Monitor & Trustee EC Letters

8/14/2019 Monitor & Trustee EC Letters

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March 11, 2010

Attn: Mr. Alex F. MorrisonErnst & Young LLP

222 Bay StreetToronto, Ontario M5K 1J7Canada

Ref.: Province of Quebec, District of Montreal, No.: 500-11-036133-094

RE: Appointment of an Equity Committee in the AbitibiBowater, Inc., Bankruptcy

Proceedings

Dear Mr. Morrison:

We, the undersigned, are petitioning you to appoint a committee from the common shareholders,referred to as an Equity Committee, for the purposes of representing the investment of thosesame common shareholders in the continued bankruptcy proceedings of AbitibiBowater, Inc.We understand that the CCAA does not specifically allow for equity committees, howeverbecause of the international nature of this case and the reasons detailed herein, we believe it iswarranted here.

We have acted and continue to act only as a point of contact for an informal, non-representedalliance of seventy-seven (77) different common shareholders for the purposes of making thispetition to you. This alliance of shareholders controls 10,603,876 million shares or 19.4% of theoutstanding shares of ABWTQ making this group the second largest block of outstandingshareholders, second only to Fairfax Financial Holdings LTD.

This alliance has concerns regarding the security of its investments as the company emergesfrom bankruptcy for several reasons. First, there has been a history of apparent naked shorting,credit default swaps, and short selling causing price manipulation that has been brought to theattention of the company and SEC, but so far no action seems to be taken and/or communicatedto us. Second, though the company has significant equity and made statements regardingmaintaining value for the shareholders there has yet to be any engagement of the commonshareholders in this reorganization process. Third, there are no preferred shares in this companymeaning the shares this alliance holds have the same priority for equity after emergence as theDirectors, Union and non-union pensioners, mutual funds, management and others. Yet, each ofthose groups has been provided representation in the proceedings while we have not.

In the Thirty-Fifth Monitor Report (March 9, 2010), Hon. Mr. Justice C. Gascon, J.S.C.,approved the ad hoc consultative committee of the non-unionized current and former employeesarguing that the Petitioners have either taken actions or have had actions imposed on them thatwill impact various and diverse groups of stakeholders. The motion argues that the non-unionized employees need a formal relationship with the Petitioners to assist in meeting the


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needs of the Petitioners and mitigate the impact to the stakeholders. The common shareholdersneed a formal relationship for the same reasons.

Individual shareholders have reached out to AbitibiBowaters Investor Relations to gatherinformation regarding the progress of the bankruptcy case only to be told they cannot have

answers to their inquiries due to the sensitive nature of the case. The common shareholder feelsdisenfranchised and alienated from the entire process. Secured creditors, unions, non-unionemployees past and present, and bondholders who are well known to be partially responsible forthis bankruptcy all have representation. Yet, this alliance of common shareholders, who have thesecond largest block of shares, are told time and again the equivalent of no comment. Mr.Duane Owens, V.P. of Finance for AbitbiBowater, Inc., responded with the following when thisalliance expressed concerns over the recent trading irregularities:

Thank you for your recent messages regarding the trading history of certain of

our securities. We intend to consider the matter internally and pursue it as we

deem appropriate under the circumstances.

Please note we do not expect to provide public updates on this matter [emailcorrespondence, Tuesday, March 9, 2010]

For further understanding of the trading irregularities including naked short selling, apparentprice manipulation using short selling, and continued trading problems, we have attached a copyof the same report sent to Mr. Owens and Mr. Alan Maza at the SEC as well as a detailedanalysis supporting this request. Each of these documents were prepared by the undersigned andreviewed by the alliance prior to this petition.

The alliance has reviewed the situation of AbitibiBowater for evidence of the expectation ofequity after bankruptcy emergence. The company currently boasts a total Shareholder EquityNet (according to the January, 2010, Monthly Operating Report) of $13,135,470,711 USD andthis is increasing each month. The companys assets have increased $301,279,397 USD fromOctober 2009 to January 2010. In addition, the Shareholder Equity Net has increased$142,857,584 over the same time period. Mr. Seth Kursman, AbitibiBowater, Inc., spokesperson,was recently quoted as saying:

After nine months of cost-cutting under the protection of U.S. and Canadian

courts, AbitibiBowater, Inc., has stacked up the cash and is ramping up to exit

bankruptcy by the middle of the year. [Canwest News Service Friday, February5, 2010, filed 4:31 am, with emphasis added]

We feel that the preponderance of the facts and circumstances surrounding this case dictates thatthe appointment of an equity committee is reasonable, justified and necessary. Out of respect forthe court and the minimization of costs to the estate, the alliance's concerns are expressed as awhole in this one petition. However, it is likely that the alliance member may submit their ownfollow-up letters to you shortly. If needed, as members are 'parties of interest', and have a right tobe heard, individual court filings will be made.


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We are very interested in the continued success of AbitibiBowater, Inc., and look forward tosupporting their emergence from bankruptcy. We are encouraged by the companys websitestating the following:

By delivering on our business goals and commitments, we are confident that we

can create significant long-term value for shareholders.

An important fact not to be lost in this is that our shares and that of the alliance are the same asall other stakeholders in this company. With this request, we are making it clear we refuse to bediscriminated against in this reorganization process. Recently, Mr. D. Patterson, CEO andPresident of AbitibiBowater, was quoted as saying "It is our obligation to defend the interests ofour stakeholders and ensure we receive compensation for the fair market value of the

expropriated assets, plus additional damages when asked about AbitibiBowaters NAFTAlawsuit against Newfoundland and Labrador governments. This alliance is just as muchstakeholders as union employees, non-union employees, Directors and bondholders and demandthat our rights be defended as well.

The committees currently having a formal role in this process are defending their rights and havepicked and chosen their representatives in this process. They do not necessarily represent thisalliances interests. We implore AbitibiBowater to not get caught up in the same practice againstwhich they are fighting the Canadian government. We implore you and AbitibiBowater toaccept us at the table as you have those other groups.

We anticipate a response to this request and will follow up with you shortly.

Respectfully submitted,

Elizabeth L. Romero, MScDr. Henry Romero, CPE, CSP115 Bristol Bend LaneDickinson, TX 77539

Attachments:

1. Equity Committee Request Report (dated March 9, 2010)2. Analysis of Stock, Price, Shorts and Fails-To-Deliver, Rev. 2 (dated February 27, 2010)3. Copy of email correspondence from D. Owens, V.P. Finance, AbitibiBowater, dated

March 9, 2010


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March 11, 2010

Attn: Mr. David Klauder, Esq.Office of the United States Trustee

844 King Street, Room 2207Lockbox #35Wilmington, DE 19899-0035

Case No.: 09-11296(KJC) Jointly Administered

RE: Appointment of an Equity Committee in the AbitibiBowater, Inc., Bankruptcy

Proceedings

Dear Mr. Klauder, Esq.:

We, the undersigned, are petitioning you to appoint a committee from the common shareholders,referred to as an Equity Committee, for the purposes of representing the investment of thosesame common shareholders in the continued bankruptcy proceedings of AbitibiBowater, Inc.,pursuant to bankruptcy code 1102(a)(2).

We have acted and continue to act only as a point of contact for an informal, non-representedalliance of seventy-seven (77) different common shareholders for the purposes of making thispetition to you. This alliance of shareholders controls 10,603,876 million shares or 19.4% of theoutstanding shares of ABWTQ making this group the second largest block of outstandingshareholders, second only to Fairfax Financial Holdings LTD.

This alliance has concerns regarding the security of its investments as the company emergesfrom bankruptcy for several reasons. First, there has been a history of apparent naked shorting,credit default swaps, and short selling causing price manipulation that has been brought to theattention of the company and SEC, but so far no action seems to be taken and/or communicatedto us. Second, though the company has significant equity and made statements regardingmaintaining value for the shareholders there has yet to be any engagement of the commonshareholders in this reorganization process. Third, there are no preferred shares in this companymeaning the shares this alliance holds have the same priority for equity after emergence as theDirectors, Union and non-union pensioners, mutual funds, management and others. Yet, each ofthose groups has been provided representation in the proceedings while we have not.

In the Thirty-Fifth Monitor Report (March 9, 2010), Hon. Mr. Justice C. Gascon, J.S.C.,approved the ad hoc consultative committee of the non-unionized current and former employeesarguing that the Petitioners have either taken actions or have had actions imposed on them thatwill impact various and diverse groups of stakeholders. The motion argues that the non-unionized employees need a formal relationship with the Petitioners to assist in meeting theneeds of the Petitioners and mitigate the impact to the stakeholders. The common shareholdersneed a formal relationship for the same reasons.


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Individual shareholders have reached out to AbitibiBowaters Investor Relations to gatherinformation regarding the progress of the Ch. 11 case only to be told they cannot have answers totheir inquiries due to the sensitive nature of the case. The common shareholder feelsdisenfranchised and alienated from the entire process. Secured creditors, unions, non-unionemployees past and present, and bondholders who are well known to be partially responsible for

this bankruptcy all have representation. Yet, this alliance of common shareholders, who have thesecond largest block of shares, are told time and again the equivalent of no comment. Mr.Duane Owens, V.P. of Finance for AbitbiBowater, Inc., responded with the following when thisalliance expressed concerns over the recent trading irregularities:

Thank you for your recent messages regarding the trading history of certain of

our securities. We intend to consider the matter internally and pursue it as we

deem appropriate under the circumstances.

Please note we do not expect to provide public updates on this matter [emailcorrespondence, Tuesday, March 9, 2010]

For further understanding of the trading irregularities including naked short selling, apparentprice manipulation using short selling, and continued trading problems, we have attached a copyof the same report sent to Mr. Owens and Mr. Alan Maza at the SEC as well as a detailedanalysis supporting this request. Each of these documents were prepared by the undersigned andreviewed by the alliance prior to this petition.

The alliance has reviewed the situation of AbitibiBowater for evidence of the expectation ofequity after bankruptcy emergence. The company currently boasts a total Shareholder EquityNet (according to the January, 2010, Monthly Operating Report) of $13,135,470,711 USD andthis is increasing each month. The companys assets have increased $301,279,397 USD fromOctober 2009 to January 2010. In addition, the Shareholder Equity Net has increased$142,857,584 over the same time period. Mr. Seth Kursman, AbitibiBowater, Inc., spokesperson,was recently quoted as saying:

After nine months of cost-cutting under the protection of U.S. and Canadian

courts, AbitibiBowater, Inc., has stacked up the cash and is ramping up to exit

bankruptcy by the middle of the year. [Canwest News Service Friday, February5, 2010, filed 4:31 am, with emphasis added]

We feel that the preponderance of the facts and circumstances surrounding this Chapter 11 casedictates that the appointment of an equity committee is reasonable, justified and necessary. Outof respect for the court and the minimization of costs to the estate, the alliance's concerns areexpressed as a whole in this one petition. However, it is likely that the alliance member maysubmit their own follow-up letters to you shortly. If needed, as members are 'parties of interest',and have a right to be heard pursuant to 11 U.S.C. 1109(b), individual court filings will bemade.


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We are very interested in the continued success of AbitibiBowater, Inc., and look forward tosupporting their emergence from bankruptcy. We are encouraged by the companys websitestating the following:

By delivering on our business goals and commitments, we are confident that we

can create significant long-term value for shareholders.

An important fact not to be lost in this is that our shares and that of the alliance are the same asall other stakeholders in this company. With this request, we are making it clear we refuse to bediscriminated against in this reorganization process. Recently, Mr. D. Patterson, CEO andPresident of AbitibiBowater, was quoted as saying "It is our obligation to defend the interests ofour stakeholders and ensure we receive compensation for the fair market value of the

expropriated assets, plus additional damages when asked about AbitibiBowaters NAFTAlawsuit against Newfoundland and Labrador governments. This alliance is just as muchstakeholders as union employees, non-union employees, Directors and bondholders and demandthat our rights be defended as well.

The committees currently having a formal role in this process are defending their rights and havepicked and chosen their representatives in this process. They do not necessarily represent thisalliances interests. We implore AbitibiBowater to not get caught up in the same practice againstwhich they are fighting the Canadian government. We implore you and AbitibiBowater toaccept us at the table as you have those other groups.

We anticipate a response to this request and will follow up with you shortly.

Respectfully submitted,

Elizabeth L. Romero, MScDr. Henry Romero, CPE, CSP115 Bristol Bend LaneDickinson, TX 77539

Attachments:

1. Equity Committee Request Report (dated March 9, 2010)2. Analysis of Stock, Price, Shorts and Fails-To-Deliver, Rev. 2 (dated February 27, 2010)3. Copy of email correspondence from D. Owens, V.P. Finance, AbitibiBowater, dated

March 9, 2010

Monitor & Trustee EC Letters

Documents

Transcript of Monitor & Trustee EC Letters