Officials at Abitibi-Consolidated Inc. say the company is currently $6 billion in debt, and an improvement in the paper market is needed before the company will be able to pay off a significant amount of the debt.
Abitibi still has their debt-reduction plan as a top priority, but will not pay off a significant amount this year, says a company official.
The company currently has a high debt-to-equity ratio of 65 per cent.
That is $466 million higher than in 2001; of that amount $386 million went to finance Abitibi's increased stake in Pan Asia Paper Co.
The company presently owns 50 per cent of the Singapore-based paper producer. Earlier in the year Abitibi had planned to reduce its debt by about $600 million, but was unable to because the price of newsprint began to decline.
Officials hop that an improvement in industry prices will change the company's current situation. Abitibi estimates an increase of $50 US per tonne of newsprint, which translates into $360 million in annual operating profits.
However, although prices have not shown a change yet, there is still a chance that there will be an improvement in prices during the last half of the year.