Fitch Downgrades Abitibi-Consolidated Debt; Remains on Rating Watch Negative

Business Wire, March 11, 2008

CHICAGO -- Fitch Ratings has downgraded the debt of Abitibi-Consolidated Inc. (ACI; a subsidiary of AbitibiBowater Inc.) as follows:

--Issuer Default Rating (IDR) to 'CC' from 'CCC';

--Senior unsecured debt to 'CC/RR4 from 'CCC/RR4';

--Secured revolver to 'CCC-/RR3' from 'CCC+/RR3'.

The ratings remain on Rating Watch Negative.

This rating action responds to the likelihood of a restricted default/default in one or more series of ACI's securities imminently approaching maturity and/or the likelihood that holders of those securities, in order to avoid default, will have to accept a package of notes carrying a 15% coupon and a cash payment, the combined value of which is less than the principal redemption of the securities. ACI has coming due $196 million of 6.95% notes on April 1, 2008, $150 million of 5.25% notes on June 20, 2008 and $150 million of 7.875% notes on August 1, 2009. ACI is offering, as part of a broad refinancing plan, a package of cash and new senior unsecured notes due in 2010 to accepting bondholders in lieu of a cash redemption. Given the highly discounted market value of ACI's debt, it is unlikely that the value of the offered package equals the par value of the existing notes, resulting in a loss for bondholders that is tantamount to a partial default.

Fitch notes that the exchange could ultimately benefit ACI and its parent, but Fitch also believes that a substantial sum of additional finance at the ACI level needs to be accomplished in what are still difficult financial markets.

The ratings of parent AbitibiBowater Inc., Bowater Inc. and Bowater Canadian Forest Products Inc. remain unchanged and on Watch Negative:

AbitibiBowater Inc.

--IDR 'CCC'.

Bowater Incorporated

--IDR 'CCC';

--Senior unsecured debt 'CCC/RR4';

--Secured revolver 'B/RR1'.

Bowater Canadian Forest Products Inc.

--IDR 'CCC';

--Senior unsecured debt 'B-/RR2';

--Secured revolver 'B/RR1'.

AbitibiBowater Inc. is the largest newsprint producer in North America, around 5.7 million tonnes annually, and a major producer of supercalendered and specialty papers, light-weight coated papers, pulp and lumber.

Fitch's rating definitions and terms of use of such ratings are available on the agency's public web site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.