FORT FRANCES—Monday’s surprise announcement of a proposed merger between Abitibi-Consolidated and Bowater Inc. has the Communications, Energy and Paperworkers of Canada asking questions, including what impact the deal might have on the proposed bio-mass boiler here.
“We just ratified [on Jan. 9] the contract extension to get the bio-mass boiler. What happens with that?” national CEP rep Rene Lindquist wondered Monday during an interview from Thunder Bay.
“Everything’s up in the air.
“I like to think positive that things will move ahead, but who knows?” added Lindquist. “Does that Abitibi board still have the authority to approve $70 million [for the bio-mass boiler] or is that being re-scrutinized?
“I’m always concerned when you get two major players merge and they say there will be ‘syngeries’ realized.”
Lindquist also said Monday’s announcement came out of the blue to the union, but that it clearly had been in the works for some time.
“One of things we talked about with the company was transparency and trust,” he remarked. “[Abitibi CEO John] Weaver and [Bowater CEO David] Paterson didn’t sit down and have a beer Friday night and make this deal up.
“This has been ongoing.”
Lindquist noted the proposed merger has to go through the securities commission and there’s certain things the companies still have to do, which may take six-nine months to fall into place.
“At the end of the day, it may be good—but it’s in my nature to be suspicious,” he remarked.
For its part, Abitibi isn’t saying much about the proposed merger, which would see the new company be called AbitibiBowater Inc.
Local mill management was contacted Monday but deferred any comment to Abitibi’s corporate head office in Montreal.
And despite several phone calls and e-mails requesting an interview, Denis Leclerc, director of public affairs for Abitibi-Consolidated, could not be reached for comment prior to press time today.
In a news release Monday, Abitibi CEO John Weaver said the new AbitibiBowater “will be a global leader headquartered in Canada with a brighter future than either company would have on its own.”
‘‘The combined company’s ability to realize significant synergies will increase shareholder value, improve our financial flexibility, and better position us to compete in today’s increasingly competitive global marketplace,” he added.
But CEP president Dave Coles said Monday’s announcement is “yet one more reason for Prime Minister Harper to immediately convene a national summit of all stakeholders to discuss the future of the forestry sector.”
“There are many issues underlying this announced merger which should raise alarm bells in Ottawa,” Coles said in a release. “Our forest-based industries and communities are already in crisis with the loss of some 10,000 jobs over the past few years.
“Our history with mergers and acquisitions has been that so-called ‘synergies’ really mean more mill closures, job losses, and devastation in our communities,” he charged.
“We intend to meet with these companies to avoid a repeat of that history,” Coles pledged. “We intend to fight for investment in the sector to save and expand jobs.”
So far, he noted, neither Abitibi-Consolidated nor Bowater have been clear about any future new investment plans in the sector and, in fact, say their merger will create synergies of $250 million (U.S.)
“All Canadians have a stake in what is going on and deserve to know that this merger meets the test of broad public interest,” Coles said.
“The forests are one of Canada’s greatest publicly-owned natural resources and we think Prime Minister Harper needs to force the industry’s hand in clarifying their plans.”
According to The Canadian Press, the two companies announced plans for a “merger of equals”—a stock-swap deal creating a firm with annual revenues of about $9.3 billion.
The headquarters and executive office would be in Montreal, with a U.S. regional manufacturing and sales office in Greenville, S.C., where Bowater is based.
AbitibiBowater, with a market capitalization of about $1.37 billion, would own or operate 32 pulp and paper facilities and 35 wood product sites, mainly in Eastern Canada and the southeastern U.S.
Its product lines will include newsprint, uncoated and coated mechanical papers, market pulp and wood products. The company also would be one of the world’s leading consumers of recycled newspapers and magazines, CP reported.
Weaver would be executive chairman of AbitibiBowater while David Paterson, chairman and CEO of Bowater, would be chief executive officer of the new firm.
The new board of directors would have seven members from each of the old companies.
Under terms of the transaction, each common share of Abitibi-Consolidated would be exchanged for 0.06261 of a common share of AbitibiBowater, and each Bowater share would be exchanged for 0.52 of a share of AbitibiBowater.
That ratio will result in 48 percent of AbitibiBowater being owned by former Abitibi-Consolidated shareholders and 52 percent by former Bowater shareholders, CP reported.
Fort Frances Times
Local News from Across the Rainy River District
