MONTREAL - The European subsidiary of insolvent newspaper giant AbitibiBowater is looking for a buyer for its newsprint mill in Britain after the company filed for administration in the United Kingdom, a form of bankruptcy.
The Montreal-based parent company said the directors of its Bridgewater Paper subsidiary made the decision after exhausting all other options to keep the U.K. operations solvent.
AbitibiBowater said Bridgewater's filing is separate from its own court-supervised restructuring in Canada and the United States, that has been going on for nearly a year.
"We recognize the impact the filing has on our U.K. employees and business partners; however, these actions were necessary and represent the best course of action going forward," said AbitibiBowater president and CEO David Paterson.
The British recycled paper mill in Liverpool employs 300 people and produces newsprint that's used primarily by British newspaper publishers. Its two paper machines have an annual capacity of 220,000 tonnes and sells British and Canadian produced paper.
An administration filing in Britian is similar to a Chapter 11 filing in the U.S. or a Companies' Creditors Arrangement Act filing in Canada.
"We are continuing to trade the business as we explore all options, which include looking for a buyer for the business as a going concern," said Tom Jack, a joint administrator from international accounting firm Ernst & Young LLP.
The filing doesn't affect the British company's subsidiaries Cheshire Recycling Ltd and Abitibi-Consolidated Europe SA.
Paterson said AbitibiBowater remains committed to building on its decades of international sales and that Europe is strategic to the company's current and future sales efforts.
Spokesman Jean-Philippe Cote said the subsidiary's customers will continue to receive a quality product and service.
"There will be no business interruptions as far as our European customers," he said in an interview.
Newsprint prices and demand have plummeted as the industry faces the global recession and consumers switching to digital media.
The British plant also faces increased competition from a new mill that is supplying limited volumes as it prepares to ramp up to full capacity within two years.
AbitibiBowater is the eighth largest publicly traded pulp and paper manufacturer in the world. It has 23 pulp and paper, and 28 wood products facilities in the United States, Canada, the United Kingdom and South Korea.
The company's Asian facilities are the only ones not under any court protection from creditors, and Cote couldn't say if that will change.
The company's shares no longer trade on the Toronto and New York Stock Exchanges. But they were worth 12 cents on the over the counter securities market. That's down one-third of a cent.