Securities Act to transfer the original notes, unless the sale is
exempt.
Each broker-dealer that receives exchange notes for its own account in
exchange for original notes, where the original notes were acquired by the
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such exchange notes. See "Plan of Distribution."
If you want to exchange your original notes, you will be required to
affirm that:
o you are not our "affiliate" within the meaning of the Securities Act;
o you are acquiring the exchange notes in the ordinary course of your
business;
o you have no arrangement or understanding with any person to participate
in a distribution of the exchange notes within the meaning of the
Securities Act; and
o you are not and have not engaged in, and do not intend to engage in, a
distribution of the exchange notes within the meaning of the Securities
Act.
In addition, we may require you to provide information regarding the
number of "beneficial owners" (within the meaning of Rule 13d-3 under the
Exchange Act) of the original notes.
Each broker-dealer that receives exchange notes for its own account must
acknowledge that it acquired the original notes for its own account as the
result of market-making activities or other trading activities and must agree
that it will deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of exchange notes. Based on the position taken by
the SEC's staff in certain interpretive letters to third parties, we believe
that broker-dealers who acquired original notes for their own accounts as a
result of market-making activities or other trading activities may fulfill their
prospectus delivery requirements with respect to the exchange notes with a
prospectus meeting the requirements of the Securities Act. Accordingly, we
believe that a broker-dealer may use this prospectus to satisfy such
requirements. We have agreed that, for a period beginning when the exchange
notes are first issued in the exchange offer and ending upon the earlier of
the expiration of the 150th day after the exchange offer has been completed
or such time as participating broker-dealers no longer own any exchange notes,
we will make this prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution" for further information. A broker-dealer intending to use this
prospectus in the resale of exchange notes must notify us of this intention,
on or prior to the expiration date. This
32
notice may be given in the letter of transmittal or may be delivered to
the exchange agent. Any participating broker-dealer who is our "affiliate"
within the meaning of the Securities Act may not rely on the staff's
interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act when reselling exchange notes.
If you have notified us that you are a broker-dealer and intend to use
this prospectus in the resale of exchange notes, we will advise you of:
o any SEC request for amendments or supplements to the registration
statement or this prospectus or for additional information;
o the SEC's issuance of any stop order suspending the effectiveness
of the registration statement or the initiation of any proceedings for
that purpose; and
o our receipt of any notification with respect to the suspension of the
qualification of the exchange notes in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
Upon the occurrence of any of these events, we agree to notify you, if
applicable, to suspend use of this prospectus and we will prepare, as soon as
practicable, a post-effective amendment to the registration statement or an
amendment or supplement to this prospectus or file any other required document
so that, as subsequently delivered to purchasers of the exchange notes, this
prospectus will not include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements in this prospectus, in
the light of the circumstances under which they were made, not misleading. In
such circumstances, you agree that you shall suspend use of this prospectus
until we have amended or supplemented the prospectus so that it does not contain
any such untrue statement or omission.
WITHDRAWAL RIGHTS
You can withdraw tenders of original notes at any time on or before the
expiration date.
For a withdrawal to be effective, you must deliver a notice of
withdrawal by mail, facsimile, hand delivery or overnight carrier to the
exchange agent on or before the expiration date. The notice of withdrawal must
specify the name of the person tendering the original notes to be withdrawn,
the total principal amount of original notes withdrawn, and the name of the
registered holder of the original notes if different from the person tendering
the original notes. If you delivered original notes to the exchange agent, you
must submit the serial numbers of the original notes to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an eligible
guarantor institution, except in the case of original notes tendered for the
account of an eligible guarantor institution. If you tendered original notes as
a book-entry transfer, the notice of withdrawal must specify the name and number
of the account at DTC to be credited with the withdrawal of original notes and
you must deliver the notice of withdrawal to the
33
exchange agent by written or facsimile transmission. You may not rescind
withdrawals of your tender of original notes. Original notes properly withdrawn
may again be tendered at any time on or before the expiration date.
We will determine all questions regarding the validity, form and
eligibility of withdrawal notices. Our determination will be final and binding
on all parties. Neither we, the exchange agent nor any other person is under any
obligation to give notice of any irregularities in any notice of withdrawal, nor
will we or they be liable for failing to give any such notice. Withdrawn
original notes will be returned to the holder after withdrawal.
INTEREST ON EXCHANGE NOTES
The exchange notes will bear interest at a rate of 7.95% per annum,
payable semi-annually, on May 15 and November 15 of each year, commencing May
15, 2002, to the person in whose names the exchange notes are registered at the
close of business on May 1 and November 1, as the case may be, next preceding
such interest payment date. Holders of exchange notes will receive interest on
May 15, 2002 from the date of initial issuance of the exchange notes, plus an
amount equal to the accrued, but unpaid, interest on the original notes.
Interest on the original notes accepted for exchange will cease to accrue upon
issuance of the exchange notes. The exchange notes are not entitled to any
sinking fund.
CONDITIONS TO THE EXCHANGE OFFER
If we reasonably believe that:
o the staff of the SEC no longer allows the exchange notes to be offered
for resale, resold and otherwise transferred by certain holders without
compliance with the registration and prospectus delivery provisions of
the Securities Act; or
o a governmental body passes any law, statute, rule or regulation which,
in our opinion, prohibits or prevents the exchange
offer; or
o the SEC or any state securities authority issues a stop order suspending
the effectiveness of the registration statement or initiates or
threatens to initiate a proceeding to suspend the effectiveness of the
registration statement; or
o we are unable to obtain any governmental approval that we believe is
necessary to complete the exchange offer,
then we may (1) terminate the exchange offer, whether or not any original notes
have been accepted for exchange, (2) waive any condition to the exchange offer
or (3) amend the terms of the exchange offer in any respect. Our failure at any
time to exercise any of the foregoing rights will not waive such rights, and
each right will be deemed an ongoing right which may be asserted at any time or
from time to time. Notwithstanding the foregoing, we do not intend to terminate
the exchange offer if none of the foregoing conditions has occurred.
34
EXCHANGE AGENT
We appointed The Bank of New York as exchange agent for the exchange
offer. Holders should direct questions and requests for assistance, requests for
additional copies of this prospectus or of the letter of transmittal and
requests for notice of guaranteed delivery to the exchange agent addressed as
follows:
- --------------------------------------------------------------------------------
By Mail: By Overnight Courier or Hand: By Facsimile:
- --------------------------------------------------------------------------------
The Bank of New York The Bank of New York
Corporate Trust Operations Corporate Trust Operations (212) 235-2261
Reorganization Unit Reorganization Unit
15 Broad Street, 16th Floor 15 Broad Street Confirm:
New York, NY 10007 Lobby Level (212) 235-2358
Attn: Mr. Kin Lau New York, NY 10007
Attn: Mr. Kin Lau
- -------------------------------------------------------------------------------
FEES AND EXPENSES
We will pay the exchange agent reasonable and customary fees for its
services and reasonable out-of-pocket expenses. We may also pay brokerage houses
and other custodians, nominees and fiduciaries their reasonable out-of-pocket
expenses in forwarding copies of this prospectus and related documents to
holders of original notes, and in handling or forwarding tenders for exchange.
We will pay the transfer taxes for the exchange of the original notes in
the exchange offer. If, however, exchange notes are delivered to or issued in
the name of a person other than the registered holder, or if a transfer tax is
imposed for any reason other than for the exchange of original notes in the
exchange offer, then the tendering holder must pay the transfer taxes. If a
tendering holder does not submit satisfactory evidence of payment of taxes or
exemption from taxes with the letter of transmittal, the taxes will be billed
directly to the tendering holder.
We will not make any payment to brokers, dealers or other persons for
soliciting acceptances in the exchange offer.
ACCOUNTING TREATMENT
We will record the exchange notes at the same carrying value as the
original notes, as reflected in our accounting records on the date of exchange.
Accordingly, we will not recognize any gain or loss for accounting purposes.
We intend to amortize the expenses of the exchange offer and issuance of the
original notes over the term of the exchange notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
If you do not exchange your original notes for exchange notes pursuant
to the exchange offer, your original notes will continue to be subject to the
restrictions on transfer as described in the legend on those notes, but you will
no longer have the
35
exchange and registration rights and your original notes will not accrue
additional interest as liquidated damages. In general, original notes
may be offered or sold only if registered under the Securities Act, except
pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. We do not currently
anticipate that we will register the transfer of the original notes under the
Securities Act.
Because we anticipate that most holders of original notes will elect to
exchange their notes for exchange notes, we expect the liquidity of the market,
if any, for the original notes remaining outstanding after the completion of the
exchange offer will be substantially limited.
36
BUSINESS AND PROPERTIES
BOWATER INCORPORATED
Bowater is a global leader in the manufacture, sale and distribution of
newsprint. Bowater also manufactures, sells and distributes uncoated groundwood
specialty paper, coated groundwood paper, market pulp and lumber. As a result of
Bowater's acquisition of Alliance, Bowater has 12 pulp and paper mills in the
United States, Canada and South Korea and 13 North American sawmills that
produce softwood and hardwood lumber. Bowater manages and controls approximately
1.6 million acres of timberlands in the United States and Canada and has 32
million acres of timber cutting rights in Canada to support these facilities.
Bowater has agreed to sell approximately 112,000 acres and leasehold interests
in approximately 5,000 acres of timberlands for aggregate consideration of
approximately $108 million.
Overview. Bowater has five divisions: the Newsprint Division, the
Coated and Specialty Papers Division, the Pulp Division, the Forest Products
Division and the Canadian Forest Products Division. Except for the Pulp
Division, each division is responsible for the sales and marketing of distinct
product lines and the operation of certain manufacturing sites. The Pulp
Division is primarily a remarketing and distribution division.
The following table sets forth, pro forma for the Alliance acquisition,
certain sales and production data for Bowater for the year ended December 31,
2000.
PRODUCT SALES (IN SALES (PERCENT PRODUCTION
- ------- MILLIONS) OF TOTAL) CAPACITY
--------- --------- --------
Newsprint $1,749 53% 3,397,000 mt
Coated and specialty papers $ 759 23% 1,143,000 mt
Market pulp $ 561 17% 1,259,000 mt
Lumber, timber and other wood products $ 231 7% 1,031,000 mbf
- -----------------
mt: metric tons mbf: thousands of board feet
Newsprint Division. The Newsprint Division operates six manufacturing
sites in the United States, Canada and South Korea. The principal product line
at these manufacturing sites is newsprint, but several of the sites also produce
market pulp and uncoated groundwood specialties. The Division is responsible for
the worldwide marketing and sales of newsprint. Bowater is the largest
manufacturer of newsprint in the United States and the second largest in North
America. After the Alliance acquisition, Bowater has approximately 20% market
share in the North American newsprint market.
Coated and Specialty Papers Division. The Coated and Specialty
Papers Division operates a manufacturing site that produces coated groundwood
paper, newsprint, market pulp and uncoated groundwood specialties and a
coating facility. Both of the facilities
37
are located in the United States. The Division is building a second coating
facility in the United States, which will be completed in 2002. The Division is
responsible for the marketing and sales of coated and uncoated groundwood
specialty papers produced by those facilities and by the facilities operated by
the Newsprint Division and the Canadian Forest Products Division.
Pulp Division. The Pulp Division markets and distributes market pulp
produced at the operations of Bowater's Newsprint Division and Coated and
Specialty Papers Division at Calhoun, Tennessee; Catawba, South Carolina;
Thunder Bay, Ontario; and Coosa Pines, Alabama. The Division sells northern and
southern kraftwood pulp and fluff pulp. The financial results for the production
and sale of market pulp are included in the financial results of the Newsprint
Division and the Coated and Specialty Papers Division, depending upon which site
manufactures the product.
Forest Products Division. The Forest Products Division manages 1.3
million acres of timberland owned or leased in the United States (including
timberlands that Bowater has agreed to sell, as described above) and Canada and
over 8 million acres of Crown-owned land in Canada on which Bowater has cutting
rights. The Division also operates three softwood sawmills, supplies wood fiber
to Bowater's pulp and paper production sites and markets timber and lumber in
North America.
Canadian Forest Products Division. The Canadian Forest Products Division
operates four manufacturing sites in Canada. Bowater acquired a significant
portion of these operations in connection with its acquisition of Alliance as
described below. The principal product lines at these manufacturing sites are
newsprint and uncoated groundwood specialties. The Division is also responsible
for Bowater's 10 sawmill operations in Quebec and New Brunswick and for all
lumber sales from Bowater's Canadian sawmills. The Division manages 400,000
acres of timberland owned in Canada and about 24 million acres of Crown-owned
land in Canada on which Bowater has cutting rights.
The principal offices of Bowater are at 55 East Camperdown Way,
Greenville, South Carolina 29601, and its telephone number at that address is
(864) 271-7733.
38
PROPERTIES
The following table lists Bowater's mills by location and does not give
effect to the Alliance acquisition:
MILLS BY
GEOGRAPHICAL APPROXIMATE
REGION MILL LOCATION MILL TYPE ANNUAL CAPACITY
- ------ ------------- --------- ---------------
United States Usk, Washington Newsprint 253,000 mt
Grenada, Mississippi Newsprint 244,000 mt
Albertville, Alabama Lumber 99,000 mbf
Calhoun, Tennessee Newsprint/Specialty 774,000 mt
Market pulp 199,000 mt
Catawba, South Carolina Coated paper 325,000 mt
Market pulp 245,000 mt
Newsprint/Specialty 247,000 mt
Benton Harbor, Michigan Paper coating 126,000 mt
Canada Thunder Bay, Ontario Newsprint 501,000 mt
Market pulp 544,000 mt
Gatineau, Quebec Newsprint 518,000 mt
Maniwaki, Quebec Lumber 79,000 mbf
Dalhousie, New Brunswick Newsprint 239,000 mt
Liverpool, Nova Scotia Newsprint 251,000 mt
Oakhill, Nova Scotia Lumber 110,000 mbf
Asia Mokpo, South Korea Newsprint 276,000 mt
- --------------
mt: metric tons mbf: thousands of board feet
As a result of the Alliance acquisition, Bowater acquired the following
mills:
MILLS BY
GEOGRAPHICAL APPROXIMATE
REGION MILL LOCATION MILL TYPE ANNUAL CAPACITY
- ------ ------------- --------- ---------------
United States Coosa Pines, Alabama Newsprint 320,000 mt
Market Pulp 272,000 mt
Westover, Alabama Lumber 58,000 mbf
Canada Dolberau, Quebec Specialty 220,000 mt
Donnacona, Quebec Specialty 245,000 mt
Mastassini, Quebec Lumber 175,000 mbf
Saint-Felicien, Quebec Lumber 160,000 mbf
Degelis, Quebec Lumber 60,000 mbf
Baker Brook, New Brunswick Lumber 75,000 mbf
Riviere-Bleue, Quebec Lumber 30,000 mbf
Lac-des-Aigles, Quebec Lumber 20,000 mbf
Price, Quebec Lumber 85,000 mbf
Girardville, Quebec Lumber 30,000 mbf
Baie-Trinite, Quebec Lumber 50,000 mbf
- --------------
mt: metric tons mbf: thousands of board feet
39
ACQUISITION OF ALLIANCE FOREST PRODUCTS INC.
Bowater completed the acquisition of all of the outstanding capital
stock of Alliance on September 24, 2001. Following this acquisition, Bowater
changed Alliance's name to Bowater Canadian Forest Products Inc.
The aggregate purchase price to shareholders for the acquisition was
approximately $486 million, consisting of 5,035,863 shares of Bowater's common
stock (including Toronto Stock Exchange listed shares exchangeable on a
one-for-one basis for shares of Bowater's common stock) and $251 million in
cash. Bowater also repaid approximately $273 million of Alliance's outstanding
debt. Bowater financed the cash portion of the purchase price and the debt
repayment with $500 million of borrowings under a bridge credit agreement.
Bowater repaid those borrowings with funds derived from the sale of the original
notes. See "Use of Proceeds."
Bowater expects that the acquisition will increase earnings. Bowater
expects to achieve annual cost savings and operating synergies in connection
with the acquisition of approximately $60 million by the end of 2002. Through
this acquisition, Bowater has increased its annual newsprint, coated and
uncoated groundwood specialty papers capacity to approximately 4.6 million
metric tons, and Bowater has increased its annual lumber capacity to
approximately 1.0 billion board feet.
BOWATER CANADA FINANCE CORPORATION
We are an unlimited liability company organized under the laws of the
Province of Nova Scotia, Canada, and a wholly-owned subsidiary of Bowater.
Bowater formed us for the purpose of providing financing to Bowater in Canada.
We have no independent operations, our only material liabilities consist of the
original notes, and our only material assets consist of our ownership interests
in indirect wholly-owned subsidiaries of Bowater Incorporated.
Our principal offices are c/o Bowater Incorporated at 55 East Camperdown
Way, Greenville, South Carolina 29601, and our telephone number at that address
is (864) 271-7733.
RECENT DEVELOPMENTS
In November 2001, Bowater completed the sale of four subsidiaries that
own or lease approximately 147,000 acres of timberland in North Carolina, South
Carolina, Georgia and Tennessee, for aggregate consideration of $121.6 million,
to two purchasers in separate transactions.
On January 1, 2002, Bowater anticipates amalgamating Alliance with its
wholly-owned indirect subsidiary, Bowater Pulp and Paper Canada Inc. The
resulting amalgamated company will be called "Bowater Canadian Forest Products
Inc."
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DESCRIPTION OF THE EXCHANGE NOTES
GENERAL
We will issue the exchange notes under an indenture, which is a contract
among us, Bowater, as guarantor, and The Bank of New York, as trustee. The
trustee's main role is to enforce your rights against us if we or Bowater
default. We describe some limitations on the extent to which the trustee acts on
your behalf under "--Events of Default-- Remedies if an Event of Default
Occurs." The trustee will also act as registrar, paying agent and authenticating
agent, and perform administrative duties for us, such as sending out interest
payments and notices under the indenture.
The following description of the provisions of the indenture is only a
summary. This summary is not complete. We recommend that you read the entire
indenture carefully before exchanging your original notes for exchange notes. In
the summary below, we have included references to some sections of the indenture
so that you can easily locate these provisions. You can obtain a copy of the
indenture by following the directions under the caption "Where You Can Find More
Information about Bowater Incorporated" on page 1 of this prospectus.
The Trust Indenture Act of 1939 applies to the indenture, and we refer
you to the Trust Indenture Act for additional terms and definitions that apply.
Some of the terms used in this section are defined in "-- Definitions
for Restrictive Covenants" below.
PRINCIPAL, MATURITY AND INTEREST
The exchange notes will be a series of debt securities under the
indenture. The amount of debt securities we can issue under the indenture is
unlimited. We will issue the exchange notes in an initial aggregate principal
amount of the original notes tendered in the exchange offer, up to $600,000,000.
However, we may issue additional notes of the same series as the exchange notes
without your consent and without notifying you. Any such additional notes will
have the same ranking, interest rate, maturity date, redemption rights and other
terms as the exchange notes. Any such additional notes, together with the
exchange notes and the original notes, will constitute a single series of debt
securities under the indenture. The exchange notes will be issued in principal
amounts of $1,000 and any integral multiple thereof.
The exchange notes will mature on November 15, 2011. Interest will
accrue from the issue date of the exchange notes at a rate equal to 7.95% per
year. In addition, holders of exchange notes will receive an amount equal to the
accrued, but unpaid, interest on the original notes. We will pay interest on the
exchange notes on May 15 and November 15 of each year, beginning on May 15,
2002. The exchange notes will not be entitled to any sinking fund.
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RANKING
The exchange notes are not secured by any of our property or assets. The
exchange notes will be senior unsecured obligations and will rank equally with
our existing and future senior unsecured debt and effectively will be junior to
our existing and future senior secured debt. Upon completion of this offering,
we will not have any senior secured or unsecured debt outstanding other than the
exchange notes and, to the extent that any remain unexchanged, the original
notes.
BOWATER'S GUARANTEES
Bowater will unconditionally and irrevocably guarantee the payment of
all principal and interest on the exchange notes. Bowater's guarantees of the
exchange notes will not be secured by any of its property or assets. Bowater's
guarantees of the exchange notes will be a senior unsecured obligation of
Bowater and will rank equally with all its existing and future senior unsecured
debt (including the original notes) and effectively will be junior to its entire
existing and future senior secured debt. As of September 30, 2001, Bowater had
no senior secured debt and senior unsecured debt totaling $1,843.8 million
(which includes $62.8 million of guarantees).
In general, the guarantees provide that if we fail to pay any interest
payment or the principal of the notes when due and payable, Bowater will,
without any action by the trustee or any holder of the notes, pay the amount of
the interest payment or the principal then due. The guarantees will not require
you to take any action or institute any proceeding against us in order to demand
or receive payments under the guarantees. Although upon making any such payment,
Bowater will be subrogated to your rights against us for any payment of interest
or principal we fail to make, Bowater will not be entitled to make a claim
against us with respect to those rights until the notes have been paid in full.
OPTIONAL REDEMPTION
We may redeem some or all of the notes at any time. If we choose to
redeem any notes prior to maturity, we will pay a redemption price equal to the
greater of the following amounts, plus, in each case, accrued and unpaid
interest to the redemption date:
o 100% of the principal amount of the notes being redeemed; or
o the sum of the present values of the remaining scheduled payments of the
principal of and interest on the notes being redeemed, discounted to the
redemption date in accordance with standard market practice (on a
semiannual compounding basis and assuming a 360-day year consisting of
twelve 30-day months) at the treasury rate referred to below plus 45
basis points.
If we choose to redeem any notes, we will mail a notice of redemption to
you not less than 30 days and not more than 60 days before the redemption date.
If we are redeeming less than all the notes, the trustee will select the
particular notes to be redeemed by lot or pro rata or by another method the
trustee deems fair and appropriate.
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Unless we default in payment of the redemption price, on and after the
redemption date, interest will cease to accrue on the notes or portions of the
notes called for redemption.
For purposes of calculating the redemption price in connection with the
redemption of the notes on any redemption date, the following terms have the
meanings set forth below:
"Treasury rate" means the semiannual equivalent yield to maturity of the
treasury security, referred to below, that corresponds to the treasury price
referred to below, calculated in accordance with standard market practice and
computed as of the second trading day preceding the redemption date.
"Treasury security" means the United States Treasury security that the
treasury dealer, referred to below, determines would be appropriate to use, at
the time of determination and in accordance with standard market practice, in
pricing the notes being redeemed in a tender offer based on a spread to United
States Treasury yields.
"Treasury price" means the bid-side price for the treasury security as
of the third trading day preceding the redemption date, as set forth in the
daily statistical release (or any successor release) published by the Federal
Reserve Bank of New York on that trading day and designated "Composite 3:30 p.m.
Quotations for U.S. Government Securities," except that:
o if that release (or any successor release) is not published or does not
contain that price information on that trading day; or
o if the treasury dealer determines that price information is not
reasonably reflective of the actual bid-side price for the treasury
security prevailing at 3:30 p.m., New York City time, on that trading
day,
then treasury price will instead mean the bid-side price for the treasury
security at or around 3:30 p.m., New York City time, on that trading day
(expressed on a next trading day settlement basis) as determined by the treasury
dealer through such alternative means as the treasury dealer considers to be
appropriate under the circumstances.
"Treasury dealer" means each of Goldman, Sachs & Co. and J.P. Morgan
Securities Inc. (or their respective successors) or, if any of them (or their
respective successors) refuses to act as treasury dealer for these purposes or
ceases to be a primary government securities dealer, another nationally
recognized investment banking firm that is a primary U.S. government securities
dealer specified by us for these purposes.
All determinations made by the treasury dealer with respect to
determining the redemption price will be final and binding on all parties,
absent manifest error.
RESTRICTIVE COVENANTS
We define some of the terms we use in the next two subsections below
under "--Definitions for Restrictive Covenants."
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Limitation on liens. Neither Bowater nor any Restricted Subsidiary may
create, incur, assume or suffer to exist any Lien upon any Principal Property,
whether owned at the date of the indenture or acquired later, to secure any
Indebtedness, without securing the notes (together with, if Bowater so
determines, any Indebtedness of Bowater or any Restricted Subsidiary that is
not subordinate to the notes and any debt securities of any other series then
outstanding under the indenture) by that Lien equally and ratably with, or prior
to, any and all other Indebtedness secured by it, so long as that Indebtedness
is so secured.
The foregoing restriction will not apply to Indebtedness secured solely
by:
o Liens existing on the date of the indenture;
o Liens on any property existing at the time Bowater or a Restricted
Subsidiary acquires it;
o Liens in favor of Bowater or any wholly-owned Restricted Subsidiary;
o Liens in favor of any governmental body to secure progress, advance or
other payments pursuant to any contract or provision of any statute;
o Liens on property to secure all or part of the cost of acquiring,
substantially repairing or altering, constructing, developing or
substantially improving the property, or to secure all or part of such
property, subject to certain limitations;
o Liens securing obligations issued by a State, territory or possession of
the United States or the District of Columbia, to finance the
acquisition or construction of property, and on which the interest is
not, in the opinion of tax counsel or in accordance with an Internal
Revenue Service ruling, includible in gross income by reason of Section
103(a) of the Internal Revenue Code of 1986, as amended; and
o any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any Lien referred to
in the foregoing clauses, subject to certain limitations.
Bowater and its Restricted Subsidiaries may create, incur, assume or
suffer to exist Liens securing any Indebtedness without equally and ratably
securing the notes and other debt securities issued under the indenture provided
that the aggregate amount of such Indebtedness and Attributable Debt with
respect to Sale and Lease-Back Transactions does not exceed 10% of Bowater's
Consolidated Net Tangible Assets.
Limitation on Sale and Lease-Back Transactions. Neither Bowater nor any
Restricted Subsidiary may enter into any Sale and Lease-Back Transactions with
respect to any Principal Property unless the aggregate amount of all
Attributable Debt with respect to Sale and Lease-Back Transactions plus the
aggregate amount of Indebtedness secured by Liens incurred without equally and
ratably securing the notes pursuant to
44
"--Limitation on liens" above, would not exceed 10% of Bowater's Consolidated
Net Tangible Assets. The foregoing restriction will not apply to, and there
shall be excluded from Attributable Debt in any computation described herein or
in "--Limitation on liens" with respect to Sale and Lease-Back Transactions if:
o the lease in such Sale and Lease-Back Transaction is for a period,
including renewal rights, of three years or less;
o Bowater or any Restricted Subsidiary, within 180 days after the Sale and
Lease-Back Transaction, applies an amount not less than the greater of
the net proceeds of the Sale and Lease-Back Transaction or the fair
value of the Principal Property at the time of the Sale and Lease-Back
Transaction to (a) the prepayment or retirement of Funded Debt of
Bowater or any of its Restricted Subsidiaries or (b) the purchase of
other property which will constitute Principal Property, subject to
certain limitations;
o the lease in such Sale and Lease-Back Transaction secures or relates to
obligations issued by a State, territory or possession of the United
States or the District of Columbia, to finance the acquisition or
construction of property, and on which the interest is not, in the
opinion of tax counsel or in accordance with an Internal Revenue
Service, includible in gross income of the holder by reason of Section
103(a) of the Internal Revenue Code of 1986, as amended; or
o such Sale and Lease-Back Transaction is entered into between Bowater and
a wholly-owned Subsidiary or between wholly-owned Subsidiaries.
DEFINITIONS FOR RESTRICTIVE COVENANTS
"Attributable Debt" means, at the time any determination thereof is to
be made, with respect to any lease under which Bowater or any of its Restricted
Subsidiaries is liable, the total net amount of rent Bowater or its Restricted
Subsidiary must pay under such lease during its remaining term, using a discount
rate equal to the weighted average yield to maturity of the notes, compounded
semiannually. By "net" amount of rent we mean the rent payable by the lessee
after excluding amounts required to be paid on account of maintenance and
repairs, insurance, taxes, assessments, water rates and similar charges. In the
case of any lease which is terminable upon the payment of a penalty, such net
amount shall also include the amount of such penalty, but no rent shall be
considered as required to be paid under such lease subsequent to the first date
upon which it may be terminated.
"Consolidated Net Tangible Assets" means, on the date of any
determination, the aggregate amount of assets, less applicable reserves and
other properly deductible items, after deducting:
o all current liabilities, and
45
o all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles,
all as set forth on the most recent quarterly balance sheet of Bowater and its
consolidated subsidiaries and computed in accordance with
accounting principles generally accepted in the United States.
"Funded Debt" means (1) all Indebtedness for money borrowed having a
maturity of more than 12 months from the date as of which the determination is
made or having a maturity of 12 months or less but by its terms being renewable
or extendible beyond 12 months from such date at the option of the borrower
(excluding any amount thereof included in current liabilities) and (2) rental
obligations payable more than 12 months from such date under leases which are
capitalized in accordance with accounting principles generally accepted in the
United States (such rental obligations to be included as Funded Debt at
the amount so capitalized and to be included for the purposes of the definition
of Consolidated Net Tangible Assets both as an asset and as Funded Debt at the
amount so capitalized.).
"Indebtedness" means, at any time, without duplication:
o all obligations for borrowed money,
o all obligations evidenced by bonds, debentures, notes or other similar
instruments, and
o all obligations in respect of any letters of credit supporting any
Indebtedness of others and guarantees of Indebtedness of others.
"Lien" means any mortgage, pledge, hypothecation, encumbrance, security
interest, statutory or other lien, or preference, priority or other security or
similar agreement or preferential arrangement of any kind or nature whatsoever,
including any conditional sale or other title retention agreement having
substantially the same economic effect as any of these.
"Principal Property" means (1) any mill, converting plant, manufacturing
plant or other facility owned on the date of the indenture or thereafter
acquired by Bowater or any Restricted Subsidiary that is located within the
continental United States and the gross book value (including related land and
improvements thereon and all machinery and equipment included therein without
deduction of any depreciation reserves) of which, on the date as of which the
determination is being made, exceeds 1% of Bowater's Consolidated Net Tangible
Assets, and (2) Timberlands, in each case other than:
o any property which, in the opinion of Bowater's board of directors as
evidenced by a board resolution, is not of material importance to the
business conducted by Bowater and its Restricted Subsidiaries as an
entirety,
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o a portion of any property which, in the opinion of Bowater's board of
directors as evidenced by a board resolution, is not of material
importance to the use or operation of such property, or
o any oil, gas or other minerals or mineral rights.
"Realty Subsidiary" means a subsidiary engaged primarily in the
development and sale or financing of real property.
"Restricted Subsidiary" means a subsidiary of Bowater (1) substantially
all the property of which is located, or substantially all the business of which
is carried on, within the continental United States and (2) which owns a
Principal Property, but does not include a Realty Subsidiary.
"Sale and Lease Back Transaction" means any arrangement whereby Bowater
or one of its subsidiaries has sold or transferred, or will sell or transfer,
property to a third party and has or will take back a lease pursuant to which
the rental payments are calculated to amortize the purchase price of the
property substantially over the useful life of such property.
"Timberlands" means any real property of Bowater or any Restricted
Subsidiary located within the continental United States which contains (or upon
completion of a growth cycle then in process is expected to contain) standing
timber of a commercial quantity and of merchantable quality, excluding, however,
any such real property which at the time of determination is held primarily for
development or sale and not primarily for the production of any lumber or other
timber products.
MERGERS AND SIMILAR EVENTS
Neither we nor Bowater may consolidate with or merge into any other
person or convey, transfer or lease our properties and assets substantially as
an entirety to any person, unless:
o the successor person is a corporation, partnership or trust organized
and validly existing under the laws of the United States, any State or
the District of Columbia or, in our case, the Province of Nova Scotia,
Canada;
o the successor person expressly assumes our obligations on the notes and
under the indenture or Bowater's obligations under guarantees and under
the Indenture as the case may be;
o after giving effect to the transaction, no Event of Default, and no
event which, after notice or lapse of time or both, would become an
Event of Default, would occur and be continuing; and
o immediately after giving effect to the transaction, either we or the
successor person shall take all necessary steps to bring any secured
Indebtedness into compliance with the limitation on liens covenant.
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MODIFICATION AND WAIVER
We and the trustee can modify and amend the indenture with the consent
of the holders of a majority of the principal amount of the outstanding original
notes and exchange notes, taken together. However, we may not, without the
consent of each holder of the original notes and the exchange notes:
o change the stated maturity of the principal or interest on a note;
o reduce any amounts due on a note;
o reduce the amount of principal payable upon acceleration of the maturity
of a note following a default;
o change the place or currency of payment on a note;
o impair your right to sue for payment;
o reduce the percentage of holders of the notes whose consent is needed to
modify or amend the indenture;
o reduce the percentage of holders of the notes whose consent is needed to
waive compliance with certain provisions of the indenture or to waive
certain defaults; and
o modify any other aspect of the provisions dealing with modification and
waiver of the indenture.
We and the trustee may also modify and amend the indenture without your
consent in limited circumstances such as clarifications and changes that would
not adversely affect you.
The holders of a majority of the principal amount of the outstanding
notes may waive our and Bowater's compliance with the restrictive covenants in
the indenture. The holders of at least a majority of the principal amount of
the outstanding notes may, on behalf of all holders of the notes, waive any past
default under the indenture, except:
o a default in the payment of principal of, premium, if any, or interest
on the notes; and
o a default in respect of a covenant or provision of the indenture that
cannot be modified or amended without the consent of the holder of each
outstanding note.
We generally will be entitled to set any day as a record date for the
purpose of determining the holders of outstanding notes that are entitled to
vote or take other action under the indenture in accordance with applicable
laws. In limited circumstances, the trustee will be entitled to set a record
date for action by you. If we or the trustee set a record date for a vote or
other action to be taken by you, that vote or action may be taken
48
only by persons who are holders of outstanding notes on the record date and
must be taken within 180 days following the record date or a shorter period
that we may specify (or as the trustee may specify, if it sets the record date).
We may shorten or lengthen (but not beyond 180 days) this period from time
to time.
You should consult your bank or broker for information on how approval
may be granted or denied if we seek to change the indenture or the notes or
request a waiver.
REPORTS
Whether or not we and Bowater are subject to the reporting requirements
of Section 13 or 15(d) of the Exchange Act, Bowater will deliver to the trustee
within 5 days after Bowater is (or would have been if Bowater were subject to
such reporting obligations) required to file with the SEC, annual and quarterly
financial statements substantially equivalent to financial statements that would
have been included in reports filed with the SEC if Bowater were subject to the
requirements of Section 13 or 15(d) of the Exchange Act, including, with respect
to annual information only, a report thereon by its certified independent public
accountants as such reports would be required in such filings, and, in each
case, together with a management's discussion and analysis of financial
condition and results of operations which would be so required and, unless the
SEC will not accept such reports, file with the SEC the annual, quarterly and
other reports which Bowater is or would have been required to file with the SEC.
DEFEASANCE
Full Defeasance. If there is a change in federal tax law, as described
below, we can legally release ourselves and Bowater from any payment or other
obligations on the notes and the guarantees, which we call full defeasance, if
we put in place the following other arrangements for repayment of the notes:
o We must deposit in trust for your benefit a combination of money and
U.S. government or U.S. government agency notes or bonds that will
generate enough cash to make interest, principal and any other payments
on the notes on their various due dates.
o There must be a change in current federal tax law or an Internal Revenue
Service ruling that lets us make the above deposit without causing you
to be taxed on the notes any differently than if we did not make the
deposit and instead repaid the notes ourselves. Under current federal
tax law, the deposit and our legal release from the notes would be
treated as though we took back the notes and gave you your share of the
cash and notes or bonds deposited in trust. In that event, you could
recognize gain or loss on the notes given back to us.
o We must deliver to the trustee a legal opinion of our counsel confirming
the tax law change described above.
49
If we ever did accomplish full defeasance, as described above, you would
have to rely solely on the trust deposit for repayment on the notes. You could
not look to us for repayment in the unlikely event of any shortfall. Conversely,
the trust deposit would most likely be protected from claims of our lenders and
other creditors if we ever became bankrupt or insolvent.
Covenant Defeasance. Under current federal tax law, we can make the same
type of deposit described above and be released and have Bowater and its other
subsidiaries released from some of the restrictive covenants in the notes. This
is called covenant defeasance. In that event, you would lose the protection of
those restrictive covenants but would gain the protection of having money and
securities set aside in trust to repay the notes. In order to achieve covenant
defeasance, we must do the following:
o We must deposit in trust for your benefit a combination of money and
U.S. government or U.S. government agency notes or bonds that will
generate enough cash to make interest, principal and any other payments
on the notes on their various due dates.
o We must deliver to the trustee a legal opinion of our counsel confirming
that, under current federal income tax law, we may make the above
deposit without causing you to be taxed on the notes any differently
than if we did not make the deposit and instead repaid the notes
ourselves.
If we accomplish covenant defeasance, the following provisions of the
indenture and the notes would no longer apply:
o Bowater's promises regarding conduct of its business previously
described above under "-- Restrictive Covenants;"
o Bowater's obligations previously described above under "-- Reports;"
o the conditions that apply when either we or Bowater merge or engage in
similar transactions, as previously described above under "-- Mergers
and Similar Events;"
o the events of default relating to breach of covenants, certain events in
bankruptcy, insolvency or reorganization, and acceleration of the
maturity of other debt, described below under "-- Events of Default".
If we accomplish covenant defeasance, you can still look to us for
repayment of the exchange notes (and to Bowater under the guarantees) if there
were a shortfall in the trust deposit. In fact, if one of the remaining events
of default occurred (such as our or Bowater's bankruptcy) and the notes become
immediately due and payable, there may be such a shortfall. Depending on the
event causing the default, you may not be able to obtain payment of the
shortfall.
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EVENTS OF DEFAULT
The term "event of default" means any of the following:
o we do not pay interest on a note within 30 days of its due date;
o we do not pay the principal or any premium on a note on its due date;
o either we or Bowater fail to perform any restrictive covenant or other
term of the indenture for 60 days after receipt of notice of such breach
from the trustee or holders of at least 25% of the principal amount of
the notes outstanding;
o Bowater repudiates its obligations under its guarantees of the notes or
the guarantees become unenforceable or invalid or are no longer in full
force and effect; or
o either we or Bowater file for bankruptcy or certain other events in
bankruptcy, insolvency or reorganization occur.
Remedies if an Event of Default Occurs. If an event of default has
occurred and has not been cured, the trustee or the holders of 25% of the
principal amount of the outstanding notes may declare the entire principal
amount of all the notes to be due and immediately payable. This is called a
declaration of acceleration of maturity. If an event of default occurs because
of certain events in bankruptcy, insolvency or reorganization, the principal
amount of all notes will be automatically accelerated, without any action by the
trustee or any holder. A declaration of acceleration of maturity may be canceled
by the holders of at least a majority in principal amount of the notes.
Except in cases of default, where the trustee has some special duties,
the trustee is not required to take any action under the indenture at the
request of any holders unless the holders offer the trustee protection from
expenses and liability satisfactory to the trustee, which is called an
indemnity. If reasonable indemnity is provided, the holders of a majority of the
principal amount of the outstanding notes may direct the time, method and place
of conducting any lawsuit or other formal legal action seeking any remedy
available to the trustee. These majority holders may also direct the trustee in
performing any other action under the indenture.
Before you may bypass the trustee and bring your own lawsuit or other
formal legal action or take other steps to enforce your rights or protect your
interests relating to the notes, the following must occur:
o you must give the trustee written notice that an event of default has
occurred and remains uncured;
o the holders of 25% in principal amount of all outstanding notes must
make a written request that the trustee take action because of the
default, and must offer
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reasonable indemnity to the trustee against the cost and other
liabilities of taking that action;
o the holders of a majority in principal amount of all outstanding notes
must not have given the trustee any direction inconsistent with that
request; and
o the trustee must have not taken action for 60 days after the receipt of
the above notice and offer of indemnity.
You are, however, entitled at any time to bring a lawsuit for the
payment of money due on your notes on or after its due date.
We will furnish to the trustee every year a written statement regarding
our performance of our obligations under the indenture and any default in such
performance.
THE TRUSTEE
The trustee's current address is 5 Penn Plaza, 13th Floor, New York, New
York 10001, Attn: Corporate Trust Administration.
The indenture provides that, except during the continuance of an event
of default, the trustee will perform only such duties as are specifically set
forth in the indenture. During the existence of an event of default, the trustee
will exercise such rights and powers vested in its exercise as a prudent person
would exercise under the circumstances in the conduct of such person's own
affairs.
The indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the trustee, should it
become our creditor, to obtain payment of claims in certain cases or to
liquidate certain property received by it in respect of any such claim as
security or otherwise. The trustee is permitted to engage in other transactions
with us or any of our affiliates. If the trustee acquires any conflicting
interest (as defined in the indenture or in the Trust Indenture Act), it must
eliminate such conflict or resign.
GOVERNING LAW
The indenture, the notes, and the guarantees of the notes will be
governed by and construed in accordance with the laws of the State of New York.
FORM AND DENOMINATIONS
THE GLOBAL NOTES
We will issue the exchange notes in the form of one or more global debt
securities, in fully registered form, without interest coupons.
The global notes and any notes issued in exchange therefor will be
subject to certain restrictions on transfer set forth in the global notes and in
the indenture and will
52
bear the legend regarding such restrictions set forth under the heading "Notice
to Investors" below.
You may hold beneficial interests in the global note directly through
DTC if you have an account at DTC, or indirectly through organizations that have
accounts at DTC.
What is a Global Security? A global security, such as the global note,
is a special type of security held in the form of a certificate by a depositary
for the investors in a particular issue of securities. The aggregate principal
amount of the global security equals the sum of the principal amounts of the
issue of securities it represents. The depositary or its nominee is the sole
legal holder of the global security. The beneficial interests of investors in
the issue of securities are represented in book-entry form in the computerized
records of the depositary. If investors want to purchase securities represented
by a global security, they must do so through brokers, banks or other financial
institutions that have an account with the depositary.
Special Investor Considerations for Global Securities. Because you, as
an investor, will not be a registered legal holder of the global note, your
rights relating to the global note will be governed by the account rules of your
bank or broker and of the depositary, DTC, as well as general laws relating to
securities transfers. We will not recognize a typical investor as a legal owner
of the notes and instead will deal only with the trustee and DTC, the depositary
that is the registered legal holder of the global note.
You should be aware that as long as the notes are issued only in the
form of a global security:
o You cannot get the notes registered in your own name.
o You cannot receive physical certificates for your interest in the notes.
o You will not be a registered legal holder of the notes and must look to
your own bank or broker for payments on the notes and protection of your
legal rights relating to the notes.
o You may not be able to sell interests in the notes to some insurance
companies and other institutions that are required by law to own their
securities in the form of physical certificates.
o As an owner of beneficial interests in the global note, you may not be
able to pledge your interests to anyone who does not have an account
with DTC, or to otherwise take actions in respect of your interests,
because you cannot get physical certificates representing those
interests.
o DTC's policies will govern payments of principal and interest,
transfers, exchanges and other matters relating to your interest in the
global note. Neither we nor the trustee has any responsibility for any
aspect of DTC's actions or for its
53
records of ownership interests in the global note. Also, neither we
nor the paying agent supervise DTC in any way.
o DTC will require that interests in the global note be purchased or sold
within its system using same-day funds. Transfers between participants
in Euroclear and Clearstream will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Description of DTC. DTC has informed us that:
o DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code and a
"clearing agency" registered pursuant to the provision of Section 17A of
the Securities Exchange Act of 1934.
o DTC was created to hold securities for financial institutions that have
accounts with it, and to facilitate the clearance and settlement of
securities transactions between the account holders through electronic
book-entry changes in their accounts, thereby eliminating the need for
physical movement of certificates. DTC account holders include
securities brokers and dealers, banks, trust companies and clearing
corporations and certain other organizations including Euroclear and
Clearstream. Indirect access to the DTC system is also available to
banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a DTC account holder, either
directly or indirectly.
o DTC's rules are on file with the SEC.
o DTC's records reflect only the identity of the account holder to whose
accounts beneficial interests in the global note are credited. These
account holders may or may not be the owners of the beneficial interests
so recorded. The account holders will be responsible for keeping account
of their holdings on behalf of their beneficial owners.
DEFINITIVE NOTES
In a few special situations described in the next paragraph, the global
note will terminate and your interests in it will be exchanged for physical
certificates representing the exchange notes. After that exchange, the choice of
whether to hold the exchange notes directly or in "street name" (in computerized
book-entry form) will be up to you. You must consult your own bank or broker to
find out how to have your interests in the exchange notes transferred to your
own name if you wish to be a direct legal holder of the exchange notes.
We will cause definitive exchange notes to be issued in exchange for the
global note if DTC notifies us that:
54
o it is unwilling, unable or no longer qualified to continue acting as the
depositary for the global note, or it has ceased to be a clearing agency
registered under the Exchange Act at a time when it is required to be so
registered, and we do not appoint a successor depositary within 90 days;
or
o an event of default with respect to the notes has occurred and is
continuing as described under "-- Events of Default"; or
o we decide in our sole discretion not to have any of the exchange notes
represented by the global note.
We would issue definitive exchange notes in this way:
o in fully registered form;
o without interest coupons; and
o in denominations of multiples of $1,000.
Any definitive exchange notes issued in this way would be registered in
the names and denominations requested by DTC. Neither we, Bowater nor the
trustee will be liable for any delay by DTC or any DTC participant or indirect
participant in identifying the owners of notes, and each such person may
conclusively rely on and shall be protected in relying on, instructions from DTC
for all purposes (including with respect to the registration and delivery, and
the respective principal amounts, of the notes to be issued).
PAYMENTS ON THE NOTES
The Global Note. The paying agent will make payments of principal of,
and interest on, the global note to Cede & Co., the nominee for DTC, as the
registered owner. The principal of, and interest on, the exchange notes will be
payable in immediately available funds in U.S. dollars.
We understand that it is DTC's current practice, upon DTC's receipt of
any payment of principal of, or interest on, global securities such as the
global note, to credit the accounts of DTC accounts holders with payment in
amounts proportionate to their respective beneficial interests in the principal
amount of the global note as shown on the records of DTC. Payments by DTC
account holders to owners of beneficial interests in the global note held
through these account holders will be the responsibility of the account holders,
as is now the case with securities held for the accounts of customers registered
in "street name."
Cross-market transfers between the DTC account holders, on the one hand,
and Euroclear or Clearstream participants, on the other hand, will be effected
through DTC in accordance with DTC's rules on behalf of Euroclear or
Clearstream, as the case may be, by its respective depositary; however, such
cross-market transactions will require delivery of instructions to Euroclear or
Clearstream, as the case may be, by the
55
counterparty in such system in accordance with the rules and procedures
and within the established deadlines (Brussels time) of such system. Euroclear
or Clearstream, as the case may be, will, if the transaction meets its
settlement requirements, deliver instructions to its respective depositary
to take action to effect final settlement on its behalf by delivering or
receiving security entitlements in relevant global notes in DTC, and making or
receiving payments in accordance with normal procedures for same-day funds
settlement applicable to DTC. Euroclear participants and Clearstream
participants may not deliver instructions directly to the depositaries
for Euroclear or Clearstream.
Neither we nor the trustee will have any responsibility or liability for
any aspect of DTC's, Euroclear's or Clearstream's or their account holders'
records relating to, or payments made on account of, beneficial ownership
interests in the global note or for maintaining, supervising or reviewing any
records relating to these beneficial ownership interests.
Holders of the exchange notes in "street name" and other owners of
beneficial interests in the global note should consult their banks or brokers
for information on how they will receive payments.
Definitive Notes. Payment of the principal of definitive notes, if any
exist, will be made at the office of the paying agent. Payment of the interest
on definitive notes will be paid by check mailed to you, if you are a registered
holder of the definitive notes. At the request of a registered holder of more
than $1,000,000 principal amount of the definitive notes, payments of principal
or interest may be made to that holder by wire transfer.
TRANSFER AND EXCHANGE OF THE NOTES
The Global Note. Except as described below, the global note may be
transferred, in whole and not in part, only to DTC, to another nominee of DTC or
to a successor of DTC or its nominee.
Beneficial Interests in the Global Note. Beneficial interests in the
global note will be represented, and transfers of such beneficial interests will
be made, through accounts of financial institutions acting on behalf of
beneficial owners either directly as account holders, or indirectly through
account holders, at DTC. Beneficial interests will be in multiples of $1,000.
Definitive Notes. You may present definitive exchange notes, if any
exist, for registration of transfer or exchange at the corporate trust office of
the trustee in the City of New York, which we have appointed as the security
registrar and transfer agent for the notes.
SAME DAY SETTLEMENT AND PAYMENT
Payments with respect to the principal of and interest on, any notes
represented by a global note registered in the name of DTC or its nominee on the
applicable record date will be payable by the trustee to DTC or, at DTC's
discretion, its nominee in its capacity as the registered holder of the global
note representing such notes under the indenture.
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Under the terms of the indenture, we, Bowater, as guarantor of the notes,
and the trustee may treat the persons in whose names the notes, including
the global notes, are registered as the owners thereof for the purpose of
receiving payment thereon and for any and all other purposes whatsoever.
Accordingly, none of us, Bowater or the trustee has or will have any
responsibility or liability for the payment of such amounts to owners of
security entitlements in a global note (including principal and
interest). Payments by the DTC participants and the indirect participants to the
owners of security entitlements in a global note will be governed by standing
instructions and customary industry practice and will be the responsibility of
the DTC participants or the indirect participants and DTC.
Transfers between DTC participants in DTC will be effected in accordance
with DTC's procedures and will be settled in same-day funds. Transfers between
participants in Euroclear or Clearstream will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Because of time zone differences, the securities account of a Euroclear
or Clearstream participant purchasing a security entitlement in a global note
from a DTC participant in DTC will be credited, and any such crediting will be
reported to the relevant Euroclear or Clearstream participant, during the
securities settlement processing day (which must be a business day for Euroclear
and Clearstream) immediately following the settlement date of DTC. Cash received
in Euroclear or Clearstream as a result of sales of security entitlements in a
global note by or through a Euroclear or Clearstream participant to a DTC
participant in DTC will be received with value on the settlement date of DTC but
will be available in the relevant Euroclear or Clearstream cash account only as
of the business day for Euroclear or Clearstream following DTC's settlement
date.
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UNITED STATES FEDERAL AND
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
The following summaries are of a general nature only and are not
intended to be and should not be construed as legal or tax advice to any
prospective holders of exchange notes, and no representations with respect to
the tax consequences to any particular holder of exchange notes are made hereby.
Accordingly, prospective holders of exchange notes should consult with, and rely
upon, their own tax advisors for advice with respect to the tax consequences to
them of the exchange of original notes for exchange notes in light of their own
particular circumstances, including any consequences arising under federal,
state, provincial and local tax laws of the United States, Canada and any other
taxing jurisdiction.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain of the U.S. federal
income tax consequences of the exchange of original notes for exchange notes.
This discussion applies only to beneficial owners of original notes that
purchased the original notes at their "issue price" on the issue date in
connection with the issue of the original notes and exchange such original notes
for exchange notes in this exchange offer. Except where noted, this discussion
deals only with original notes held as capital assets and does not apply to
holders that are subject to special tax rules. For example, this discussion does
not address:
o tax consequences to holders who may be subject to special tax
treatment, such as dealers in securities or currencies, financial
institutions, tax-exempt entities, traders in securities that elect
to use a mark-to-market method of accounting, corporations that
accumulate earnings to avoid federal income tax, insurance companies,
or, in some cases, an expatriate of the United States or a
nonresident alien individual who has made a valid election to be
treated as a United States resident;
o tax consequences to persons holding notes as part of a hedging,
integrated, constructive sale or conversion transaction
or a straddle;
o tax consequences to U.S. holders of notes whose "functional currency"
is not the U.S. dollar;
o alternative minimum tax consequences; or
o any state or local tax consequences.
The discussion below is based upon the provisions of the Internal
Revenue Code, existing and proposed regulations promulgated thereunder, and
published rulings and judicial decisions, all as of the date of this prospectus.
Those authorities may be changed, perhaps retroactively, in which case U.S.
federal income tax consequences may be different from those discussed below.
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You should consult your own tax advisors concerning the U.S. federal
income tax consequences to you of the exchange of original notes for exchange
notes, the ownership and disposition of exchange notes and any consequences
arising under the tax laws of any state, local or other jurisdiction.
CONSEQUENCES TO UNITED STATES HOLDERS
The following discussion summarizes certain U.S. federal tax
consequences that will apply to you if you are a United States holder of
original notes.
"United States holder" means a beneficial owner of an original note who
or that is:
o a citizen or resident of the United States;
o a corporation or partnership created or organized in or under the laws
of the United States or any political subdivision of the United States;
o an estate, the income of which is subject to U.S. federal income
taxation regardless of its source; or
o a trust that (1) is subject to the primary supervision of a court within
the United States and the control of one or more U.S. persons or (2)
has a valid election in effect under applicable U.S. Treasury
regulations to be treated as a U.S. person.
The Exchange. The exchange of original notes for exchange notes should
not be treated as an exchange for United States federal income tax purposes.
Therefore, an exchange note should be treated as a continuation of the
corresponding original note and, as a result, an exchanging United States holder
should not recognize any gain or loss on the exchange, and its holding period
and basis in the exchange note would be the same as in the original note.
Payments of Interest. Interest on an exchange note will generally be
taxable to you as ordinary income at the time it is paid or accrued in
accordance with your method of accounting for U.S. federal income tax purposes.
The exchange notes will be treated as indebtedness of a U.S. obligor for
U.S. federal income tax purposes and, as a result, interest on the notes
generally will be treated as U.S. source income. Nonetheless, in the case of a
United States holder that is entitled to benefits under the Canada-United States
Tax Convention, as currently in effect, interest income on the exchange notes
may, subject to certain restrictions and limitations, be treated as foreign
source income for purposes of claiming a U.S. foreign tax credit for certain
Canadian income taxes, if any, imposed on the holder.
Sale, Exchange and Retirement of Notes. In general, your tax basis in an
exchange note will be equal to your basis in the original note, reduced by any
cash payments on that note other than stated interest. Upon the sale, exchange,
retirement or
59
other disposition of an exchange note, you generally will recognize gain or loss
equal to the difference between the amount you realize upon the sale, exchange,
retirement or other disposition (less an amount equal to any accrued stated
interest that you did not previously include in income, which will be taxable as
ordinary income) and your adjusted tax basis in the orginal note. That
gain or loss will be capital gain or loss and generally will be a U.S.
source gain or loss unless it is attributable to an office or other fixed
place of business maintained by you outside the United States and certain
other conditions are met. Capital gains of individuals derived in respect of
capital assets held for more than one year may be eligible for reduced rates of
taxation. The deductibility of capital losses is subject to limitations.
Information Reporting and Backup Withholding. In general, information
reporting requirements will apply to certain payments of principal and interest
on the exchange notes and to the proceeds of sale of the exchange notes unless
you are an exempt recipient (such as a corporation). A backup withholding tax at
a rate equal to the fourth lowest income tax rate applicable for individuals
(which, under current law, is 30.5% for 2001, 30% for 2002 and 2003, 29% for
2004 and 2005, 28% for 2006 and thereafter) will apply to such payments if you
fail to provide a correct taxpayer identification number, certified under
penalties of perjury, or certification of exempt status, or if you are notified
by the Internal Revenue Service that you have failed to report all interest and
dividends required to be shown on your U.S. federal income tax returns.
Any amounts withheld under the backup withholding rules will be allowed
as a refund or a credit against your U.S. federal income tax liability provided
the required information is timely furnished to the IRS.
CONSEQUENCES TO NON-UNITED STATES HOLDERS
The following is a discussion of certain of the U.S. federal income and
estate tax consequences that generally will apply to you if you are a non-United
States holder of exchange notes. A non-United States holder is a beneficial
owner of exchange notes other than a United States holder.
U.S. Federal Withholding Tax. The 30% U.S. federal withholding tax
will not apply to any payment to you of interest on the exchange notes,
provided that:
o you do not actually or constructively own 10% or more of the total
combined voting power of all classes of Bowater's voting stock within
the meaning of Section 871(h)(3) of the Code and related U.S. Treasury
regulations;
o you are not a controlled foreign corporation that is related, directly
or indirectly, to Bowater through stock ownership; and
o (1) you provide your name and address on an IRS Form W-8BEN, and
certify, under penalty of perjury, that you are not a U.S. person, as
defined in the Internal Revenue Code, or (2) you hold your exchange
notes through certain
60
foreign intermediaries and you satisfy the certification requirements
of applicable U.S. Treasury regulations.
If you do not satisfy the requirements described above, payments of
interest made to you will be subject to the 30% U.S. federal withholding tax,
unless you provide us with a properly executed (1) IRS Form W-8BEN (or successor
form) claiming an exemption from or reduction in the rate of withholding under
an applicable tax treaty (in which case interest on the exchange notes will be
subject to U.S. federal withholding tax at the applicable treaty rate) or (2)
IRS Form W-8ECI (or successor form) stating that interest paid on the exchange
notes is not subject to withholding tax because it is effectively connected with
your conduct of a trade or business in the United States.
The 30% U.S. federal withholding tax generally will not apply to any
payment of principal or any gain that you realize on the sale, exchange,
retirement or other disposition of the exchange notes.
U.S. Federal Estate Tax. Your estate will not be subject to U.S. federal
estate tax on the exchange notes beneficially owned by you at the time of your
death, provided that, at the time of your death (a) you do not own, within the
meaning of the Internal Revenue Code and the U.S. Treasury regulations, 10% or
more of the total combined voting power of all classes of Bowater's voting
stock, and (b) interest on the exchange notes would not have been effectively
connected with the conduct by you of a trade or business in the United States.
U.S. Federal Income Tax. If you are engaged in a trade or business in
the United States and interest on any Exchange Note is effectively connected
with the conduct of that trade or business, you will be subject to U.S. federal
income tax on that interest on a net income basis (although generally exempt
from the 30% withholding tax) in the same manner as if you were a U.S. person as
defined under the Internal Revenue Code. In addition, if you are a foreign
corporation, you may also be subject to a branch profits tax equal to 30% (or
lower applicable treaty rate) of your earnings and profits for the taxable year,
subject to adjustments, that are effectively connected with the conduct by you
of a trade or business in the United States. For this purpose, interest on
exchange notes will be included in your earnings and profits.
Any gain or income realized on the disposition of an exchange note
generally will not be subject to U.S. federal income tax unless (a) that gain or
income is effectively connected with the conduct of a trade or business in the
United States by you, or (b) in the case of gain, you are an individual who is
present in the United States for 183 days or more in the taxable year of that
disposition and certain other conditions are met.
Information Reporting and Backup Withholding. Under U.S. Treasury
regulations that became effective for payments made on or after January 1, 2001,
backup withholding and information reporting will not apply to payments that we
make or our paying agent (in its capacity as such) makes to you if you have
provided the required certification that you are a non-United States holder and
provided that neither we nor our paying agent has actual knowledge that you are
a United States holder (as described above).
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In addition, you will not be subject to backup withholding and
information reporting with respect to the proceeds of the sale of an exchange
note within the United States or conducted through certain U.S.-related
financial intermediaries, if the payor receives the statement described above
and does not have actual knowledge that you are a U.S. person, as defined under
the Internal Revenue Code, or you otherwise establish an exemption.
Any amounts withheld under the backup withholding rules will be allowed
as a refund or a credit against your U.S. federal income tax liability provided
the required information is timely furnished to the IRS.
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
General. This summary is of the principal Canadian federal income tax
considerations under the Income Tax Act (Canada) and the Income Tax Regulations
(which we refer to in this section as the Act and the Regulations, respectively)
in effect on the date hereof generally applicable to a beneficial owner of
original notes who exchanges such original notes for exchange notes pursuant to
the exchange offer and who, for the purposes of the Act:
o deals with us at arm's-length;
o is neither resident nor deemed to be resident in Canada at any time; and
o holds the notes as capital property and does not use or hold and is not
deemed to use or hold the notes in a business that the Holder carries
on, or is deemed to carry on, in Canada at any time.
We refer to such a beneficial owner below as a "Holder."
Special rules that are not discussed in this summary may apply to a
Holder that is an insurer carrying on business in Canada and in a country other
than Canada. This summary is not applicable to a Holder that is a "financial
institution," as defined by the Act for purposes of certain rules applicable to
income, gain or loss arising from "mark-to-market property."
We have based this summary on the current provisions of the Act and the
Regulations, all specific proposals to amend the Act and Regulations publicly
announced by or on behalf of the Minister of Finance (Canada) prior to the date
of this prospectus and the current published administrative practices and
policies of the Canada Customs and Revenue Agency. This summary assumes that the
Act and the Regulations will be amended in accordance with the proposals as so
announced, although no assurance of that can be given.
This summary is not exhaustive of all possible Canadian federal income
tax considerations, and except for the proposed amendments, does not take into
account or anticipate any changes in law whether by judicial, governmental or
legislative decision or action, nor does it take into account tax legislation or
considerations of any province or
62
territory of Canada or any jurisdiction other than Canada. The provisions of
provincial income tax legislation vary from province to province in Canada and
in some cases differ from federal income tax legislation.
This summary is of a general nature only and is not intended to be, and
should not be interpreted as, legal or tax advice to any particular Holder.
Accordingly, holders of original notes considering exchanging their original
notes for exchange notes are urged to consult their own tax advisors as to the
particular tax consequences to them of participating in the exchange offer.
Canadian Withholding Tax. Subject to the exception in the next
paragraph, any amount paid or credited, or deemed to be paid or credited, by a
resident of Canada as, on account or in lieu of payment of, or in satisfaction
of interest to non-residents of Canada (other than certain persons carrying on
business in Canada, to the extent provided in the Act and the Regulations)
generally will be subject to a 25% non-resident withholding tax. The rate of
such tax may be reduced through the application of international tax treaties or
conventions to which Canada is a party, usually to a rate of 10% or 15%.
Generally, interest (other than certain interest described in the Act)
payable by a corporation resident in Canada to non-residents of Canada who deal
at arm's-length with that corporation on an obligation where the evidence of
indebtedness was issued by that corporation after June 23, 1975 is exempt from
such withholding tax if under the terms of the obligation or any related
agreement, the corporation may not under any circumstances be obliged to pay
more than 25% of the principal amount of the obligation (or the aggregate
principal amount of a number of obligations, identical in all respects but for
their separate principal amounts, that comprise a single debt issue of
obligations) within five years from the date of its issue except:
o in the event of a failure or default under such terms or agreement;
o if the terms of the obligation or such agreement become unlawful or are
changed by legislation or by a court, statutory board or commission;
o if such a non-resident person exercises a right under the terms of
the obligation or such agreement to convert the obligation into, or
exchange the obligation for, a "prescribed security" under the Act
and the Regulations for this purpose; or
o in the event of the death of the holder of the obligation.
For purposes of the Act and the Regulations, we are treated as a
corporation resident in Canada. We believe that interest (including any
make-whole premium deemed to be interest) paid or credited (or deemed to be paid
or credited for purposes of the Act) on an exchange note to a Holder will be
exempt from Canadian withholding tax.
In addition, no other taxes on income (including taxable capital gains)
will be payable by a Holder in respect of the acquisition, ownership or
disposition of an exchange note. The exchange of original notes for exchange
notes will not result in any Canadian federal income tax consequences to a
Holder.
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PLAN OF DISTRIBUTION
Based on existing interpretations of the Securities Act by the staff of
the SEC set forth in several no-action letters to third parties, and subject to
the immediately following sentence, we believe that the exchange notes to be
issued pursuant to the exchange offer may be offered for resale, resold and
otherwise transferred by the holders thereof (other than holders who are
broker-dealers) without further compliance with the registration and prospectus
delivery provisions of the Securities Act. However, any purchaser of original
notes who is our "affiliate" within the meaning of the Securities Act or who
intends to participate in the exchange offer for the purpose of distributing the
exchange notes, or any broker-dealer who purchased the original notes from us to
resell pursuant to Rule 144A or any other available exemption under the
Securities Act, (1) will not be able to rely on the interpretations of the staff
set forth in the above-mentioned no-action letters, (2) will not be entitled to
tender its original notes in the exchange offer and (3) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or transfer of the original notes unless the sale or
transfer is made pursuant to an exemption from such requirements. We do not
intend to seek our own no-action letter, and there can be no assurance that the
SEC's staff would make a similar determination with respect to the original
notes and exchange notes as it has in such no-action letters to third parties.
Each holder of the original notes who wishes to exchange the original
notes for exchange notes in the exchange offer will be required to represent
that (1) it is not our "affiliate" within the meaning of Rule 405 under the
Securities Act, (2) the exchange notes to be received by it will be acquired in
the ordinary course of its business, (3) at the time of the commencement of the
exchange offer, it has not engaged in, does not intend to engage in, and has no
arrangement or understanding with any person to participate in the distribution
of the exchange notes within the meaning of the Securities Act and (4) it is not
acting on behalf of any person who could not make all of the foregoing
representations. In addition, in connection with any resales of exchange notes,
any participating broker-dealer who acquired the original notes for its own
account as a result of market-making or other trading activities and
participates in the Exchange Offer must deliver a prospectus meeting the
requirements of the Securities Act. Based upon no-action letters from the SEC's
staff to third parties, we believe that participating broker-dealers may fulfill
their prospectus delivery requirements with respect to the exchange notes (other
than a resale of an unsold allotment from the original sale of the original
notes) with this prospectus. Under the exchange and registration rights
agreement, we are required to allow participating broker-dealers to use this
prospectus in connection with the resale of exchange notes for a period
beginning when the exchange notes are first issued in the exchange offer and
ending upon the earlier of the expiration of the 150th day after the exchange
offer has been completed or such time as participating broker-dealers no longer
own any exchange notes.
Neither we nor Bowater will receive any proceeds from any sale of
exchange notes by brokers-dealers. Exchange notes received by broker-dealers for
their own account pursuant to the exchange offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the
64
writing of options on the exchange notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any broker-dealer or
the purchasers of any such exchange notes. Any broker-dealer that resells
exchange notes that were received by it for its own account pursuant to the
exchange offer and any broker or dealer that participates in a distribution of
such exchange notes may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit of any such resale of exchange notes and any
commissions or concessions received by them may be deemed to be underwriting
compensation under the Securities Act. The letter of transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period of 150 days after the Expiration Date, we will promptly
send additional copies of this prospectus and any amendment or supplement to
this prospectus to any broker-dealer that requests such documents in the letter
of transmittal. We will pay our own expenses incurred in connection with the
performance of our obligations in the exchange offer other than commissions or
concessions of any brokers or dealers and other than certain taxes and will
indemnify the holders of the exchange notes (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act. We
note, however, that in the opinion of the SEC, indemnification against
liabilities arising under federal securities laws is against public policy and
may be unenforceable.
LEGAL AND TAX MATTERS
Certain legal matters with respect to the exchange notes will be passed
upon for us and Bowater by Carter, Ledyard & Milburn, Ernst & Young LLP
(concerning Canadian income tax matters) and Cox Hanson O'Reilly Matheson
(concerning matters of Nova Scotia law).
EXPERTS
The consolidated financial statements and schedule of Bowater and its
subsidiaries as of December 31, 2000 and 1999 and for each of the years in the
three-year period ended December 31, 2000 have been incorporated by reference
herein in reliance upon the report of KPMG LLP, independent accountants,
incorporated by reference herein and upon the authority of said firm as experts
in accounting and auditing.
The consolidated financial statements of Alliance as of December 31,
2000 and 1999 and for each of the years in the three-year period ended December
31, 2000 have been incorporated by reference in this prospectus in reliance
upon the report of Raymond Chabot Grant Thornton General Partnership,
independent public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
65
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware
empowers a corporation to indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he or she is or was a director or officer of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise.
Depending on the character of the proceeding, a corporation may indemnify
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with such action,
suit or proceeding if the person indemnified acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. In the case of an
action by or in the right of the corporation, no indemnification may be made in
respect of any claim, issue or manner as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his or
her duty to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
that despite the adjudication of liability such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to above or in the defense of any claim, issue or matter therein, he or
she shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him or her in connection therewith.
The Restated Certificate of Incorporation of Bowater provides, in
effect, that, to the extent and under the circumstances permitted by Section 145
of the General Corporation Law of the State of Delaware, Bowater shall indemnify
any person who was or is a party or is threatened to be made a party to any
action, suit or proceeding of the type described above by reason of the fact
that he or she is or was a director or officer of Bowater or is or was serving
at the request of Bowater as a director or officer of another enterprise.
Under insurance policies maintained by Bowater, directors and officers
of Bowater may be indemnified against certain losses arising from certain
claims, including claims under the Securities Act, which may be made against
such persons by reason for their being such directors or officers.
ITEM 21. EXHIBITS
The following exhibits are filed herewith or incorporated herein by
reference:
II-1
Exhibit
Number Description of Exhibits
- ------ -----------------------
1.1 Purchase Agreement dated as of October 31, 2001 by and among Bowater
Canada Finance Corporation, Bowater Incorporated, Goldman, Sachs &
Co., and J.P. Morgan Securities Inc., as representatives of the
several purchasers named in Schedule I thereto (incorporated by
reference to Exhibit 10.2 to Bowater's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2001 ("September 2001 Form
10-Q")).
4.1 Form of 7.95% Notes due 2011 of Bowater Canada Finance Corporation
(included in Exhibit 4.3).
4.2 Form of guarantee of Bowater Incorporated with respect to 7.95%
Notes due 2011 of Bowater Canada Finance Corporation (included in
Exhibit 4.3).
4.3 Indenture, dated as of October 31, 2001, by and among Bowater
Incorporated, as guarantor, Bowater Canada Finance Corporation, as
issuer, and The Bank of New York, as trustee, with respect to the
7.95% Notes due 2011 (incorporated by reference to Exhibit 10.3 to
Bowater's September 2001 Form 10-Q).
4.4 Exchange and Registration Rights Agreement, dated as of November 6,
2001, by and between Bowater Incorporated, Bowater Canada Finance
Corporation and Goldman, Sachs & Co. and J.P. Morgan Securities Inc.,
as representatives of the several purchasers referenced therein
(incorporated by reference to Exhibit 10.4 to Bowater's September
2001 Form 10-Q).
5.1 Opinion of Carter, Ledyard & Milburn regarding the enforceability of
the notes and the guarantees.
5.2 Opinion of Cox Hanson O'Reilly Matheson regarding legality of the
notes.
8.1 Opinion of Ernst & Young LLP regarding tax matters.
8.2 Opinion of Carter, Ledyard & Milburn regarding tax matters.
12 Statement of Computation of Unaudited Ratio of Earnings to Fixed
Charges.
23.1 Consent of Ernst & Young LLP (included in Exhibit 8.1).
23.2 Consents of Carter, Ledyard & Milburn (included in Exhibits 5.1 and
8.2).
23.3 Consent of Cox Hanson O'Reilly Matheson (included in Exhibit 5.2).
23.4 Consent of KPMG LLP.
23.5 Consent of Raymond Chabot Grant Thornton General Partnership.
II-2
24 Power of Attorney.
25 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York.
99.1 Unaudited Pro Forma Condensed Combined Financial Statements of
Bowater for the year ended December 31, 2000 and for the nine-month
period ended September 30, 2001.
99.2 Form of Letter of Transmittal.
99.3 Form of Notice of Guaranteed Delivery.
99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and other nominees.
99.5 Form of Letter to Clients.
- ---------------
ITEM 22. UNDERTAKINGS
1. The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(b) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change in such information in the registration statement.
II-3
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
2. The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of the
registrants' annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of
any employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be an initial bona fide
offering thereof.
3. The undersigned registrants hereby undertake to respond to any request for
information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11, or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
4. The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
5. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the
registrants have been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrants of expenses incurred or paid by a director, officer or
controlling person of one of the registrants in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
such registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Bowater
Incorporated certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-4 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the city of Greenville, the State of South Carolina, on
December 10, 2001.
BOWATER INCORPORATED
By: /s/Arnold M. Nemirow
---------------------------------
Name: Arnold M. Nemirow
Title: Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------------------------------------------------------------------------------
/s/Arnold M. Nemirow Director, Chairman, President December 7, 2001
- -------------------- and Chief Executive Officer
Arnold M. Nemirow
/s/David G. Maffucci Senior Vice President and Chief December 7, 2001
- -------------------- Financial Officer
David G. Maffucci
/s/Michael F. Nocito Vice President and Controller December 7, 2001
- --------------------
Michael F. Nocito
* Director December 7, 2001
- -------------------
Francis J. Aguilar
* Director December 7, 2001
- -------------------
Richard Barth December 7, 2001
* Director December 7, 2001
- -------------------
Kenneth M. Curtis December 7, 2001
* Director December 7, 2001
- -------------------
Cinda A. Hallman
II-5
SIGNATURE TITLE DATE
- --------------------------------------------------------------------------------
* Director December 7, 2001
- -------------------
Charles J. Howard
* Director December 7, 2001
- -------------------
James L. Pate
* Director December 7, 2001
- -------------------
John A. Rolls
* Director December 7, 2001
- -------------------
Arthur R. Sawchuk
*/s/Anthony H. Barash
-----------------
Anthony H. Barash
Attorney-in-Fact
II-6
Pursuant to the requirements of the Securities Act of 1933, Bowater
Canada Finance Corporation certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Greenville, in the Sate of South
Carolina, on December 10, 2001.
BOWATER CANADA FINANCE CORPORATION
By:/s/David G. Maffucci
----------------------------
Name: David G. Maffucci
Title: Director, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------------------------------------------------------------------------------
/s/David G. Maffucci Director, President and Chief December 7, 2001
- -------------------- Executive Officer
David G. Maffucci
/s/William G. Harvey Director, Vice President, December 7, 2001
- -------------------- Treasurer and Chief Financial
William G. Harvey Officer
/s/Michael F. Nocito Director and Vice President December 7, 2001
- -------------------
Michael F. Nocito
II-7
EXHIBIT INDEX
Exhibit
Number Description of Exhibits
- ------ -----------------------
1.1 Purchase Agreement dated as of October 31, 2001 by and among Bowater
Canada Finance Corporation, Bowater Incorporated, Goldman, Sachs &
Co., and J.P. Morgan Securities Inc., as representatives of the
several purchasers named in Schedule I thereto (incorporated by
reference to Exhibit 10.2 to Bowater's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2001 ("September 2001 Form
10-Q")).
4.1 Form of 7.95% Notes due 2011 of Bowater Canada Finance Corporation
(included in Exhibit 4.3).
4.2 Form of guarantee of Bowater Incorporated with respect to 7.95%
Notes due 2011 of Bowater Canada Finance Corporation (included in
Exhibit 4.3).
4.3 Indenture, dated as of October 31, 2001, by and among Bowater
Incorporated, as guarantor, Bowater Canada Finance Corporation, as
issuer, and The Bank of New York, as trustee, with respect to the
7.95% Notes due 2011 (incorporated by reference to Exhibit 10.3 to
Bowater's September 2001 Form 10-Q).
4.4 Exchange and Registration Rights Agreement, dated as of November 6,
2001, by and between Bowater Incorporated, Bowater Canada Finance
Corporation and Goldman, Sachs & Co. and J.P. Morgan Securities Inc.,
as representatives of the several purchasers referenced therein
(incorporated by reference to Exhibit 10.4 to Bowater's September
2001 Form 10-Q).
5.1 Opinion of Carter, Ledyard & Milburn regarding the enforceability of
the notes and the guarantees.
5.2 Opinion of Cox Hanson O'Reilly Matheson regarding legality of the
notes.
8.1 Opinion of Ernst & Young LLP regarding tax matters.
8.2 Opinion of Carter, Ledyard & Milburn regarding tax matters.
12 Statement of Computation of Unaudited Ratio of Earnings to Fixed
Charges.
23.1 Consent of Ernst & Young LLP (included in Exhibit 8.1).
23.2 Consents of Carter, Ledyard & Milburn (included in Exhibits 5.1 and
8.2).
23.3 Consent of Cox Hanson O'Reilly Matheson (included in Exhibit 5.2).
23.4 Consent of KPMG LLP.
23.5 Consent of Raymond Chabot Grant Thornton General Partnership.
24 Power of Attorney.
25 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York.
II-8
99.1 Unaudited Pro Forma Condensed Combined Financial Statements of
Bowater for the year ended December 31, 2000 and for the nine-month
period ended September 30, 2001.
99.2 Form of Letter of Transmittal.
99.3 Form of Notice of Guaranteed Delivery.
99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and other nominees.
99.5 Form of Letter to Clients.
II-9