EXHIBIT 99.3
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ABITIBI CONSOLIDATED
NEWS RELEASE
A (TSX)
ABY (NYSE)
C$
ABITIBI-CONSOLIDATED REPORTS Q2 RESULTS
MONTREAL, JULY 24, 2007 - Abitibi-Consolidated Inc. today reported second
quarter net earnings of $148 million, or 34 cents a share, compared to net
earnings of $157 million, or 36 cents a share in the second quarter of 2006.
For the six-month period ending June 30, 2007, the Company recorded net
earnings of $78 million, or 18 cents a share, compared to net earnings of $124
million, or 28 cents a share, for the same six-month period last year.
Although not a GAAP measure, the second quarter results before the impact of
specific items would have been a loss of $111 million, or 25 cents per share,
compared to a loss of $29 million, or 7 cents a share, in the second quarter of
2006 (see Table 3 of MD&A).
The quarter's results include the following after-tax specific items: a gain of
$204 million on translation of foreign currencies, a net gain on dilution of
$31 million as a result of the issuance of new units equivalent to a 25%
interest in ACH Limited Partnership, a $22 million favourable income tax
adjustment, a positive impact of $18 million due to a gain from the disposal of
certain timberlands in the United States, a $7 million negative impact of mill
closure and other elements, and a charge of $7 million for merger and
integration-related costs.
In the second quarter of 2007, the Company posted an operating loss of $64
million before specific items, compared to an operating profit of $57 million
in the second quarter of 2006. The Newsprint segment had operating losses of
$25 million, while the Commercial Printing Papers and Wood Products segments
had operating losses of $21 million and $18 million respectively.
Before specific items, the $121 million reduction in operating results in the
second quarter of 2007 was mainly attributable to lower prices in the Company's
Newsprint and Wood Products business segments, higher cost of products sold in
the Newsprint segment and lower sales volume for all segments.
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Q2 VS. Q1 2007 SUMMARY
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o Sales of $1.06 billion vs. $1.07 billion ($1.25 billion in Q2 2006)
o EBITDA of $42 million vs. $70 million ($168 million in Q2 2006)
o US newsprint prices lower by approximately US$28 per tonne (lower by
US$73 per tonne vs. Q2 2006)
o Continued positive demand outlook for uncoated groundwood papers
o Higher wood products prices but volume still impacted by low U.S.
housing starts
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COMMENTS BY THE CEO
"The forest products industry continues to be challenging for us and for our
customers," said John Weaver, Abitibi-Consolidated President and Chief
Executive Officer. "We believe the combination with Bowater, which is expected
to generate annualized synergies of at least US$250 million, will enhance
financial flexibility, increase cash flow, and create a better opportunity to
unlock future value. We have spent the past months planning for the integration
with Bowater and once final approvals have been achieved, the plan will quickly
be put into action."
PROPOSED COMBINATION WITH BOWATER INCORPORATED
On January 29, 2007, Abitibi-Consolidated Inc. and Bowater Incorporated
announced the execution of a definitive agreement to combine in an all-stock
merger of equals. The combination is expected to create a new leader in
publication papers, the third largest publicly traded paper and forest products
company in North America and the eighth largest in the world.
On June 22, the two companies announced that the United States Securities and
Exchange Commission (SEC) had completed its review of the joint proxy
statement/prospectus/management information circular, which was subsequently
mailed to shareholders of both companies.
In July, Institutional Shareholder Services Inc. (ISS), Glass Lewis & Co. and
PROXY Governance, Inc., three independent proxy advisory firms, recommended
that Abitibi-Consolidated shareholders vote in favour of the proposed
combination with Bowater. In separate reports, the three firms also recommended
that Bowater stockholders vote in favour of the proposed combination.
Shareholders of Abitibi-Consolidated and stockholders of Bowater will vote on
the proposed combination on July 26.
TRANSACTION CLOSES ON ACH LIMITED PARTNERSHIP
On April 2, 2007, the Company closed the transaction with the Caisse de depot
et placement du Quebec (Caisse) to create a partnership for
Abitibi-Consolidated's hydroelectric assets located in Ontario, which represent
approximately 137 megawatts of installed capacity. The Company has retained a
75% interest in the partnership, known as ACH Limited Partnership (ACH LP),
while the Caisse has acquired a 25% interest. On a consolidated basis, the
transaction has yielded gross proceeds of $297.5 million to the Company. ACH LP
is intended to be Abitibi-Consolidated's growth vehicle in energy generation.
INVESTOR CALL
A conference call hosted by management to discuss quarterly results will be
held today at 11:00 a.m. (Eastern). The call will be webcast at
www.abitibiconsolidated.com, under the "Investor Relations" section. A slide
presentation to be referenced on the call will also be made available in the
same section prior to the call. Participants not able to listen to the live
conference call can access a replay along with the slide presentation, both of
which will be archived online.
Abitibi-Consolidated is a global leader in newsprint and commercial printing
papers as well as a major producer of wood products, serving clients in some 70
countries from its 45 operating facilities. Abitibi-Consolidated is among the
largest recyclers of newspapers and magazines in North America, diverting
annually approximately 1.7 million tonnes of waste paper from landfills.
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CONTACTS
INVESTORS: MEDIA AND OTHERS:
Francesco Alessi Denis Leclerc
514 394-2341 514 394-3601
falessi@abitibiconsolidated.com denis_leclerc@abitibiconsolidated.com
FORWARD-LOOKING STATEMENTS
Any statements made regarding the proposed combination between
Abitibi-Consolidated Inc. and Bowater Incorporated, the expected timetable for
completing the combination, benefits or synergies of the combination, and other
statements contained in this news release that are not historical fact are
forward-looking statements that are based on management's beliefs, certain
assumptions and current expectations. These statements may be identified by the
use of forward-looking terminology such as the words "expects," "projects,"
"intends," "believes," "anticipates" and other terms with similar meaning
indicating possible future events or actions or potential impact on the
businesses or shareholders of Abitibi-Consolidated and Bowater. Such statements
include, but are not limited to, statements about future financial and
operating results, Abitibi-Consolidated's and Bowater's plans, objectives,
expectations and intentions, the markets for Abitibi-Consolidated's and
Bowater's products, the future development of Abitibi-Consolidated's and
Bowater's business, and the contingencies and uncertainties to which
Abitibi-Consolidated and Bowater may be subject and other statements that are
not historical facts. This news release also includes information that has not
been reviewed by either company's independent auditors. There is no assurance
the combination contemplated in this news release will be completed at all, or
completed upon the same terms and conditions described. All forward-looking
statements in this news release are expressly qualified by information
contained in each company's filings with regulatory authorities.
The following factors, among others, could cause actual results to differ
materially from those set forth in the forward-looking statements: the ability
to obtain required governmental or third party approvals of the combination on
the proposed terms and schedule and without material concessions; the failure
of Abitibi-Consolidated or Bowater shareholders to approve the combination; the
exercise by a material percentage of Abitibi-Consolidated shareholders of their
dissent rights; the risk that the businesses will not be integrated
successfully; the risk that the cost savings and other expected synergies from
the combination may not be fully realized or may take longer to realize than
expected; and disruption from the combination making it more difficult to
maintain relationships with customers, employees or suppliers. Additional
factors that could cause Abitibi-Consolidated's and Bowater's results to differ
materially from those described in the forward-looking statements can be found
in the periodic reports filed by Abitibi-Consolidated and Bowater with the SEC
and the Canadian securities regulatory authorities and available at the SEC's
Internet site (http://www.sec.gov) and on SEDAR (http://www.sedar.com). Neither
Abitibi-Consolidated nor Bowater undertakes and each specifically disclaims,
any obligation to update or revise any forward-looking information, whether as
a result of new information, future developments or otherwise.