AbitibiBowater trying to avoid big tax bill

AbitibiBowater is juggling its corporate structure to avoid a big tax bill.

Unless AbitibiBowater is able to repay a $250 million loan between its Canadian and U.S. subsidiaries, the company faces a $55.25 million withholding tax in Canada, and potentially even more in the U.S.

The loan was agreed upon during the merger of Abitibi-Consolidated and Bowater last year. The Canadian company agreed to lend AbitibiBowater US Holding LLC $201.6 million. That amount increased to about $250 million with interest as of April's court protection.

The U.S. holding company doesn't have sufficient funds to repay the loan.

Creation of two holding companies would allow the debt to be paid by transferring preferred units under similar terms and conditions.

Source:

AbitibiBowater juggles to avoid large tax bills from $250 million loan (Canadian Press)