AbitibiBowater is selling its 75 per cent stake in its Ontario hydro assets for $300 million.
The Montreal forest products giant announced it has signed an agreement for the sale of its 75 per cent indirect interest in ACH Limited Partnership to a consortium formed by an undisclosed institutional investor and a private renewable energy company.
ACH was established in 2007 to hold the power generation assets of the forest company.
The company said the cash proceeds will be used to reduce the forest product giant's debt, enhance liquidity and for general corporate purposes.
In a Feb. 11 statement, company president Richard Garneau said $100 million will be applied to reduce debt. “We intend to protect the cost structure of the Iroquois Falls and Fort Frances mills and remain committed to reducing costs.”
The company said following the completion of the transaction, ACH will continue to supply electricity to the Fort Frances and Iroquois Falls mills under a long-term power purchase agreement.
Randy Hillier, Progressive Conservative critic for Northern Development, Mines and Forestry said Premier Dalton McGuinty's failed energy policy has led to “exorbitant hydro rates making companies such as Abitibi uncompetitive.
“These are the consequences of the Green Energy Act. This is what happens when poor policy is pushed through as legislation without thorough consideration of its repercussions.”
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