Moody's Cuts Ratings On $5B Of AbitibiBowater Debt

NEW YORK (AP) — Moody's Investors Service downgraded a slew of ratings on the debt of AbitibiBowater Inc. after the Canadian newsprint maker filed for bankruptcy protection Thursday.

Moody's cut the corporate family rating of Abitibi-Consolidated Inc. to "Ca" from "Caa3" and the probability of default rating to "Ca/LD" from "Caa3." It lowered the corporate family and the probability of default ratings of Bowater Inc. to "Ca" from "Caa3."

The ratings are all non-investment grade, or "junk" status.

AbitibiBowater was created in 2007 in a combination of Greenville, S.C.-based Bowater and Montreal's Abitibi-Consolidated. The company has faced a huge drop in demand for newsprint as newspaper readers have migrated to the Internet, declining ad revenues have led to fewer pages printed and publishers have reduced the physical size of their pages to conserve cash.

Moody's said Abitibi's probability of default rating of "Ca/LD" reflects the fact that the company missed a $347 million term loan repayment due on March 31. In about three days, the "LD," or limited default, designation will be removed and Abitibi's probability of default rating will be "Ca," Moody's said.