Resolute Forest Products' S&P ratings unaffected by announced Fibrek takeover bid
November 29, 2011
– Standard & Poor's Ratings Services today said that its ratings on Montreal-based Resolute Forest Products (formerly AbitibiBowater Inc.; BB-/Stable/--) are unaffected by the company's announced takeover bid for Fibrek Inc. (not rated), a virgin and recycled kraft pulp producer.
Standard & Poor's believes that the acquisition is in line with Resolute's strategy to expand its pulp business to offset the declining newsprint business. We expect the company to fund the proposed acquisition with cash on hand and equity. While Resolute's liquidity will likely decline we expect leverage to remain unaffected. The company's current adjusted leverage ratio is 3.3x. As of Sept. 30, 2011, Resolute has US$295 million cash on hand and US$519 million available under its asset-backed loan credit facility.