NEW YORK (AP) ¿ Newsprint maker AbitibiBowater Inc. on Thursday filed for bankruptcy court protection after deciding there was no other way it could deal with its debt of more than $6 billion.

AbitibiBowater, created in 2007 in a combination of U.S.-based Bowater and Canada's Abitibi-Consolidated, has faced collapsing demand for its newsprint as advertisers abandon newspapers for the Internet.

In addition, the recession has reduced the amount companies spend on newspaper ads, and rising newsprint prices have caused newspaper publishing companies to take such cost-savings measures as trimming the width of their pages. Further, declines in advertising and circulation have resulted in fewer pages printed overall, and in dozens of newspapers one or more of their print publication days have been eliminated.

Besides the global recession, the pulp and paper maker faced a subzero global credit environment plus the recent expropriation of a $300 million asset by a Canadian province.

By last month these challenges prompted AbitibiBowater to advise, in a U.S. regulatory filing, that its "liquidity position is currently severely constrained."

Efforts to avoid bankruptcy included selling hundreds of millions in assets, laying off workers and attempting to refinance its massive debt.

However, earlier this month it terminated a $1.8 billion refinancing effort to exchange existing debt for new debt. The exchange offer's deadline had been extended several times.

"The company concluded that there are no viable alternatives to its previously announced proposed refinancing ... and as a result has determined that the best course of action is to pursue its overall restructuring under Court supervision in the United States and Canada," AbitibiBowater said in a statement Thursday.

Company operations will continue as normal during its restructuring, spokesman Seth Kursman said in a telephone interview, adding that overseas facilities are not affected by the bankruptcy filings.

No layoffs, closures or pay cuts were announced with the bankruptcy, Kursman added, though such moves may be forthcoming as the restructuring progresses.

AbitibiBowater also said it arranged with Fairfax Financial Holdings Ltd. and Avenue Management LLC for debtor-in-possession financing of about $200 million.

Early Thursday morning the New York Stock Exchange and Toronto Stock Exchange, having been alerted by the company to its bankruptcy filings, halted trading in the stock, which closed Wednesday at 53 cents.

In the past 52 weeks, shares have ranged from 24 cents to $14.89. The company's current market capitalization is $30.5 million.

The bankruptcy filings by AbitibiBowater, a U.S.-based company with administrative headquarters in Montreal, could spur merger and acquisition activity, Frost & Sullivan Research Manager Vivek Tapuria said.

"The precarious financial situation of AbitibiBowater, itself a merger of two forestry products companies, will certainly make for an attractive opportunity for M&A," he said. "At issue is whether an acquirer wishes to take on AbitibiBowater's crushing $6 billion in debt."
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