WILMINGTON, Del., April 17 North America's largest newsprint maker, AbitibiBowater ABWTQ.PK, won bankruptcy court approval on Friday for $206 million in financing to get it through its Chapter 11 reorganization.
The judge's interim order approving the financing, known as debtor-in-possession or DIP funding, clears the way for the company to use the funds provided by Fairfax Financial Holdings Ltd (FFH.TO) of Canada and Avenue Investments LP for its working capital.
Fairfax Financial Holdings invested $350 million in AbitibiBowater last year through senior unsecured convertible notes issued by AbitibiBowater. Fairfax holds two AbitibiBowater board seats.
The DIP financing can be eventually be increased to $600 million upon the final order from the judge.
AbitibiBowater attorneys said in the court they had competing proposals for their DIP financing, but the Fairfax Financial Holding plan was less expensive and provided the company greater flexibility.
AbitibiBowater, which employs more than 15,000, filed on Thursday. The company was formed in the 2007 merger of Bowater of the United States and Abitibi Consolidated of Canada. It has struggled with declining demand from newspapers, many of which have cut back on the amount of paper-based publishing. (Reporting by Thomas Hals; Editing by Richard Chang)