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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 26, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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BOWATER INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 62-072180
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
</TABLE>
55 EAST CAMPERDOWN WAY
POST OFFICE BOX 1028
GREENVILLE, S.C. 29602
(864) 271-7733
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
WENDY C. SHIBA, ESQ.
VICE PRESIDENT, SECRETARY AND ASSISTANT GENERAL COUNSEL
BOWATER INCORPORATED
55 EAST CAMPERDOWN WAY
POST OFFICE BOX 1028
GREENVILLE, SC 29602
(864) 271-7733
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPY TO:
ALLEN FINKELSON, ESQ.
CRAVATH, SWAINE & MOORE
825 EIGHTH AVENUE
NEW YORK, NY 10019
(212) 474-1000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) SHARE(2) PRICE(2) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1.00 par value........... 21,645,334 $47.375 $1,025,447,698 (3)
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</TABLE>
(1) Based upon the sum of (a) the sum of the number of shares of the common
stock of Avenor Inc. ("Avenor Common Shares") outstanding on June 23, 1998
and the number of Avenor Common Shares issuable upon the exercise of
outstanding options and purchase rights exercisable on or before June 23,
1998, multiplied by .5533, an estimated Exchange Ratio (as defined herein)
determined by dividing Canadian $35 by the product of United States $45.5062
(the minimum price of common stock of Bowater Incorporated (the "Bowater
Common Stock") for purposes of calculating the Exchange Ratio under the
terms of the Plan of Arrangement (as defined herein)) and an assumed
currency exchange rate of 1.39 Canadian dollars for each United States
dollar, and multiplied by .50 (the maximum percentage of Avenor Common
Shares that may be exchanged for exchangeable shares of Bowater Canada Inc.)
and (b) the number of Avenor Common Shares issuable upon conversion of
convertible debentures of Avenor Inc. outstanding on June 23, 1998,
multiplied by .5533.
(2) Calculated pursuant to Rule 457(c), based upon the average of the high and
low prices of shares of common stock of Bowater Incorporated reported on the
New York Stock Exchange as of June 23, 1998.
(3) In accordance with Rule 457(b), the registration fee of $302,507 is offset
by the fee of $322,513 which was paid by the Registrant to the Securities
and Exchange Commission with respect to the Joint Management Information
Circular and Proxy Statement filed on June 18, 1998 with respect to this
transaction.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JUNE 26, 1998
PROSPECTUS
BOWATER INCORPORATED
COMMON STOCK
(PAR VALUE $1.00 PER SHARE)
This prospectus relates to shares of common stock, par value $1.00 per
share (the "Bowater Common Stock"), of Bowater Incorporated, a Delaware
corporation ("Bowater"), to be issued upon exchange (by way of redemption or
purchase) of exchangeable shares (the "Exchangeable Shares") of Bowater Canada
Inc., an indirectly owned subsidiary of Bowater organized under the laws of
Canada ("Bowater Canada"). The Exchangeable Shares will be issued by Bowater
Canada in exchange for certain of the common shares (the "Avenor Common Shares")
of Avenor Inc. ("Avenor") pursuant to the terms of an Amended and Restated
Arrangement Agreement dated as of March 9, 1998 (the "Arrangement Agreement")
and the terms of a plan of arrangement (the "Plan of Arrangement") providing for
an arrangement (the "Arrangement") involving Avenor and its shareholders under
Section 192 of the Canadian Business Corporations Act (the "CBCA"). Shares of
Bowater Common Stock are being offered on a continuous basis pursuant to Rule
415 under the Securities Act of 1933, as amended (the "Securities Act"), during
the period of time that the Registration Statement to which this prospectus
relates remains effective. Bowater, Bowater Canadian Holdings Incorporated, a
subsidiary of Bowater organized under the laws of the province of Nova Scotia
("Bowater Holdings") and Bowater Canada will offer shares of Bowater Common
Stock in exchange for Exchangeable Shares from time to time. Upon such exchange,
holders of Exchangeable Shares will be entitled to receive for each Exchangeable
Share one share of Bowater Common Stock. See "Plan of Distribution". All
expenses of registration incurred in connection with this offering are being
paid by Bowater. Bowater, Bowater Holdings and Bowater Canada will receive the
Exchangeable Shares exchanged for the shares of Bowater Common Stock offered
hereby. The Bowater Common Stock is currently traded on the New York Stock
Exchange (the "NYSE"), U.S. regional exchanges, the London Stock Exchange and
the Swiss Stock Exchange. Bowater is in the process of delisting the Bowater
Common Stock from the Swiss Stock Exchange. On July [ ], 1998, the closing
price of the Bowater Common Stock on the NYSE was $[ ] per share. All
dollar references in this Prospectus are to United States dollars ("$") unless
otherwise indicated by reference to Canadian dollars ("C$").
------------------------
SEE "RISK FACTORS" BEGINNING AT PAGE 4 HEREOF FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH ANY INVESTMENT IN THE
BOWATER COMMON STOCK OFFERED HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 1998.
<PAGE> 3
AVAILABLE INFORMATION
Bowater is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"), which can be inspected
and copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Judiciary Plaza, Room 1024, Washington, D.C. 20549; and
at the regional offices of the Commission at Citicorp Center, 13th Floor, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 and at Seven World
Trade Center, New York, New York 10048. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 at prescribed rates or on the Internet
at http://www.sec.gov. Such reports, proxy statements and other information
concerning Bowater also may be inspected at the offices of the NYSE, 20 Broad
Street, New York, New York 10005.
Bowater has filed with the Commission a registration statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act with respect to the shares of
Bowater Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto, certain parts of which are omitted in accordance with the
rules and regulations of the Commission. For further information with respect to
Bowater and such Bowater Common Stock, reference is made to such Registration
Statement and to the exhibits and schedules thereto. Statements contained in
this Prospectus as to the contents of any contract or any other document
referred to are not necessarily complete, and in each instance reference is made
to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference. A copy of the Registration Statement may be obtained at the
public reference facilities maintained by the Commission as provided in the
preceding paragraph.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by Bowater with the
Commission pursuant to the Exchange Act (File No. 1-8712), are incorporated in
this Prospectus by reference and shall be deemed to be a part hereof:
(a) Bowater's Annual Report on Form 10-K for the year ended December
31, 1997;
(b) Bowater's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998;
(c) Bowater's Current Report on Form 8-K filed March 19, 1998;
(d) The Joint Management Information Circular and Proxy Statement on
Schedule 14A for Bowater filed on June 18, 1998;
(e) The description of the Bowater Common Stock contained in the
Registration Statement of Bowater on Form S-3, File No. 33-51569.
All documents filed by Bowater pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering made hereby shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of the
filing of such documents. Any statement contained in this Prospectus, in a
supplement to this Prospectus or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed supplement to this Prospectus or in any
subsequently filed document that is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
Bowater hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, on the written or oral request of any such person, a copy of any or
all of the documents referred to above which have been or may be incorporated in
this Prospectus by
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reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such documents). Written or telephone
requests for such copies should be directed to Bowater at its principal
executive offices located at 55 East Camperdown Way, Post Office Box 1028,
Greenville, South Carolina 29602, Attention: Investor Relations Department
(telephone number: (864) 271-7733).
3
<PAGE> 5
RISK FACTORS
Investors should consider carefully the following factors, in addition to
the other information contained in this Prospectus, before exchanging their
Exchangeable Shares for the shares of Bowater Common Stock offered hereby.
RISKS RELATED TO THE EXCHANGE OF EXCHANGEABLE SHARES
Taxability of the Exchange
The exchange of Exchangeable Shares for shares of Bowater Common Stock is
generally a taxable event in Canada and the United States. A holder's tax
consequences can vary depending on a number of factors, including the residency
of the holder, the method of the exchange (redemption or purchase) and the
length of time that the Exchangeable Shares were held prior to an exchange. See
"Income Tax Considerations".
Differences in Canada and U.S. Trading Markets
The Toronto Stock Exchange (the "TSE") and the Montreal Exchange (the "ME")
have both conditionally approved the listing of the Exchangeable Shares on the
effective date of the Arrangement, subject to Bowater Canada fulfilling all of
the requirements of the TSE and the ME, including distribution of Exchangeable
Shares to a minimum number of public shareholders. The Bowater Common Stock is
listed on the NYSE, U.S. regional exchanges, the London Stock Exchange and the
Swiss Stock Exchange. Bowater is in the process of delisting the Bowater Common
Stock from the Swiss Stock Exchange. Bowater has agreed that the shares of
Bowater Common Stock issued pursuant to the Arrangement and issuable from time
to time in exchange for the Exchangeable Shares will be listed on the NYSE and
the Pacific Exchange, Inc. There is no current intention to list the
Exchangeable Shares or Bowater Common Stock on any other stock exchange in
Canada or the United States. As a result of the foregoing, the price at which
the Exchangeable Shares will trade will be based upon the market for such shares
on the TSE and ME and the price at which the shares of Bowater Common Stock will
trade will be based upon the market for such shares on the NYSE and the other
exchanges upon which they trade. Although Bowater believes that the market price
of the Exchangeable Shares on the TSE and ME and the market price of the Bowater
Common Stock on the NYSE and such other exchanges will reflect essentially
equivalent values, there can be no assurances that the market price of the
Bowater Common Stock will be identical, or even similar, to the market price of
the Exchangeable Shares.
Foreign Property
Provided the Exchangeable Shares are listed on a prescribed stock exchange
in Canada (which currently includes the TSE and ME), the Exchangeable Shares
will not be foreign property under the Income Tax Act (Canada), as amended (the
"Canadian Tax Act"), for trusts governed by registered retirement savings plans,
registered retirement income funds and deferred profit sharing plans, for
registered pension plans or for certain other persons to whom Part XI of the
Canadian Tax Act is applicable. Shares of Bowater Common Stock will, however, be
foreign property for such plans or persons.
RISKS RELATED TO OPERATIONS
Uncertainties in Integrating Business Operations and Achieving Cost Reductions
The value of shares of Bowater Common Stock may be affected by the ability
of the management of Bowater to achieve the cost reductions from operating and
administrative efficiencies and other synergies expected to result from the
transaction with Avenor. The consolidation of functions and the integration of
departments, systems and procedures present significant management challenges.
Although Bowater's management is experienced in achieving cost reductions and
operating efficiencies, there can be no assurance that any specified level of
cost savings or other synergies will be fully achieved or will be achieved
within the time periods contemplated, nor can there be any assurance as to the
effect of the transaction with Avenor on Bowater's results of operations.
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Industry Conditions and Competition
Bowater's operating results reflect the general cyclical pattern of the
pulp and paper industry. Most of Bowater's products are world-traded commodity
products. Consequently, Bowater, like other participants in this industry, has
little direct influence over the timing and extent of price changes. Product
pricing is significantly affected by the relationship between industry supply
and demand, with the former influenced primarily by fluctuations in available
manufacturing capacity and the latter by the health of the economy in general
and the strength of print media in particular.
The markets for Bowater's products are highly competitive, with a number of
major companies competing in each market. Certain of Bowater's competitors may
have greater financial resources than Bowater. In addition, some of Bowater's
competitors are currently lower cost producers in some of the businesses in
which Bowater operates, including newsprint. Bowater competes with North
American, European, and Asian producers in most of its product lines. Variations
in the exchange rate between the United States dollar and other currencies,
particularly those of Sweden, Finland, and certain Asian countries,
significantly affect the relative competitive position of Bowater as compared to
many of its competitors.
A significant portion of Bowater's revenues are represented by newsprint
sales. Any material decline in newsprint prices or any other adverse development
in the market for newsprint could have a material adverse effect on Bowater.
Sales of market pulp constitute the second largest source of revenues of
Bowater. Market pulp prices historically have been volatile. Significant
declines in market pulp prices or any other adverse development in the market
for market pulp could have a material adverse effect on Bowater.
Trends in electronic data transmission and storage could adversely affect
traditional print media, including products of Bowater's customers; however,
neither the timing nor extent of these trends can be predicted with certainty.
Industry reports indicate that Bowater's newspaper publishing customers in North
America have experienced some loss in market share to other forms of media and
advertising, such as direct mailings and newspaper inserts (both of which are
end uses for several of Bowater's products), cable television and the Internet.
Some of these customers are also facing a decline in newspaper readership,
circulation and advertising lineage. Bowater does not believe that this is the
case in most overseas markets. Bowater's magazine and catalog publishing
customers have also been affected by the use of electronic media for
merchandising products, while benefiting from the increase in magazine and
catalog publications dealing with electronic media, especially computer hardware
and software.
Environmental Regulation and Significant Environmental Expenditures
Bowater is subject to a variety of federal, state and provincial
environment laws and regulations in the jurisdictions in which it operates.
Bowater believes its operations are currently in substantial compliance with
applicable environmental laws and regulations.
In late 1993, the U.S. Environmental Protection Agency (the "EPA") proposed
regulations that would impose new air and water quality standards aimed at
further reductions of pollutants. Known as the "Cluster Rule", these regulations
were issued in final form by the EPA in November 1997. Bowater's compliance
period begins in the first quarter of 1998 and extends until the year 2006;
however, the majority of the compliance requirements must be met by 2001. These
new rules will require capital expenditures at all of Bowater's U.S. paper
mills.
Bowater anticipates spending approximately $60 million to $75 million to
enable its present facilities (without giving effect to the Arrangement) to
comply with the new effluent guidelines, with the majority to be spent at
Bowater's Catawba, South Carolina location. Additional capital expenditures will
also be required to meet the new air quality standards. Engineering studies are
currently under way to define this additional cost, which is expected (without
giving effect to the Arrangement) to be in the same range as the requirement for
the effluent guideline expenditure. Bowater's capital spending plan for 1998
(without giving effect to the Arrangement) includes amounts relating to this
study and implementation of the new effluent quality regulations. Other than the
Cluster Rule regulations described above, Bowater anticipates approximately
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$10 million to $15 million of capital expenditures per year for the foreseeable
future to maintain the compliance of its existing operations (without giving
effect to the Arrangement) with environmental regulations. In addition to these
capital expenditures, Bowater will take on environmental capital expenditures
that Avenor has currently projected to be C$20 million over the period 1998 to
2000 to allow Avenor's facilities to meet the requirements of current
environmental laws and regulations applicable to Avenor.
Regulations adopted in British Columbia have an additional objective to be
met before the end of 2002 with respect to the reduction of adsorbable organic
halogens (AOX) to non-detectable levels, which could require Bowater to
undertake significant further capital expenditures. Currently, it is unclear
what action would be required to meet this objective in its present form and,
therefore, the cost of additional capital expenditures cannot be estimated.
Unforeseen expenditures required to allow Bowater to remain in compliance
with laws and regulations governing air emissions, wastewater discharge, waste
management and landfill sites, including site or other remediation costs, or
unforeseen environmental liabilities, could have an adverse effect on Bowater's
business and financial condition. There can be no assurance that internally
generated funds or other sources of liquidity will be sufficient for Bowater's
requirements with respect to unforeseen environmental compliance expenditures.
Additionally, there can be no assurance that changes in the substance or
enforcement of environmental laws and regulations or their application will not
require further significant expenditures.
Increased Exposure to Currency Fluctuations
Most of Bowater's sales and costs are denominated in U.S. dollars. Most of
Avenor's sales are also denominated in U.S. dollars, but many of its costs are
denominated in Canadian dollars. After giving effect to the transaction with
Avenor, Bowater will have increased exposure to fluctuations in the Canadian
dollar. As a result, Bowater's earnings will be affected to a greater extent
than in the past by increases or decreases in the value of the Canadian dollar.
Increases in the value of the Canadian dollar versus the U.S. dollar would tend
to reduce reported earnings in U.S. dollar terms, and decreases in the value of
the Canadian dollar would tend to increase reported earnings.
Increased Leverage
Bowater expects to finance the cash consideration to be paid in connection
with the Arrangement and related fees and expenses through the use of existing
cash and marketable securities and borrowings under a committed $1 billion
unsecured credit facility, a substantial portion of which is unused. As a result
of the new borrowings and addition of Avenor's existing debt, Bowater's
indebtedness as a percentage of total capitalization will be higher than in
recent years. Bowater anticipates repaying a substantial portion of indebtedness
through the planned sale of Avenor's Dryden, Ontario mill. However, there can be
no assurance as to the timing of any such sale or the amount of the proceeds to
be received therefrom. If Bowater is unsuccessful in completing the sale of the
Dryden, Ontario mill, Bowater's leverage will remain at a higher than normal
level for a longer period than if the sale were completed. While such higher
leverage would not be above reasonable levels within the forest products
industry, such leverage would increase Bowater's financial risk by: (i)
increasing the cost of additional financing for working capital, capital
expenditures, and other purposes and (ii) increasing the amount of cash flow
dedicated to the payment of interest and principal.
Effect of Weak Asian Markets
Asian demand for paper and pulp products has declined as a result of weak
economic conditions and financial market turmoil, leading to downward pricing
pressure and a reduction of shipments into the region. In addition, producers
for the Asian markets have redirected their tonnage to other regions, thereby
creating a downward pressure on prices elsewhere. Neither Bowater nor Avenor
currently has production facilities located in Asia, although Bowater has signed
an agreement for the purchase of a mill in Korea. Completion of the purchase,
which is expected within two months, is subject to satisfaction of several
conditions as described in "Bowater Management's Discussion and Analysis of
Financial Condition and Results of Operations --
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Three Months Ended March 31, 1998, versus March 31, 1997 -- Pending
Transactions" incorporated herein by reference to Bowater's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1998.
In 1997, Bowater and Avenor had export sales to Asia totaling 6% and 21%,
respectively, of total net revenues, compared with 8% and 22% in 1996. Since
late 1997, tonnage that Bowater and Avenor otherwise would have shipped to Asia
has in general been shifted to markets that are experiencing stronger demand
such as the United States, Latin America and Europe. This stronger demand has
substantially offset the effect of the Asian weakness on the total volume of
shipments by Bowater and Avenor. There can be no assurance that non-Asian
markets will continue to absorb reduced Asian demand.
Weak market conditions in Asia may continue to have an adverse effect on
the level of worldwide demand for pulp and paper products as producers for the
Asian markets may continue to redirect their tonnage to other regions.
Significant future weakness in Asian markets could erode world-wide pricing for
Bowater's and Avenor's products, thereby adversely affecting Bowater's financial
results. In addition, Asian producers may use their depreciated currencies to
increase exports. Any significant destabilization of one or more major Asian
trading currencies could further erode prices for commodity-grade products such
as those produced by Bowater and Avenor.
BOWATER
Bowater is engaged in the manufacture, sale and distribution of newsprint,
directory paper, uncoated groundwood specialties, coated groundwood paper,
market pulp and lumber. Bowater markets and distributes its various products in
North America, Latin America, Europe, Asia and the Pacific Rim. Bowater's
principal executive offices are located at 55 East Camperdown Way, Post Office
Box 1028, Greenville, South Carolina 29602, and its telephone number is (864)
271-7733.
USE OF PROCEEDS
Because the shares of Bowater Common Stock offered hereby will be issued
upon the exchange (by way of redemption or purchase) of Exchangeable Shares,
Bowater will receive no cash proceeds therefrom.
DESCRIPTION OF CAPITAL STOCK
As of the date of this Prospectus, Bowater is authorized to issue
100,000,000 shares of Bowater Common Stock and 10,000,000 shares of preferred
stock, par value $1.00 per share, issuable in series (the "Bowater Preferred
Stock"). The Board of Directors of Bowater (the "Bowater Board"), without
further shareholder action, is authorized to provide for the issuance of shares
of preferred stock in one or more series, and to establish from time to time the
number of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and any
qualifications, limitations or restrictions thereof. As of June 24, 1998 there
were 40,562,127 shares of Bowater Common Stock issued and outstanding and
264,318 shares of 8.4% Series C Cumulative Preferred Stock, par value $1.00 per
share (the "Bowater Series C Preferred Stock") issued and outstanding.
BOWATER COMMON STOCK
Shares of Bowater Common Stock have a par value of $1.00 per share. The
holders of Bowater Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of shareholders. Cumulative voting for
the election of directors is not authorized by Bowater's Restated Certificate of
Incorporation, as amended (the "Bowater Certificate"). Subject to the rights of
the holders of any class of capital stock of Bowater having any preference or
priority over the Bowater Common Stock (such as the Bowater Series C Preferred
Stock), the holders of shares of Bowater Common Stock are entitled to receive
such dividends as may be declared by the Bowater Board out of funds legally
available therefor and are entitled upon any liquidation, dissolution or
winding-up of Bowater to receive ratably the net assets of Bowater available for
distribution. The Support Agreement to be entered into among Bowater, Bowater
Holdings and
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Bowater Canada (the "Support Agreement"), in connection with the Arrangement,
prohibits Bowater from declaring or paying any dividend on the Bowater Common
Stock unless (a) Bowater Canada immediately thereafter declares or pays, as the
case may be, an equivalent dividend on the Exchangeable Shares and (b) Bowater
Canada has sufficient money or other assets or authorized but unissued
securities available to enable the due declaration and the due and punctual
payment, in accordance with applicable law, of an equivalent dividend on the
Exchangeable Shares. No preemptive rights, conversion rights, redemption rights
or sinking fund provisions are applicable to the Bowater Common Stock, and there
are no dividends in arrears or default.
BOWATER SERIES C PREFERRED STOCK
The Bowater Board has designated 850,000 authorized shares of Bowater
Preferred Stock as Bowater Series C Preferred Stock. All of the shares of
Bowater Series C Preferred Stock are held by Sun Trust Bank, as depositary for
the holders of Depositary Shares of Bowater (the "Bowater Depositary Shares").
Each of the Bowater Depositary Shares represents a one-fourth interest in a
share of Bowater Series C Preferred Stock and entitles the holder to that
proportion of the rights and preferences of the Bowater Series C Preferred Stock
(including dividend, voting and liquidation rights) represented thereby. The
Bowater Depositary Shares are evidenced by depositary receipts ("Depositary
Receipts") issued pursuant to a Deposit Agreement, dated as of February 1, 1994,
by and among Bowater, the Sun Trust Bank and the holders from time to time of
the Depositary Receipts. Dividends on the Bowater Series C Preferred Stock are
cumulative from the date of initial issuance and are payable quarterly on
January 15, April 15, July 15 and October 15 of each year in the amount of $2.10
per quarter. Each Bowater Series C Preferred Stock has a liquidation preference
over the Special Voting Stock and Bowater Common Stock of $100 plus an amount
equal to accrued and unpaid dividends thereon (whether or not declared). The
Bowater Series C Preferred Stock is not redeemable prior to February 8, 1999. On
or after that date, the Bowater Series C Preferred Stock is redeemable at the
option of Bowater, in whole or in part, at $100 per share (equivalent to $25 per
Depositary Share) plus accrued and unpaid dividends (whether or not declared) to
the redemption date. The Bowater Series C Preferred Stock has no stated maturity
and is not subject to any sinking fund or mandatory redemption and is not
convertible into any other securities of Bowater. The Depositary Shares are
listed on the NYSE. The Bowater Series C Preferred Stock is not so listed, and
there is no trading market for the Series C Preferred Stock except as
represented by the Depositary Shares.
BOWATER SPECIAL VOTING STOCK
The Bowater Board has designated one authorized share of Bowater Preferred
Stock as Special Voting Stock, par value $1.00 per share (the "Special Voting
Stock"). The holder of the share of Special Voting Stock will be entitled to
cast a number of votes equal to the number of outstanding Exchangeable Shares
from time to time not owned by Bowater or its affiliates as to which the holder
of the share of Special Voting Stock has timely received voting instructions
from the holders of such Exchangeable Shares in accordance with the Voting and
Exchange Trust Agreement (as defined below). The holders of Bowater Common Stock
and the holder of the share of Special Voting Stock will vote together as a
single class on all matters. The Special Voting Stock, with respect to rights on
liquidation, dissolution and winding-up, will rank senior to all classes of
common stock of Bowater and junior to any other class or series of Bowater
Preferred Stock. In the event of any liquidation, dissolution or winding-up of
Bowater, the holder of the share of Special Voting Stock will be entitled to
receive, prior to any distributions to holders of the shares of Bowater Common
Stock, $10.00 out of the assets of Bowater available for distribution to its
shareholders. No dividends are payable on the share of Special Voting Stock. The
Special Voting Stock will be issued to Montreal Trust Company of Canada, as
trustee (together with its successors, the "Trustee") under the Voting and
Exchange Trust Agreement to be entered into among Bowater, Bowater Holdings,
Bowater Canada and the Trustee (the "Voting and Exchange Trust Agreement") in
connection with the Arrangement. The share of Special Voting Stock will not be
subject to redemption except that, at such time as there are no Exchangeable
Shares outstanding not owned by Bowater or its affiliates, and there are no
shares of stock, debt, options or other agreements of Bowater Canada that could
give rise to the issuance of any Exchangeable Shares to any person (other than
Bowater or
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its affiliates), the share of Special Voting Stock will be automatically
redeemed and canceled, with the $10.00 liquidation preference due and payable
upon such redemption.
CERTAIN CERTIFICATE, BYLAW AND CONTRACT PROVISIONS
Certain provisions of the Bowater Certificate or the Bylaws of Bowater (the
"Bowater Bylaws") may have the effect of delaying, deferring or preventing a
change in control of Bowater. These provisions include: those regarding a
classified board of directors; the supermajority shareholder or special director
voting requirements for approval of certain business combinations and for
filling vacancies on the Bowater Board under certain circumstances; the
requirement that the shareholders may act only through a shareholders meeting,
coupled with the provision that only the Bowater Board or certain executive
officers can call a special meeting of the shareholders; the requirements under
the Bowater Bylaws for submitting proposals at shareholder meetings; the ability
of the Bowater Board to issue preferred stock issued serially without prior
approval of the shareholders and which may have various voting rights designated
by the directors, including a separate right to approve a merger or sale of
substantially all of the assets of Bowater; and the supermajority voting
requirements to amend certain provisions of the Bowater Certificate or, in
certain circumstances, various provisions (including the notice provisions) of
the Bowater Bylaws. Certain provisions in Bowater's employment contracts,
change-in-control agreements, stock option plans, severance pay plans, and
qualified and nonqualified benefit plans, in Bowater's credit agreements, and in
the indentures relating to Bowater's outstanding debt securities may also have
the effect of inhibiting a change of control of Bowater.
PLAN OF DISTRIBUTION
EXCHANGEABLE SHARES
Pursuant to the Plan of Arrangement, Bowater Holdings and Bowater Canada
will acquire all outstanding Avenor Common Shares and each holder of an Avenor
Common Share (other than holders who exercise and perfect their dissent rights)
will receive for each such share, at such holder's election, subject to
proration, (i) C$35 in cash, without interest thereon, (ii) a number of shares
of Bowater Common Stock equal to the Exchange Ratio (described below), (iii) a
number of Exchangeable Shares equal to the Exchange Ratio or (iv) a combination
of the foregoing. The "Exchange Ratio" equals C$35 divided by the product of the
weighted average trading price of shares of Bowater Common Stock on the NYSE for
the 20 trading days ending on the third business day prior to the effective date
of the Arrangement (but not more than $55.6187 or less than $45.5062) and the
noon spot rate of exchange for one U.S. dollar (expressed in Canadian dollars)
on the last of such trading days based on information provided by the Bank of
Canada. Pursuant to a supplemental indenture to be entered into among Bowater,
Bowater Canada, Avenor and Montreal Trust Company, as trustee, holders of the
7.5% Convertible Debentures due 2004 of Avenor (the "Avenor Convertible
Debentures") who do not convert their Avenor Convertible Debentures prior to the
Arrangement, will be entitled, after the effective date of the Arrangement, to
convert their Avenor Convertible Debentures into Exchangeable Shares on the same
basis as if they had converted their Avenor Convertible Debentures into Avenor
Common Shares prior to the effective date of the Arrangement and such Avenor
Common Shares had been exchanged for a number of Exchangeable Shares equal to
the Exchange Ratio.
Bowater Common Stock may be issued to holders of Exchangeable Shares as
follows: (i) holders of Exchangeable Shares may require at any time that such
shares be exchanged for an equivalent number of shares of Bowater Common Stock
(see "-- Procedures for Issuance of Bowater Common Stock -- Retraction of
Exchangeable Shares by Holders"); (ii) Bowater Holdings or Bowater Canada may,
under certain circumstances, purchase or redeem such Exchangeable Shares by
exchanging therefor an equal number of shares of Bowater Common Stock (see
"-- Procedures for Issuance of Bowater Common Stock -- Redemption of
Exchangeable Shares"), and (iii) upon liquidation of Bowater or Bowater Canada,
holders of Exchangeable Shares may be required to, or may elect to, exchange
such Exchangeable Shares for shares of Bowater Common Stock (see "-- Procedures
for Issuance of Bowater Common Stock -- Liquidation of Bowater Canada",
"-- Insolvency of Bowater Canada" and "-- Liquidation of Bowater"). No broker,
dealer or underwriter has been engaged in connection with the offering of the
Bowater Common Stock made hereby.
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The following is a description of the terms on which Bowater Common Stock
may be issued in exchange for the Exchangeable Shares. Such terms are set forth
in the provisions attaching to the Exchangeable Shares (the "Exchangeable Share
Provisions") as set forth in Exhibit 1 to the Plan of Arrangement, the Plan of
Arrangement and certain provisions of the Voting and Exchange Trust Agreement.
The Arrangement Agreement, in which the Plan of Arrangement (including the
Exchangeable Share Provisions) is included as Schedule A, and the form of Voting
and Exchange Trust Agreement are included as exhibits to the Registration
Statement of which this Prospectus constitutes a part, and the following
description is qualified in its entirety by reference to the Plan of Arrangement
(including the Exchangeable Shares Provisions) and the Voting and Exchange Trust
Agreement.
PROCEDURES FOR ISSUANCE OF BOWATER COMMON STOCK
Retraction of Exchangeable Shares by Holders
Holders of the Exchangeable Shares are entitled at any time to retract
(i.e., to require Bowater Canada to redeem) any or all Exchangeable Shares owned
by them and to receive an amount per Exchangeable Share to be satisfied by the
delivery of one share of Bowater Common Stock (the "Retraction Price") in
exchange therefor, subject to the right (the "Retraction Call Right") of Bowater
Holdings described below. Holders of Exchangeable Shares may effect such
retraction by presenting to Bowater Canada or its transfer agent a certificate
or certificates representing the Exchangeable Shares the holder desires to have
Bowater Canada redeem, together with such other documents and instruments as may
be required under the CBCA or the by-laws of Bowater Canada or by the transfer
agent, and a duly executed retraction request (the "Retraction Request") (i)
specifying that the holder desires to have all or any number specified therein
of the Exchangeable Shares represented by such certificate or certificates (the
"Retracted Shares") redeemed by Bowater Canada, (ii) stating the business day on
which the holder desires to have Bowater Canada redeem such Retracted Shares
(the "Retraction Date"), provided that the Retraction Date is not less than 10
business days nor more than 15 business days after the date on which the
Retraction Request is received by Bowater Canada and further provided that, in
the event that no such business day is specified by the holder in the Retraction
Request, the Retraction Date will be deemed to be the fifteenth business day
after the date on which the Retraction Request is received by Bowater Canada,
and (iii) acknowledging the Retraction Call Right of Bowater Holdings to
purchase all but not less than all the Retracted Shares directly from the holder
and that the Retraction Request will be deemed to be a revocable offer by the
holder to sell the Retracted Shares to Bowater Holdings in accordance with the
Retraction Call Right on the terms and conditions described below.
Upon receipt by Bowater Canada of a Retraction Request, Bowater Canada will
promptly notify Bowater and Bowater Holdings of the Retraction Request. In order
to exercise its Retraction Call Right, Bowater Holdings must notify Bowater
Canada of its determination to do so (the "Bowater Holdings Call Notice") within
five business days of notification to Bowater Holdings by Bowater Canada of the
receipt by Bowater Canada of the Retraction Request. If Bowater Holdings
delivers the Bowater Holdings Call Notice within such five business days time
period, and provided that the Retraction Request is not revoked by the holder in
the manner described below, Bowater Canada will not redeem the Retracted Shares
and Bowater Holdings will purchase from such holder and such holder will sell to
Bowater Holdings on the Retraction Date the Retracted Shares for the Retraction
Price. In the event that Bowater Holdings does not deliver a Bowater Holdings
Call Notice within such five business day period, and provided that the
Retraction Request is not revoked by the holder in the manner described below,
Bowater Canada will redeem the Retracted Shares on the Retraction Date for the
Retraction Price.
A holder of Retracted Shares may, by notice in writing given by the holder
to Bowater Canada before the close of business on the business day immediately
preceding the Retraction Date, withdraw its Retraction Request, in which event
such Retraction Request will be null and void and the revocable offer
constituted by the Retraction Request to sell the Retracted Shares to Bowater
Holdings will be deemed to have been revoked.
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If, as a result of solvency provisions of applicable law, Bowater Canada is
not permitted to redeem all Exchangeable Shares tendered by a retracting holder,
Bowater Canada will redeem only those Exchangeable Shares tendered by the holder
(rounded down to a whole number of shares) as would not be contrary to such
provisions of applicable law. The holder of any Exchangeable Shares not redeemed
by Bowater Canada as a consequence of such applicable law or purchased by
Bowater Holdings will be deemed to have required Bowater to purchase such
unretracted shares in exchange for Bowater Common Stock on the Retraction Date
pursuant to the exchange right provided for in the Voting and Exchange Trust
Agreement described below. See "-- Insolvency of Bowater Canada".
Redemption of Exchangeable Shares
Subject to applicable law and the exercise by Bowater Holdings of its right
(the "Redemption Call Right") described below, on the date (the "Redemption
Date"), if any, established by the Board of Directors of Bowater Canada, which
date will not be earlier than June 30, 2008 (except as described in the
following sentence), Bowater Canada may, at its option and (except in the case
of an acquisition of Control of Bowater (as described in Plan of Arrangement),
in which case, in the event the Board of Directors of Bowater Canada elects to
redeem the Exchangeable Shares, the notice will be provided the number of days
prior to the Redemption Date as the Board of Directors of Bowater Canada
determines to be reasonably practicable under the circumstances), upon at least
60 days prior notice to the holders of the Exchangeable Shares, redeem the whole
of the then outstanding Exchangeable Shares for an amount per Exchangeable Share
to be satisfied by the delivery of one share of Bowater Common Stock (the
"Redemption Price"). The Redemption Date may be earlier than June 30, 2008, if
earlier than such date there are fewer than 500,000 Exchangeable Shares
outstanding (other than Exchangeable Shares held by Bowater or its affiliates
and subject to necessary adjustments to such number of shares to reflect
permitted changes to Exchangeable Shares) or a transaction is proposed that will
result in an acquisition of Control of Bowater. In the event that a transaction
is proposed that will result in Control of Bowater being acquired by any person
and the Board of Directors of Bowater Canada elects to redeem the Exchangeable
Shares, the Redemption Date will be the date immediately prior to the date the
acquisition of Control of Bowater occurs pursuant to such transaction. On or
after the Redemption Date, upon the holder's presentation and surrender of the
certificates representing the Exchangeable Shares and such other documents as
may be required at the office of the transfer agent or the registered office of
Bowater Canada, Bowater Canada will deliver the Redemption Price to the holder
at the address of the holder recorded in the securities register or hold the
Redemption Price for pick up by the holder at the registered office of Bowater
Canada or the office of the transfer agent as specified in the written notice.
Notwithstanding a proposed redemption of the Exchangeable Shares by Bowater
Canada on the Redemption Date, pursuant to the Exchangeable Share Provisions,
Bowater Holdings is entitled to exercise the Redemption Call Right to purchase
on such Redemption Date all but not less than all of the Exchangeable Shares
then outstanding in exchange for the Redemption Price and, upon the exercise of
the Redemption Call Right, the holders thereof will be obligated to sell such
shares to Bowater Holdings. If Bowater Holdings exercises the Redemption Call
Right, Bowater Canada's right to redeem the Exchangeable Shares on the
Redemption Date will terminate.
Liquidation of Bowater Canada
In the event of the liquidation, dissolution or winding-up of Bowater
Canada or any other proposed distribution of the assets of Bowater Canada among
its shareholders for the purpose of winding up its affairs, a holder of
Exchangeable Shares will be entitled, subject to applicable law, to receive an
amount per Exchangeable Share to be satisfied by the delivery of one share of
Bowater Common Stock (the "Liquidation Amount") from the assets of Bowater
Canada for each Exchangeable Share on the effective date of any liquidation,
dissolution or winding up of Bowater Canada or any other distribution of assets
of Bowater Canada among its shareholders for the purpose of winding up its
affairs (the "Liquidation Date").
On or after the Liquidation Date, a holder of Exchangeable Shares may
surrender certificates representing such Exchangeable Shares, together with such
other documents as may be required to effect the transfer of Exchangeable Shares
under the CBCA or the by-laws of Bowater Canada or by the transfer agent,
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at Bowater Canada's registered office or the office of the transfer agent. Upon
receipt of the certificates and other documents and subject to the exercise by
Bowater Holdings of its right described below (the "Liquidation Call Right"),
Bowater Canada will deliver the Liquidation Amount to such holder at the address
recorded in the securities register or hold the Liquidation Amount for pick up
by the holder at Bowater Canada's registered office or the office of the
transfer agent, as specified by Bowater Canada in a notice to such holders.
Upon occurrence of a liquidation, dissolution or winding-up of Bowater
Canada or other distribution of assets of Bowater Canada among its shareholders
for the purpose of winding up its affairs, Bowater Holdings will have the
Liquidation Call Right to purchase all but not less than all of the Exchangeable
Shares then outstanding at a purchase price per share equal to the Liquidation
Amount and, upon the exercise of the Liquidation Call Right, the holders of the
Exchangeable Shares will be obligated to sell such shares to Bowater Holdings.
The purchase by Bowater Holdings of all of the outstanding Exchangeable Shares
upon the exercise of the Liquidation Call Right will occur on the Liquidation
Date.
Insolvency of Bowater Canada
Upon occurrence of a Bowater Canada Insolvency Event (as defined below),
the Trustee under the Voting and Exchange Trust Agreement on behalf of the
holders of Exchangeable Shares will have the right to require Bowater to
purchase any or all of the Exchangeable Shares then outstanding (other than
Exchangeable Shares held by Bowater or its affiliates) for an amount per share
to be satisfied by the delivery of one share of Bowater Common Stock. As used
herein, a "Bowater Canada Insolvency Event" means the institution by Bowater
Canada of any proceeding to be adjudicated a bankrupt or insolvent or to be
wound up, or the consent of Bowater Canada to the institution of bankruptcy,
insolvency or winding-up proceedings against it, or the filing of a petition,
answer or consent seeking dissolution or winding-up under any bankruptcy,
insolvency or analogous laws, including without limitation the Companies
Creditors' Arrangement Act (Canada) and the Bankruptcy and Insolvency Act
(Canada), and the failure by Bowater Canada to contest in good faith any such
proceedings commenced in respect of Bowater Canada within 30 days of becoming
aware thereof, or the consent by Bowater Canada to the filing of any such
petition or to the appointment of a receiver, or the making by Bowater Canada of
a general assignment for the benefit of creditors, or the admission in writing
by Bowater Canada of its inability to pay its debts generally as they become
due, or Bowater Canada not being permitted, pursuant to solvency requirements of
applicable law, to redeem any Exchangeable Shares in connection with a
Retraction Request.
Upon the occurrence and during the continuance of a Bowater Canada
Insolvency Event, a holder of Exchangeable Shares will be entitled, subject to
the provisions of the Voting and Exchange Trust Agreement, to instruct the
Trustee to exercise the exchange right with respect to any or all of the
Exchangeable Shares held by such holder, thereby requiring Bowater to purchase
such Exchangeable Shares from the holder. As soon as practicable following the
occurrence of a Bowater Canada Insolvency Event or any event that may, with the
passage of time or the giving of notice, become a Bowater Canada Insolvency
Event, Bowater Canada and Bowater will give written notice thereof to the
Trustee. As soon as practicable after receiving such notice, the Trustee will
then notify each holder of Exchangeable Shares of such event or potential event
and will advise the holder of its rights with respect to the exchange right.
Liquidation of Bowater
In the event of a Bowater Liquidation Event (as defined below), Bowater
will be required to purchase each outstanding Exchangeable Share (other than
Exchangeable Shares held by Bowater or its affiliates) on the fifth business day
prior to the effective date of a Bowater Liquidation Event for a purchase price
to be satisfied by the delivery of one share of Bowater Common Stock for each
Exchangeable Share purchased. As used herein, a "Bowater Liquidation Event'
means any determination by the Bowater Board to institute voluntary liquidation,
dissolution or winding-up proceedings with respect to Bowater or to effect any
other distribution of assets of Bowater among its shareholders for the purpose
of winding up its affairs or the receipt by Bowater of notice of, or Bowater
otherwise becoming aware of, any threatened or instituted claim, suit, petition
or other proceedings with respect to the involuntary liquidation, dissolution or
winding-up of Bowater
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or to effect any other distribution of assets of Bowater among its shareholders
for the purpose of winding up its affairs, where Bowater has failed to contest
in good faith any such proceeding within 30 days of becoming aware thereof. Upon
a holder's request and surrender of Exchangeable Share certificates, duly
endorsed in blank and accompanied by such instrument of transfer as Bowater may
reasonably require, Bowater will deliver to such holder the Liquidation Amount.
Support Agreement
The Support Agreement provides, among other things, that Bowater will take
all actions and do all things necessary or desirable to enable and permit
Bowater Canada, in accordance with applicable law, to pay the Liquidation
Amount, the Retraction Price or the Redemption Price to holders of Exchangeable
Shares as set out above. The Support Agreement is included as an exhibit to the
Registration Statement of which this Prospectus constitutes a part, and its
description is qualified in its entirety by reference thereto.
INCOME TAX CONSIDERATIONS
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
Subject to the qualifications and assumptions contained herein, the
following discussion is the opinion of Davies, Ward & Beck, Canadian counsel to
Avenor, and Fraser & Beatty, Canadian counsel to Bowater, as to the principal
Canadian federal income tax considerations, as of the date hereof, generally
applicable to holders of Exchangeable Shares who at all relevant times, for
purposes of the Canadian Tax Act, hold their Exchangeable Shares and will hold
their shares of Bowater Common Stock as capital property and deal at arm's
length with, and are not affiliated with, Bowater Canada or Bowater ("Holders").
This discussion does not apply to a Holder with respect to whom Bowater is a
foreign affiliate within the meaning of the Canadian Tax Act.
All Holders should consult with their own tax advisors as to whether, as a
matter of fact, they hold their Exchangeable Shares and will hold their shares
of Bowater Common Stock as capital property for purposes of the Canadian Tax
Act. Certain provisions in the Canadian Tax Act (the "mark-to-market rules")
relating to financial institutions (including certain financial institutions,
registered securities dealers and corporations controlled by one or more of the
foregoing) will preclude such financial institutions from treating their
Exchangeable Shares and shares of Bowater Common Stock as capital property for
purposes of the Canadian Tax Act. This discussion does not take into account the
mark-to-market rules, and Holders that are financial institutions for purposes
of these rules should consult their own tax advisors.
This discussion is based on the current provisions of the Canadian Tax Act
and the regulations thereunder, the current provisions of the Canada-United
States Income Tax Convention (the "Tax Treaty"), and counsel's understanding of
the current published administrative practices of Revenue Canada. This
discussion takes into account the proposals to amend the Canadian Tax Act and
the regulations thereunder publicly announced by or on behalf of the Minister of
Finance (Canada) prior to the date hereof (the "Proposed Amendments") and
assumes that all such Proposed Amendments will be enacted in their present form.
No assurances can be given that the Proposed Amendments will be enacted in the
form proposed, if at all; however, the Canadian federal income tax
considerations generally applicable to Holders will not be different in a
material adverse way if the Proposed Amendments are not enacted.
Except for the foregoing, this discussion does not take into account or
anticipate any change in law, whether by legislative, administrative or judicial
decision or action, nor does it take into account provincial, territorial or
foreign income tax legislation or considerations, which may differ from the
Canadian federal income tax considerations described herein.
WHILE THIS DISCUSSION IS INTENDED TO ADDRESS ALL PRINCIPAL CANADIAN FEDERAL
INCOME TAX CONSIDERATIONS, IT IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO
BE, NOR SHOULD IT BE CONSTRUED TO BE, LEGAL, BUSINESS OR TAX ADVICE TO ANY
PARTICULAR HOLDER. THEREFORE, HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THEIR PARTICULAR CIRCUMSTANCES.
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For purposes of the Canadian Tax Act, all amounts relating to the
acquisition, holding or disposition of shares of Bowater Common Stock, including
dividends, adjusted cost base and proceeds of disposition, must be converted
into Canadian dollars based on the prevailing United States dollar exchange rate
at the time such amounts arise. In computing a Holder's liability for tax under
the Canadian Tax Act, any cash amounts received by a shareholder in United
States dollars must be converted into the Canadian dollar equivalent, and the
amount of any non-cash consideration received by a shareholder must be expressed
in Canadian dollars at the time such consideration is received.
HOLDERS RESIDENT IN CANADA
The following portion of this discussion is applicable to Holders who, for
purposes of the Canadian Tax Act and any applicable tax treaty or convention,
are resident or deemed to be resident in Canada at all relevant times. Certain
of such persons to whom the Exchangeable Shares might not constitute capital
property may elect, in certain circumstances, to have such property treated as
capital property by making the irrevocable election permitted by subsection
39(4) of the Canadian Tax Act.
Redemption of Exchangeable Shares
On the redemption (including a retraction) of an Exchangeable Share by
Bowater Canada, the Holder will be deemed to have received a dividend equal to
the amount, if any, by which the redemption proceeds exceed the paid-up capital
at that time of the Exchangeable Share so redeemed. For these purposes, the
redemption proceeds will be the fair market value, at the time of the
redemption, of the shares of Bowater Common Stock received from Bowater Canada
plus the amount, if any, of all accrued but unpaid dividends on the Exchangeable
Share paid on the redemption. The amount of such deemed dividend generally will
be subject to the same tax treatment accorded to dividends on the Exchangeable
Shares as described below. On the redemption, the Holder will also be considered
to have disposed of the Exchangeable Share, but the amount of such deemed
dividend will be excluded in computing the Holder's proceeds of disposition for
purposes of computing any capital gain or capital loss arising on the
disposition. See "-- Taxation of Capital Gains and Capital Losses" below. In the
case of a Holder that is a corporation, in some circumstances, the amount of any
such deemed dividend may be treated as proceeds of disposition and not as a
dividend.
In the case of a Holder who is an individual, dividends received or deemed
to be received on the Exchangeable Shares will be included in computing the
Holder's income, and will be subject to the gross-up and dividend tax credit
rules normally applicable to taxable dividends received from taxable Canadian
corporations.
Subject to the discussion below, in the case of a Holder that is a
corporation other than a "specified financial institution" (as defined in the
Canadian Tax Act), dividends received or deemed to be received on the
Exchangeable Shares normally will be included in the corporation's income and
deductible in computing its taxable income.
A Holder that is a "private corporation" (as defined in the Canadian Tax
Act) or any other corporation resident in Canada and controlled or deemed to be
controlled by or for the benefit of an individual or a related group of
individuals may be liable under Part IV of the Canadian Tax Act to pay a
refundable tax of 33 1/3% of dividends received or deemed to be received on the
Exchangeable Shares to the extent that such dividends are deductible in
computing the Holder's taxable income.
If Bowater or any person with whom Bowater does not deal at arm's length is
a "specified financial institution" for the purposes of the Canadian Tax Act at
the time a dividend is paid on an Exchangeable Share, then, subject to the
exemption described in the next paragraph, dividends received or deemed to be
received by a Holder that is a corporation will be fully includible in income
and will not be deductible in computing taxable income under Part I of the
Canadian Tax Act. A corporation will generally be a specified financial
institution for these purposes if it is a bank, a trust company, a credit union,
an insurance corporation or a corporation whose principal business is the
lending of money to persons with whom the corporation is dealing at arm's length
or the purchasing of debt obligations issued by such persons or a combination
thereof, or a corporation controlled by one or more such entities, or related to
such entities. Bowater has informed
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counsel that it is of the view that neither it nor any person with whom it does
not deal at arm's length is a specified financial institution at the current
time. However, there can be no assurances that this status will not change prior
to any dividend on the Exchangeable Shares being received or deemed to be
received by a corporate Holder.
This denial of the dividend deduction to a corporate Holder will not apply
if at the time a dividend is received or deemed to be received, the Exchangeable
Shares are listed on a prescribed stock exchange (which currently includes the
TSE and the ME), Bowater controls Bowater Holdings and Bowater Canada, and the
recipient (together with persons with whom the recipient does not deal at arm's
length and any partnership or trust of which the recipient or such person is a
member or beneficiary, respectively) does not receive dividends on more than 10%
of the issued and outstanding Exchangeable Shares.
The Exchangeable Shares will be "term preferred shares" as defined in the
Canadian Tax Act. Consequently, in the case of a shareholder that is a specified
financial institution, such a dividend will be deductible in computing its
taxable income only if:
(i) where neither Bowater nor any person with whom Bowater does not
deal at arm's length is a specified financial institution at the time the
dividend is received, the specified financial institution did not acquire
the Exchangeable Shares in the ordinary course of the business carried on
by such institution; or
(ii) in any case, at the time the dividend is received by the
specified financial institution, the Exchangeable Shares are listed on a
prescribed stock exchange in Canada (which currently includes the TSE and
the ME) and the specified financial institution, either alone or together
with persons with whom it does not deal at arm's length, does not receive
(or is not deemed to receive) dividends in respect of more than 10% of the
issued and outstanding Exchangeable Shares.
In addition, to the extent that a deemed dividend arises on the redemption of
the Exchangeable Shares by Bowater Canada, a portion of the dividend may not be
subject to the denial of dividend deduction applicable in respect of term
preferred shares. Specified financial institutions should consult their own tax
advisors.
A Holder that is throughout the relevant taxation year a
"Canadian-controlled private corporation" (as defined in the Canadian Tax Act)
may be liable to pay an additional refundable tax of 6 2/3% on its "aggregate
investment income" for the year which will include dividends or deemed dividends
that are not deductible in computing taxable income.
The Exchangeable Shares will be "taxable preferred shares" and "short-term
preferred shares" for purposes of the Canadian Tax Act. Accordingly, Bowater
Canada will be subject to a 66 2/3% tax under Part VI.1 of the Canadian Tax Act
on dividends (other than "excluded dividends" as defined in the Canadian Tax
Act) paid or deemed to be paid on the Exchangeable Shares and will be entitled
to deduct an amount equal to 9/4 of the tax so payable in computing its taxable
income for purposes of the Canadian Tax Act. Dividends received or deemed to be
received on the Exchangeable Shares will not be subject to the 10% tax under
Part IV.1 of the Canadian Tax Act applicable to certain corporations.
Exchange of Exchangeable Shares with Bowater Holdings or Bowater
On the exchange of an Exchangeable Share with Bowater Holdings or Bowater
for shares of Bowater Common Stock, the Holder will generally realize a capital
gain (or a capital loss) equal to the amount by which the proceeds of
disposition of the Exchangeable Share, net of any reasonable costs of
disposition, exceed (or are less than) the adjusted cost base to the Holder of
the Exchangeable Share immediately before the exchange. For these purposes, the
proceeds of disposition will be the fair market value at the time of exchange of
the shares of Bowater Common Stock plus any other amount received by the Holder
from Bowater Holdings or Bowater as part of the exchange consideration. See
"-- Taxation of Capital Gains and Capital Losses" below.
BECAUSE OF THE EXISTENCE OF THE RETRACTION CALL RIGHT, THE REDEMPTION CALL
RIGHT AND THE LIQUIDATION CALL RIGHT, A HOLDER OF AN EXCHANGEABLE SHARE CANNOT
CONTROL WHETHER SUCH HOLDER WILL RECEIVE BOWATER COMMON STOCK BY WAY OF
REDEMPTION OF THE EXCHANGEABLE SHARE BY BOWATER CANADA OR BY WAY OF PURCHASE
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<PAGE> 17
OF THE EXCHANGEABLE SHARE BY BOWATER HOLDINGS OR BOWATER. AS DESCRIBED ABOVE,
THE CANADIAN FEDERAL INCOME TAX CONSEQUENCES OF A REDEMPTION DIFFER FROM THOSE
OF A PURCHASE.
Disposition of Shares of Bowater Common Stock
The cost of a share of Bowater Common Stock received on a retraction,
redemption or exchange of an Exchangeable Share will be equal to the fair market
value of such share at the time of such event. A disposition or deemed
disposition of a share of Bowater Common Stock by a Holder will generally result
in a capital gain (or a capital loss) equal to the amount by which the proceeds
of disposition, net of any reasonable costs of disposition, exceed (or are less
than) the adjusted cost base to the holder of such share immediately before the
disposition. The adjusted cost base to a Holder of shares of Bowater Common
Stock acquired on a retraction, redemption or exchange of an Exchangeable Share
will be determined by averaging the cost of such share with the adjusted cost
base of all other shares of Bowater Common Stock held by such Holder as capital
property immediately before the retraction, redemption or exchange, as the case
may be. See "-- Taxation of Capital Gains and Capital Losses" below.
Dividends on Bowater Common Stock
Dividends on shares of Bowater Common Stock will be included in the
recipient's income for the purposes of the Canadian Tax Act. Such dividends
received by an individual Holder will not be subject to the gross-up and
dividend tax credit rules in the Canadian Tax Act. A Holder that is a
corporation will include such dividends in computing its income and generally
will not be entitled to deduct the amount of such dividends in computing its
taxable income. A Holder that is throughout the relevant taxation year a
"Canadian-controlled private corporation" (as defined in the Canadian Tax Act)
may be liable to pay an additional refundable tax of 6 2/3% on its "aggregate
investment income" for the year which will include such dividends. United States
non-resident withholding tax on such dividends will be eligible for foreign tax
credit or deduction treatment, where applicable, under the Canadian Tax Act.
Taxation of Capital Gains and Capital Losses
Three-quarters of any capital gain ("taxable capital gain") must be
included in a Holder's income for the year of disposition. Three-quarters of any
capital loss ("allowable capital loss") generally must be deducted by the Holder
from taxable capital gains for the year of disposition. Any allowable capital
losses in excess of taxable capital gains for the year of disposition generally
may be carried back up to three taxation years or forward indefinitely and
deducted against net taxable capital gains in such other years to the extent and
under the circumstances described in the Canadian Tax Act.
Capital gains realized by an individual or trust, other than other certain
specified trusts, may give rise to alternative minimum tax under the Canadian
Tax Act.
A Holder that is throughout the relevant taxation year a
"Canadian-controlled private corporation" (as defined in the Canadian Tax Act)
may be liable to pay an additional refundable tax of 6 2/3% on its "aggregate
investment income" for the year, which is defined to include an amount in
respect of taxable capital gains.
If the Holder is a corporation, the amount of any capital loss arising from
a disposition or deemed disposition of an Exchangeable Share may be reduced by
the amount of dividends received or deemed to have been received by it on such
share to the extent and under circumstances prescribed by the Canadian Tax Act.
Similar rules may apply where a corporation is a member of a partnership or a
beneficiary of a trust that owns Exchangeable Shares or where a trust or
partnership of which the corporation is a beneficiary or a member is a member of
a partnership or a beneficiary of a trust that owns Exchangeable Shares. Holders
to whom these rules may be relevant should consult their own tax advisors.
Eligibility for Investment
Shares of Bowater Common Stock will be foreign property under the Canadian
Tax Act for trusts governed by registered retirement savings plans, registered
retirement income funds and deferred profit sharing
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<PAGE> 18
plans, for registered pension plans or for certain other persons to whom Part XI
of the Canadian Tax Act applies.
Shares of Bowater Common Stock will be a qualified investment under the
Canadian Tax Act for trusts governed by registered retirement savings plans,
registered retirement income funds and deferred profit sharing plans provided
such shares remain listed on the NYSE (or are listed on another prescribed stock
exchange).
Foreign Property Information Reporting
A holder of shares of Bowater Common Stock who is a "specified Canadian
entity" for a taxation year or fiscal period and whose total cost amount of
"specified foreign property", including such shares, at any time in the year or
fiscal period exceeds Canadian $100,000 will be required to file an information
return for the year or period disclosing prescribed information, including the
shareholder's cost amount, any dividends received in the year, and any gains or
losses realized in the year, in respect of such property. With some exceptions,
a taxpayer resident in Canada in the year will be a specified Canadian entity. A
holder of Bowater Common Stock should consult its own advisors about whether it
must comply with these rules. On October 2, 1997, the Minister of Finance
(Canada) and the Minister of National Revenue announced that this requirement to
report such specified foreign property is suspended pending a review and that
the first filing date has been delayed until April 1999.
HOLDERS NOT RESIDENT IN CANADA
The following portion of the discussion is applicable to Holders who, for
purposes of the Canadian Tax Act and any applicable tax treaty or convention,
have not been and will not be resident or deemed to be resident in Canada at any
time while they have held Exchangeable Shares or will hold shares of Bowater
Common Stock and, except as specifically discussed below, to whom such shares
are not "taxable Canadian property" (as defined in the Canadian Tax Act) and, in
the case of a non-resident of Canada who carries on an insurance business in
Canada and elsewhere, such shares are not "designated insurance property" as
defined in the Canadian Tax Act.
Generally, Exchangeable Shares and shares of Bowater Common Stock will not
be taxable Canadian property at a particular time provided that such shares are
listed on a prescribed stock exchange (which currently include the NYSE, the TSE
and the ME), the Holder does not use or hold, and is not deemed to use or hold,
the Exchangeable Shares or the shares of Bowater Common Stock, as applicable, in
connection with carrying on a business in Canada and the holder, persons with
whom such Holder does not deal at arm's length, or the Holder and such persons,
has not owned (or had under option) 25% or more of the issued shares of any
class or series of the capital stock of Bowater Canada or Bowater, as
applicable, at any time within five years preceding the particular time.
Exchangeable Shares will be deemed to be taxable Canadian property to a Holder
who made a joint tax election under Section 85 of the Canadian Tax Act on the
acquisition of the Exchangeable Shares. In the case of Bowater, even if the
Holder exceeds the 25% threshold referred to in the preceding sentence with
respect to shares of Bowater Common Stock, such shares of Bowater Common Stock
may not be taxable Canadian property. At the time of disposition such a Holder
should consult its own tax advisors to determine whether its shares of Bowater
Common Stock constitute taxable Canadian property at that time. The TSE and the
ME have conditionally approved the listing of the Exchangeable Shares, subject
to Bowater Canada fulfilling all of the requirements of the TSE and the ME,
including distribution of the Exchangeable Shares to a minimum number of public
shareholders.
A Holder of Exchangeable Shares or shares of Bowater Common Stock that are
not taxable Canadian property will not be subject to tax under the Canadian Tax
Act on the exchange of an Exchangeable Share for shares of Bowater Common Stock
(except to the extent the exchange gives rise to a deemed dividend discussed
below), or on the sale or other disposition of an Exchangeable Share or share of
Bowater Common Stock.
Dividends paid or deemed to be paid on the Exchangeable Shares are subject
to non-resident withholding tax under the Canadian Tax Act at the rate of 25%,
although such rate may be reduced under the provisions of an applicable income
tax treaty or convention. For example, under the Tax Treaty, the rate is
generally
17
<PAGE> 19
reduced to 15% in respect of dividends paid to a person who is the beneficial
owner thereof and who is resident in the United States for purposes of the Tax
Treaty. See "-- United States Federal Income Tax Considerations".
A Holder whose Exchangeable Shares are redeemed by Bowater Canada (either
under Bowater Canada's redemption right or pursuant to the Holder's retraction
rights) will be deemed to receive a dividend as described above under
"-- Holders Resident in Canada -- Redemption of Exchangeable Shares". Any such
deemed dividend will be subject to withholding tax as described in the preceding
paragraph. Holders cannot control whether they will realize a deemed dividend or
proceeds of disposition on an exchange of the Exchangeable Shares for shares of
Bowater Common Stock.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion of the principal United States federal income tax
consequences generally applicable to a United States Holder (as defined below)
of Exchangeable Shares arising from and relating to the receipt and ownership of
shares of Bowater Common Stock, is the opinion of Fried, Frank, Harris, Shriver
& Jacobson (a partnership including professional corporations), who acted as
United States counsel to Avenor ("Fried Frank") in connection with the
Arrangement, insofar as it relates to matters of United States federal income
tax law and legal conclusions with respect thereto. This discussion is based, in
part, on certain representations and agreements made by Bowater and Bowater
Canada, and the assumption that such representations are, and will be as of the
Effective Time, true and correct, that such agreements will be complied with and
that the Plan of Arrangement will be consummated in accordance with its terms.
As used herein, a "United States Holder" includes a holder of Exchangeable
Shares or shares of Bowater Common Stock, as the case may be, who is a citizen
or individual resident of the United States, a corporation created or organized
in or under the laws of the United States, or of any political subdivision
thereof, an estate or other entity the income of which is includible in its
gross income for United States federal income tax purposes without regard to its
source or a trust if a court within the United States is able to exercise
primary supervision over the administration of such trust and one or more United
States persons have the authority to control all substantial decisions of the
trust, but excludes persons subject to special provisions of United States
federal income tax law, such as tax-exempt organizations, financial
institutions, insurance companies, broker-dealers, persons having a "functional
currency" other than the United States dollar, holders who hold Exchangeable
Shares or shares of Bowater Common Stock, as the case may be, as part of a
hedge, straddle, wash sale, synthetic security, conversion transaction or other
integrated investment comprised of Exchangeable Shares or shares of Bowater
Common Stock, as the case may be, and one or more other investments (other than
by virtue of their participation in the Arrangement) and holders of Exchangeable
Shares or shares of Bowater Common Stock, as the case may be, who acquired their
Exchangeable Shares or shares of Bowater Common Stock, as the case may be,
through the exercise of employee stock options or otherwise as compensation for
services. This discussion is limited to United States Holders who hold
Exchangeable Shares or shares of Bowater Common Stock, as the case may be, as
capital assets.
This discussion is based on United States federal income tax law in effect
as of the date of this Prospectus. No statutory, judicial or administrative
authority exists which directly addresses certain of the United States federal
income tax consequences of the issuance and ownership of instruments comparable
to the Exchangeable Shares. Consequently, some aspects of the United States
Federal income tax treatment of an exchange of Exchangeable Shares for shares of
Bowater Common Stock are not certain. No advance income tax ruling has been
sought or obtained from the United States Internal Revenue Service (the
"Service") regarding the tax consequence of any of the transactions described
herein. There can be no assurance that the Service would not challenge the
conclusions contained in the discussion below, or that, if challenged, a court
would not agree with the Service.
This discussion does not address aspects of United States taxation other
than United States federal income taxation under the U.S. Code, nor does it
address all aspects of United States federal income taxation that may be
applicable to a particular United States Holder in light of the United States
Holder's particular circumstances. Accordingly, all United States Holders are
urged to consult their own tax advisors with respect
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<PAGE> 20
to the United States federal income tax consequences to them for an exchange of
Exchangeable Shares for Bowater Common Stock and the ownership and disposition
of shares of Bowater Common Stock in light of their particular circumstances. In
addition, this discussion does not address the United States state or local tax
consequences or the foreign tax consequences of the Arrangement or the receipt
and ownership of the Exchangeable Shares or shares of Bowater Common Stock.
UNITED STATES HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT
TO THE UNITED STATES FEDERAL, STATE AND LOCAL TAX CONSEQUENCES AND THE FOREIGN
TAX CONSEQUENCES OF THE RECEIPT AND OWNERSHIP OF BOWATER COMMON STOCK.
Exchange of Exchangeable Shares
Assuming the Exchangeable Shares are treated as issued by Bowater Canada
for United States federal income tax purposes, it is anticipated that a United
States Holder who exchanges its Exchangeable Shares for shares of Bowater Common
Stock generally will recognize gain and should recognize loss on such exchange.
Such gain or loss will be equal to the difference between the fair market value
of the shares of Bowater Common Stock at the time of the exchange and the United
States Holder's tax basis in the Exchangeable Shares surrendered. The gain or
loss will generally be capital gain or loss, except that, with respect to any
declared but unpaid dividends on the Exchangeable Shares, ordinary income may be
recognized. Capital gain or loss will generally be long-term capital gain or
loss if the United States Holder's holding period for the Exchangeable Shares is
more than one year at the time of the exchange. With respect to non-corporate
United States Holders, long-term capital gains will be subject to United States
federal income tax at a maximum rate of 28 percent if at the time of the
exchange the Exchangeable Shares have been held for more than twelve months, and
a maximum rate of 20 percent if at the time of the exchange the Exchangeable
Shares have been held for more than eighteen months. A United States Holder will
have a tax basis in the shares of Bowater Common Stock received equal to the
fair market value of such shares at the time of the exchange. The holding period
for such shares will begin on the day after the exchange. The Service could
assert, however, that the Exchangeable Shares and certain of the rights
associated therewith constitute "offsetting positions" for purposes of the
straddle rules set forth in Section 1092 of the U.S. Code. In such case, the
holding period of the Exchangeable Shares would not increase while held by a
United States Holder (and interest incurred in carrying the Exchangeable Shares
would not be deductible by a United States Holder). Under certain limited
circumstances, the exchange by a United States Holder of Exchangeable Shares for
shares of Bowater Common Stock may be characterized as a tax-free exchange.
Whether an exchange would be tax-free will depend upon the facts and
circumstances existing at the time of the exchange and cannot be accurately
predicted at the time of this Prospectus.
For United States federal income tax purposes, gain recognized on the
exchange of Exchangeable Shares for shares of Bowater Common Stock generally
will be treated as United States source gain, except that, under the terms of
the Tax Treaty, such gain may be treated as sourced in Canada. Any Canadian tax
imposed on the exchange may be available as a credit against United States
federal income taxes, subject to applicable limitations. A United States Holder
that is ineligible for a foreign tax credit with respect to any Canadian tax
paid may be entitled to a deduction therefor in computing United States taxable
income.
The foregoing discussion and the discussion under "-- Passive Foreign
Investment Company Considerations" would apply only if the Exchangeable Shares
are treated as issued by Bowater Canada, rather than by Bowater, for United
States federal income tax purposes. There is some possibility, however, that the
Service would assert that the Exchangeable Shares should be treated as issued by
Bowater for United States federal income tax purposes. If the Service were to
make such assertion successfully, an exchange of Exchangeable Shares for shares
of Bowater Common Stock would likely not give rise to taxable gain or loss.
Passive Foreign Investment Company Considerations
Assuming that the Exchangeable Shares are treated as issued by Bowater
Canada for United States federal income tax purposes, a United States Holder of
Exchangeable Shares would be subject to a special adverse tax regime upon its
exchange of Exchangeable Shares for Bowater Common Stock if Bowater Canada
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<PAGE> 21
were, or were to become, a "passive foreign investment company" for United
States federal income tax purposes (a "PFIC") during the holder's holding period
for its Exchangeable Shares. Bowater Canada generally would be classified as a
PFIC for United States federal income tax purposes for any taxable year during
which either (i) 75 percent or more of its gross income is passive income (as
defined for United States federal income tax purposes) or (ii) on average for
such taxable year, 50 percent or more of its assets (by value) produce or are
held for the production of passive income. For purposes of applying the
foregoing, the assets and gross income of Bowater Canada's significant
subsidiaries (including, after the consummation of the Arrangement, Avenor) will
be proportionately attributed to Bowater Canada.
While there can be no assurance with respect to the classification of
Bowater Canada as a PFIC, Bowater Canada believes that it is not and has not
been a PFIC, and Bowater Canada and Bowater intend to endeavor to cause Bowater
Canada to avoid PFIC status, although there can be no assurance that they will
be able to do so or that their intent will not change. Promptly following the
end of each taxable year, Bowater Canada will endeavor to notify United States
Holders of Exchangeable Shares if it believes that it was a PFIC for that
taxable year and will provide such holders with information sufficient to allow
such holders to make certain potentially beneficial elections under the U.S.
Code.
UNITED STATES HOLDERS OF EXCHANGEABLE SHARES ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS REGARDING THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF OWNING AND
DISPOSING OF STOCK IN A PFIC AND OF MAKING CERTAIN ELECTIONS IN ORDER TO LESSEN
THE ADVERSE NATURE OF THOSE CONSEQUENCES.
Shareholders Not Resident in or Citizens of the United States
The following discussion is applicable to a non-United States Holder that
acquires Bowater Common Stock in exchange for Exchangeable Shares. As used
herein, a "non-United States Holder" is a holder of Exchangeable Shares who, for
United States federal income tax purposes, is a non-resident alien individual, a
foreign corporation, a foreign partnership or a foreign estate or trust, but
excludes persons subject to special provisions of United States federal income
tax law, such as tax-exempt organizations, financial institutions, insurance
companies, broker-dealers, holders who hold Exchangeable Shares as part of a
hedge, straddle, wash sale, synthetic security, conversion transaction or other
integrated investment comprised of Exchangeable Shares and one or more other
investments (other than by virtue of their participation in the Arrangement) and
holders who acquired their Exchangeable Shares through the exercise of employee
stock options or otherwise as compensation for services. A non-United States
Holder seeking benefits under an applicable tax treaty or an exemption from
United States withholding tax for "effectively connected" income, as described
below, may be required to comply with additional certification and other
requirements in order to establish the holder's entitlement to such benefits or
exemption. This discussion is limited to non-United States Holders who hold
Exchangeable Shares as capital assets and who will hold Bowater Common Stock as
capital assets.
An individual may, subject to certain exceptions, be deemed to be a
resident alien (as opposed to a non-resident alien) by virtue of being present
in the United States for at least 31 days in the calendar year and for an
aggregate of at least 183 days during a three-year period ending in the current
calendar year (counting for such purposes all of the days present in the current
year, one-third of the days present in the immediately preceding year, and
one-sixth of the days present in the second preceding year). Resident aliens are
subject to tax as if they were United States citizens.
This discussion does not consider specific facts and circumstances that may
be relevant to a particular non-United States Holder's tax position, including
whether such non-United States Holder is a United States expatriate.
Dividends received by a non-United States Holder with respect to Bowater
Common Stock that are not effectively connected with the conduct by such holder
of a trade or business in the United States will generally be subject to United
States withholding tax at a rate of 30 percent, which rate may be reduced by an
applicable income tax treaty in effect between the United States and the
non-United States Holder's country of residence (currently 15 percent,
generally, on dividends paid to residents of Canada under the Tax Treaty).
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<PAGE> 22
Subject to the discussion below, a non-United States Holder generally will
not be subject to United States federal income tax on gain (if any) recognized
on the exchange of Exchangeable Shares for Bowater Common Stock, or on the sale
or exchange of Bowater Common Stock, unless (i) such gain is effectively
connected with a trade or business of the non-United States Holder in the United
States, or, if a tax treaty applies, is attributable to a permanent
establishment maintained by the non-United States Holder in the United States or
(ii) the non-United States Holder is an individual who holds Exchangeable Shares
or the Bowater Common Stock, as the case may be, as capital assets and is
present in the United States for 183 days or more in the taxable year of
disposition, and certain other conditions are satisfied.
Notwithstanding the general rule set forth in the preceding paragraph,
under the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"), gain
or loss recognized by a non-United States Holder on the sale or exchange of
Exchangeable Shares, or on the sale or exchange of Bowater Common Stock, will be
subject to regular United States federal income tax as if such gain or loss were
effectively connected with a United States trade or business if (a) shares of
Bowater Common Stock are "United States real property interests" ("USRPIs") (as
defined below) with respect to the non-United States Holder and (b) the non-
United States Holder is a "greater than 5 percent shareholder" (as defined
below) at some time during the shorter of (x) the five-year period ending on the
date of the exchange of the Exchangeable Shares or Bowater Common Stock (as the
case may be) or (y) the period during which such non-United States Holder held
the Exchangeable Shares or Bowater Common Stock (as the case may be) (such
period the "FIRPTA holding period").
Shares of Bowater Common Stock will be USRPIs with respect to a non-United
States Holder unless it is established that Bowater was at no time a United
States real property holding corporation (a "USRPHC") during the non-United
States Holder's FIRPTA holding period. A corporation is a USRPHC if the fair
market value of its interests in United States real property equals or exceeds
50 percent of the sum of the fair market value of all of its interests in real
property and all of its other assets used or held for use in a trade or business
(as defined in applicable regulations). Bowater does not believe that it is
presently a USRPHC. Moreover, Bowater considers it unlikely that it will become
a USRPHC in the future unless its interests in United States real property
increase significantly as a result of one or more acquisitions, but there can be
no assurance that Bowater is not, or will not in any event become, a USRPHC in
the future. After the Arrangement, Bowater intends to monitor its USRPHC status
regularly, and will endeavor to notify non-United States Holders of Exchangeable
Shares and Bowater Common Stock if it believes that it may become a USRPHC in
any taxable year.
The definition of a "greater than 5 percent shareholder" is complex and
subject to some uncertainty. In the case of a non-United States Holder who owns
only Bowater Common Stock (actually and constructively), such non-United States
Holder will be a greater than 5 percent shareholder if such non-United States
Holder holds more than 5 percent of the total fair market value of the Bowater
Common Stock outstanding (on a non-diluted basis). In the case of a non-United
States Holder who owns only Exchangeable Shares (actually and constructively),
disregarding for this purpose any Bowater Common Stock constructively owned by
reason of ownership of Exchangeable Shares, such non-United States Holder will
be a greater than 5 percent shareholder if such holder holds Exchangeable Shares
with a fair market value on the relevant date of determination greater than 5
percent of the total fair market value of the Bowater Common Stock outstanding
(on a non-diluted basis) on such date and the Exchangeable Shares are not
treated as "regularly traded on an established securities market". It is not
anticipated that the Exchangeable Shares will be considered regularly traded on
an established securities market for this purpose as neither Bowater nor Bowater
Canada anticipates making certain filings which would be required for the
Exchangeable Shares to be so considered. If the Exchangeable Shares were so
treated, a non-United States Holder who holds more than 5 percent of the total
fair market value of the Exchangeable Shares outstanding could be treated as a
greater than 5 percent shareholder. If, at any time, shares of Bowater Common
Stock were not regularly traded on an established securities market, or the
Exchangeable Shares were traded on an established securities market located in
the United States, different rules, not described herein, may apply. Non-United
States Holders who believe they may be greater than 5 percent shareholders are
particularly urged to consult their own tax advisors to determine the possible
application of FIRPTA to them.
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A non-United States Holder that is a greater than 5 percent shareholder at
any time during the FIRPTA holding period may be subject to withholding on the
sale or exchange of Exchangeable Shares, if, at the time of such sale or
exchange, such Exchangeable Shares are not treated as regularly traded on an
established securities market. Upon the sale or exchange of Exchangeable Shares,
the transferee of such Exchangeable Shares would be required to withhold 10
percent of the amount realized in the sale or exchange, unless, in general, the
non-United States Holder obtains from Bowater and provides to the transferee a
statement signed under penalties of perjury to the effect that Bowater is not a
USRPHC and was not a USRPHC at any time during the FIRPTA holding period. Any
tax withheld may be credited against the United States federal income tax owed
by the non-United States Holder for the year in which the sale or exchange
occurs.
The foregoing discussion of the possible application of the FIRPTA rules to
non-United States Holders is only a discussion of certain material aspects of
these rules. Because the United States federal income tax consequences to a
non-United States Holder under FIRPTA may be significant and are complex,
non-United States Holders are urged to discuss those consequences with their tax
advisors.
LEGAL OPINIONS
Certain legal matters in connection with the Common Stock offered hereby
are being passed upon for Bowater by Anthony H. Barash, Senior Vice President
- -- Corporate Affairs and General Counsel. Certain Canadian federal income tax
consequences have been passed upon by Davies, Ward & Beck and Fraser & Beatty,
and certain U.S. federal income tax consequences have been passed upon by Fried,
Frank, Harris, Shriver & Jacobson, as set forth under "Income Tax
Considerations".
EXPERTS
The consolidated financial statements of Bowater, as of December 31, 1997
and 1996, and for each of the years in the three-year period ended December 31,
1997, have been incorporated by reference in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of such firm as experts in accounting
and auditing.
The consolidated financial statements of Avenor, incorporated by reference
herein as of December 31, 1997, 1996 and 1995, and for each of the three years
in the period ended December 31, 1997, have been audited by Price Waterhouse,
Chartered Accountants, as set forth in their report thereon incorporated by
reference herein, and are incorporated by reference herein in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
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======================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN A PROSPECTUS
SUPPLEMENT, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY BOWATER OR ANY OTHER PERSON. NEITHER
THIS PROSPECTUS NOR ANY PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
ANY OFFER TO BUY THE SECURITIES IN ANY JURISDICTION IN WHICH THE OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING THE OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE THE OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT ANY INFORMATION CONTAINED HEREIN
OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Risk Factors.......................... 4
Bowater............................... 7
Use of Proceeds....................... 7
Description of Capital Stock.......... 7
Plan of Distribution.................. 9
Income Tax Considerations............. 13
Legal Opinions........................ 22
Experts............................... 22
</TABLE>
======================================================
======================================================
BOWATER
INCORPORATED
COMMON STOCK
------------------------
PROSPECTUS
[ ], 1998
======================================================
<PAGE> 25
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses to be paid by Bowater in connection with this
offering are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 0
Printing expenses........................................... 15,000
Accounting fees and expenses................................ 3,500
Legal fees and expenses..................................... 25,000
Miscellaneous............................................... 6,500
-------
Total............................................. $50,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware
empowers a corporation to indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he or she is or was a director or officer of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise.
Depending on the character of the proceeding, a corporation may indemnify
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with such action,
suit or proceeding if the person indemnified acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. In the case of an
action by or in the right of the corporation, no indemnification may be made in
respect of any claim, issue or manner as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his or
her duty to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
that despite the adjudication of liability such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to above or in the defense of any claim, issue or matter therein, he or
she shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him or her in connection therewith.
The Restated Certificate of Incorporation of Bowater provides, in effect,
that, to the extent and under the circumstances permitted by Section 145 of the
General Corporation Law of the State of Delaware, Bowater shall indemnify any
person who was or is a party or is threatened to be made a party to any action,
suit or proceeding of the type described above by reason of the fact that he or
she is or was a director or officer of Bowater or is or was serving at the
request of Bowater as a director or officer of another enterprise.
Under insurance policies maintained by Bowater, directors and officers of
Bowater may be indemnified against certain losses arising from certain claims,
including claims under the Securities Act, which may be made against such
persons by reason for their being such directors or officers.
II-1
<PAGE> 26
ITEM 16. EXHIBITS
The following exhibits are filed herewith or incorporated herein by
reference:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
<S> <C>
2.1 Amended and Restated Arrangement Agreement dated as of March
9, 1998 by and between Bowater and Avenor Inc. (incorporated
by reference to Exhibit 2.1 to Annex D of the Joint
Management Information Circular and Proxy Statement filed on
June 18, 1998 on Schedule 14A for Bowater).
4.1 Agreement pursuant to S-K Item 601(b)(4)(iii)(A) to provide
the Commission upon request copies of certain other
instruments with respect to long-term debt not being
registered where the amount of securities authorized under
each such instrument does not exceed 10% of the total assets
of the registrant and its subsidiaries on a consolidated
basis (incorporated by reference to Exhibit 4.3 to Bowater's
Registration Statement No. 2-93455).
4.2 Indenture, dated as of August 1, 1989, by and between the
Company and Manufacturers Hanover Trust Company, as Trustee,
with respect to the 9% Debentures Due 2009 (incorporated by
reference to Exhibit 4.7 to Bowater's Registration Statement
No. 33-61219).
4.3 Indenture, dated as of December 1, 1991, by and between the
Company and Marine Midland Bank, N.A., as Trustee, with
respect to the 9 3/8% Debentures Due 2021 (incorporated by
reference to Exhibit 4.8 to Bowater's Annual Report on Form
10-K for the period ending December 31, 1991, File No.
1-8712 (the "1991 10-K")).
4.4 Indenture, dated as of December 1, 1991, by and between
Bowater and Marine Midland Bank, N.A., as Trustee, with
respect to the 8 1/2% Notes Due 2001 (incorporated by
reference to Exhibit 4.9 to the 1991 10-K).
4.5 Indenture, dated as of October 15, 1992, by and between
Bowater and The Chase Manhattan Bank (N.A.) as Trustee, with
respect to the 8 1/4% Notes Due 1999 (incorporated by
reference to Exhibit 4.10 to Bowater's Annual Report on
Form-10K for the period ending December 31, 1992, File No.
1-8712 (the "1992 10-K")).
4.6 Indenture, dated as of October 15, 1992, between Bowater and
The Chase Manhattan Bank (N.A.) as Trustee, with respect to
the 9 1/2% Debentures Due 2012 (incorporated by reference to
Exhibit 4.11 to the 1992 10-K).
4.7 Deposit Agreement, dated as of February 1, 1994, by and
among Bowater, Trust Company Bank, as Depositary, and the
holders from time to time of the Depositary Receipts
relating to Bowater's 8.40% Series C Cumulative Preferred
Stock, together with form of Depositary Receipt
(incorporated by reference to Exhibit 4.4 to the February
1994 8-K).
4.8 Restated Certificate of Incorporation of Bowater, as amended
(incorporated by reference to Exhibit 4.2 to the Bowater's
Registration Statement No. 33-51569).
4.9 Certificate of Designations of the 8.40% Series C Cumulative
Preferred Stock of Bowater (incorporated by reference to
Exhibit 4.2 to the February 1994 8-K).
4.10 Bylaws of Bowater amended and restated as of May 20, 1998.
5 Opinion of Anthony H. Barash regarding the legality of the
securities being issued.
8.1 Opinion of Davies, Ward & Beck regarding tax matters.
8.2 Opinion of Fraser & Beatty regarding tax matters.
8.3 Opinion of Fried, Frank, Harris, Shriver & Jacobson
regarding tax matters.
23.1 Consent of KPMG Peat Marwick LLP, independent accountants.
23.2 Consent of Price Waterhouse, Chartered Accountants.
23.5 Consent of Anthony H. Barash (included in Exhibit 5).
23.6 Consent of Davies, Ward & Beck (included in Exhibit 8.1).
</TABLE>
II-2
<PAGE> 27
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
<S> <C>
23.7 Consent of Fraser & Beatty (included in Exhibit 8.2)
23.8 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 8.3).
24 Powers of Attorney.
99.1 Form of Voting and Exchange Trust Agreement (incorporated by
reference to Annex F of the Joint Management Information
Circular and Proxy Statement filed on June 18, 1998 on
Schedule 14A for Bowater).
99.2 Form of Support Agreement (incorporated by reference to
Annex G of the Joint Management Information Circular and
Proxy Statement filed on June 18, 1998 on Schedule 14A for
Bowater).
</TABLE>
ITEM 17. UNDERTAKINGS
(a) Bowater hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
Provided, However, that paragraphs (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by Bowater pursuant to
section 13 or section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of Bowater
pursuant to the provisions described under Item 15
II-3
<PAGE> 28
above, or otherwise, Bowater has been advised that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Bowater of
expenses incurred or paid by a director, officer or controlling person of
Bowater in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, Bowater will, unless, in the opinion of its
counsel, the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-4
<PAGE> 29
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Bowater
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Greenville, the state of South Carolina, on June 26,
1998.
BOWATER INCORPORATED
By: /s/ ARNOLD M. NEMIROW
------------------------------------
(Arnold M. Nemirow
Chairman of the Board, President and
Chief Executive Officer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ ARNOLD M. NEMIROW Director, Chairman of the Board, June 26, 1998
- --------------------------------------------------- President and Chief Executive
Arnold M. Nemirow Officer
/s/ DAVID G. MAFFUCCI Senior Vice President and Chief June 26, 1998
- --------------------------------------------------- Financial Officer
David G. Maffucci
/s/ MICHAEL F. NOCITO Vice President and Controller June 26, 1998
- ---------------------------------------------------
Michael F. Nocito
* Director June 26, 1998
- ---------------------------------------------------
Francis J. Aguilar
* Director June 26, 1998
- ---------------------------------------------------
H. David Aycock
* Director June 26, 1998
- ---------------------------------------------------
Richard Barth
* Director June 26, 1998
- ---------------------------------------------------
Kenneth M. Curtis
* Director June 26, 1998
- ---------------------------------------------------
Charles J. Howard
* Director June 26, 1998
- ---------------------------------------------------
Donald R. Melville
</TABLE>
II-5
<PAGE> 30
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Director June 26, 1998
- ---------------------------------------------------
James L. Pate
* Director June 26, 1998
- ---------------------------------------------------
John A. Rolls
*By: /s/ WENDY C. SHIBA June 26, 1998
---------------------------------------------
(Wendy C. Shiba, Attorney-in-Fact)
</TABLE>
II-6
<PAGE> 1
Exhibit 4.10
As amended as of
May 20, 1998
BY-LAWS
OF
BOWATER INCORPORATED
ARTICLE 1
CERTIFICATE OF INCORPORATION
The purpose of the Corporation, certain rights and powers of the
Corporation and of its directors and stockholders, the location of its
registered office in the State of Delaware and its capital stock shall all be as
set forth in the Certificate of Incorporation of the Corporation; and the
management of the business and the conduct of the affairs of the Corporation
shall be subject to the provisions of the said Certificate, which is hereby made
a part of these By-Laws. In case of any irreconcilable inconsistency between the
Certificate of Incorporation and these By-Laws, provisions in the Certificate of
Incorporation shall prevail.
All references in these By-Laws to the Certificate of Incorporation
shall be construed to mean the Certificate of Incorporation of the Corporation
as from time to time amended.
ARTICLE 2
PLACE OF MEETINGS AND LOCATION OF OFFICES
The registered office of the Corporation in the State of Delaware shall
be in the City of Wilmington, County of New Castle, and the Corporation shall
have a resident agent, who may be either an individual or a corporation, in
charge thereof.
The stockholders and directors may hold their meetings and have an
office or offices outside of the State of Delaware.
1
<PAGE> 2
ARTICLE 3
MEETINGS OF STOCKHOLDERS
Section 3.1. Annual Meeting.
The annual meeting of stockholders for the election of Directors and
for such other matters as may be properly brought before the stockholders
meeting shall be held in each year on such date and at such time and place
either within or without the State of Delaware as shall be determined by
resolution of the Board of Directors of the Corporation.
Any business properly brought before an annual meeting of stockholders
may be transacted at that meeting. To be properly brought before an annual
meeting, the business must be (i) specified in the written notice of the meeting
(or any supplement thereto) given by or at the direction of the Board of
Directors or otherwise brought before the meeting by or at the direction of the
Board of Directors, or (ii) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given written notice of the proposed
business, either by personal delivery or by United States mail, postage prepaid,
to the Secretary of the Corporation, such that the Secretary shall receive such
notice at least 120 days prior to the anniversary date of the immediately
preceding annual meeting or not later than 10 days after notice or public
disclosure of the date of the annual meeting shall be given or made to
stockholders, whichever date shall be earlier. Subject to Section 3.11 of these
By-Laws, any such notice shall set forth as to each item of business the
stockholder shall propose to bring before the annual meeting:
(a) a description of such item of business and the reasons for conducting it at
such meeting and, in the event that such item of business shall include a
proposal to amend either the Certificate of Incorporation or these By-Laws, the
text of the proposed amendment;
(b) the name and address of the stockholder proposing such item of business;
(c) the class and number of shares held of record, held beneficially and
represented by proxy by such stockholder as of the record date for the meeting
(if such a date has been established) and as of the date of such notice and a
representation that the stockholder intends to appear in person or by proxy at
the meeting to propose such item of business; and
(d) any material interest of the stockholder in such item of business.
Only business that shall have been properly brought before an annual
meeting of stockholders in accordance with these By-Laws shall be conducted at
such meeting, and the officer or other person presiding over the meeting as
provided in Section 3.5 of these By-Laws may refuse to permit any business to be
brought before such meeting that shall not have been properly brought before it
in accordance with these By-Laws.
2
<PAGE> 3
Section 3.2. Special Meetings.
Special meetings of the stockholders may be called by the Board of
Directors, the Chairman of the Board of Directors, the President of the
Corporation, or a Committee of the Board of Directors which has been duly
designated by the Board of Directors and whose powers and authority, as provided
in a resolution of the Board of Directors or in these By-Laws, include the power
to call such meetings, and special meetings may not be called by any other
person or persons. Each such call shall state the time, place and purpose of the
meeting. The place of the meeting may be any place stated in the call, within or
outside the State of Delaware.
Section 3.3. Notice of Meetings.
No action shall be taken by the stockholders of the Corporation except
at an annual or special meeting of stockholders. Notice of each annual or
special meeting of the stockholders stating the place, day and hour thereof and
the purposes for which the meeting is to be held shall be given the manner
specified by Article 5 by the Secretary (or by a person designated for the
purpose either by the Secretary or by the person or persons calling the meeting
or by the Board of Directors), not less than ten (10) or more than sixty (60)
days prior to the meeting, except that where the matter to be acted on is a
merger or consolidation of the Corporation, or a sale, lease or exchange of all
or substantially all of its assets, such notice shall be given not less than
twenty (20) days nor more than sixty (60) days prior to such meeting.
If any meeting action is proposed to be taken which, if taken, would
entitle any stockholders to appraisal rights pursuant to section 262 of the
Delaware General Corporation Law, the notice of such meeting shall also contain
a statement of such purpose and to that effect and shall be accompanied by a
copy of that statutory section.
Section 3.4. Stockholders List.
The officer who has charge of the transfer books for shares of the
Corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept open at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
3
<PAGE> 4
Section 3.5. Organization of Meetings.
At each meeting of the stockholders the Chairman, or, in his absence,
the President, or, in their absence, any Vice President, or in all their
absence, a stockholder, director or officer appointed by the Board of Directors,
or if they fail to act, chosen by a majority vote of the stockholders present in
person or by proxy and entitled to vote thereat, shall act as chairman; and the
Secretary, or, in his absence, an Assistant Secretary, or, in the absence of the
Secretary and all Assistant Secretaries , a person whom the chairman of such
meeting shall appoint, shall act as secretary of such meeting and keep the
minutes thereof.
Section 3.6. Quorum.
At any meeting of the stockholders, unless otherwise provided by law or
by the Certificate of Incorporation, the holders of shares of stock of the
Corporation representing one-third of the voting power of the stock of the
Corporation issued and outstanding and entitled to vote upon a question to be
considered at the meeting, present in person or by proxy, shall be necessary to
and shall constitute a quorum for the consideration of such question. If at any
time the Corporation has outstanding shares of stock ("contingent vote shares")
the voting power of which is dependent upon the receipt by the record holder of
such contingent vote shares of instructions from holders of securities of a
subsidiary of the Corporation, then for purposes of determining the voting power
of the stock of the Corporation issued and outstanding and entitled to vote upon
a question to be considered at the meeting, the record holder of such contingent
vote shares shall be deemed to have received instructions from each holder of
such subsidiary securities entitled to provide such instructions, and for
purposes of determining the voting power of the shares of stock present in
person or by proxy at such meeting, such contingent vote shares shall only have
the voting power to which they would otherwise be entitled based on the
instructions actually received by such record holder. If, however, a meeting of
stockholders cannot be organized because a quorum has not attended, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting at which the adjournment is taken of the
time and place of the adjourned meeting, until a quorum shall be present or
represented. In case of a meeting for the election of directors, such meeting
may be adjourned only from day to day or for such longer periods, not exceeding
fifteen days each, until such directors have been elected. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted that might have been transacted had a quorum been present at the time
originally fixed for the meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
4
<PAGE> 5
Section 3.7. Vote Required.
When a quorum is present at any meeting, all elections of directors
shall be determined by plurality vote, and all other questions brought before
such meeting shall be determined by the vote of stockholders present, in person
or by proxy, entitled to cast at least a majority of the votes which all
stockholders present are entitled to cast on the particular matter, unless the
question is one upon which, by express provision of the laws of the State of
Delaware or of the Certificate of Incorporation, a different vote is required,
in which case such express provision shall govern and control the decision of
such question.
Section 3.8. Voting.
Each stockholder having the right to vote shall at every meeting of the
stockholders be entitled to vote in person or by proxy; and unless otherwise
provided by statute or the Certificate of Incorporation, each stockholder of
record shall be entitled to one vote for each outstanding share registered in
his name on the books of the Corporation as of the record date for determining
the stockholders entitled to notice of and to vote at such meeting.
Section 3.9. Proxies; Appointment and Revocation.
Each proxy shall be in writing, executed by the stockholder giving the
proxy or by his attorney thereunto authorized, or by a telegram, cable or telex,
filed with the Secretary of the Corporation; but no proxy shall be voted after
three years from its date, unless the proxy expressly provides for a longer
period. A proxy, unless coupled with an interest, shall be revocable at will,
notwithstanding any other agreement or any provision in the proxy to the
contrary, but the revocation of a proxy shall not be effective until notice
thereof has been given to the Secretary of the Corporation. A proxy shall not be
revoked by the death or incapacity of the maker unless, before the vote is
counted or the authority is exercised, written notice of such death or
incapacity is given to the Secretary of the Corporation.
Section 3.10. Judges of Election.
In advance of any meeting of stockholders, the Board of Directors may
appoint judges of election, who need not be stockholders, to act at such meeting
or any adjournment thereof. If judges of election be not so appointed, the
chairman of any such meeting may, and on the request of any stockholder or his
proxy shall, make such appointment at the meeting. The number of judges shall be
one or three as shall be determined by the Board of Directors, except that, if
appointed at the meeting on the request of any stockholder or his proxy shall,
make such appointment at the meeting. The number of judges shall be one or three
as shall be determined by the Board of Directors, except that, if appointed at
the meeting on the request of one or more
5
<PAGE> 6
stockholders or proxies, the holders of a majority of the shares of the
Corporation present and entitled to vote shall determine whether one or three
judges are to be appointed. No person who is a candidate for office shall act as
a judge.
In case any person appointed as a judge fails to appear or fails or
refuses to act, the vacancy may be filled by appointment made by the Board of
Directors in advance of the convening of the meeting, or at the meeting by the
officer or person acting as chairman.
The judges of election shall determine the number of shares outstanding
and the voting power of each, the shares represented at the meeting, the
existence of a quorum, the authenticity, validity and effect of proxies, receive
votes or ballots, hear and determine all challenges and questions in any way
arising in connection with the right to vote, count and tabulate all votes,
determine the result, and do such other acts as may be proper to conduct the
election or vote with fairness to all stockholders. The judges of election shall
perform their duties impartially, in good faith, to the best of their ability,
and as expeditiously as is practical. If there be three judges of election, the
decision, act or certificate of a majority shall be effective in all respects as
the decision, act or certificate of all.
On request of the chairman of the meeting, or of any stockholder or his
proxy, the judges shall make a report in writing of any challenge or question or
matter determined by them, and execute a certificate of any fact found by them.
Any report or certificate made by them shall be prima facie evidence of the
facts stated therein.
Section 3.11. Notification of Nominations.
Subject to the rights of the holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation,
nominations for the election of directors may be made by the Board of Directors
or by any stockholder entitled to vote for the election of directors. Any
stockholder entitled to vote for the election of directors at a meeting may
nominate persons for election as directors only if written notice of the intent
of such stockholder to make such nomination shall be given, either by personal
delivery or by United States mail, postage prepaid, to the Secretary of the
Corporation not later than (i) with respect to an election to be held at an
annual meeting of stockholders, 120 days prior to the anniversary date of the
immediately preceding annual meeting and (ii) with respect to an election to be
held at a special meeting of stockholders for the election of directors, the
close of business on the seventh day following the date on which notice of such
meeting shall first be given to stockholders. Each such notice shall set forth:
(a) the name and address of the stockholder who shall intend to make the
nomination and of the person or persons to be nominated;
6
<PAGE> 7
(b) the class and number of shares held of record, held beneficially and
represented by proxy by such stockholder as of the record date of the meeting
(if such a date has been established ) and as of the date of such notice and a
representation that the stockholder intends to appear in person or by proxy at
the meeting to nominate the person or persons specified in the notice;
(c) a description of all arrangements or understandings between the stockholder
and each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
stockholder;
(d) such other information regarding each nominee proposed by such stockholder
as would have been required to be included in a proxy statement filed pursuant
to the proxy rules of the Securities and Exchange Commission had each nominee
been nominated, or intended to be nominated, by the Board of Directors; and
(e) the consent in writing of each nominee to serve as a director of the
Corporation if so elected.
The officer or other person presiding over the meeting as provided in
Section 3.5 of these By-Laws may refuse to acknowledge the nomination of any
person not made in compliance with the foregoing procedure.
ARTICLE 4
BOARD OF DIRECTORS
Section 4.1. Number, Election and Tenure.
A Board of Directors shall be chosen by ballot at the annual meeting of
stockholders or at a special meeting for that purpose held in place thereof. No
director need be a stockholder.
The number of directors constituting the whole Board shall be not less
than nine nor more than fifteen as fixed from time to time by resolution of the
whole Board; provided, that no decrease in the number of directors shall shorten
the term of any incumbent director.
The Board of Directors shall be and is divided into three classes,
Class I, Class II and Class III. No one class shall have more than one director
more than any other class. If a fraction is contained in the quotient arrived at
by dividing the authorized number of directors by three, then if such fraction
is one-third, the extra director shall be a member of Class III, and if such
fraction is two-thirds, one of the extra directors shall be a member of Class
III and one of the extra directors shall be a member of Class II, unless
otherwise provided for from time to time by resolution of the Board of
Directors.
7
<PAGE> 8
Each director shall serve for a term ending on the date of the third
annual meeting following the annual meeting at which such director was elected;
provided, however, that each initial director in Class I shall serve for a term
ending on the date of the annual meeting next following the end of calendar year
1984; each initial director in Class II shall serve for a term ending on the
date of the annual meeting next following the end of calendar year 1985; and
each initial director in Class III shall serve for a term ending on the date of
the annual meeting next following the end of calendar year 1986.
In the event of any increase or decrease in the authorized number of
directors, (i) each director then serving as such shall nevertheless continue as
director of the class of which he is a member until the expiration of his
current term, or his prior death, retirement or resignation, and (ii) the newly
created or eliminated directorships resulting from such increase or decrease
shall be apportioned by the Board of Directors among the three classes of
directors so as to ensure that no one class has more than one director more than
any other class. To the extent possible consistent with the foregoing rule, any
newly created directorships shall be added to those classes whose terms of
office are to expire at the latest dates following such allocation, and any
newly eliminated directorships shall be subtracted from those classes whose
terms of office are to expire at the earliest dates following such allocation,
unless otherwise provided for from time to time by resolution of the Board of
Directors. Notwithstanding any provisions to the contrary contained herein, each
director shall serve until a successor is elected and qualified or until his
earlier death, resignation or removal.
Section 4.2. Resignation.
Any director may resign at any time by written notice to the Board of
Directors, the Chairman, the President or the Secretary. Such resignation shall
take effect immediately upon receipt thereof or at any later time specified
therein. Unless otherwise specified in any such notice, acceptance of such
resignation shall not be necessary to make it effective.
Section 4.3. Removal.
A director may be removed only for cause and only by the affirmative
vote of the holders of at least 75% of the shares then entitled to vote at an
election of directors, at a special meeting of the stockholders called and held
for that purpose.
Section 4.4. Vacancies; New Directorships.
Any vacancies in the Board of Directors occurring for any reason and
any newly created directorships resulting from any increase in the number of
directors may be filled only by the Board of Directors, acting by (i) a vote of
at least a majority of the remaining directors then in
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office, though less than a quorum, if no Acquiring Stockholder (as defined in
the Certificate of Incorporation) has become such in the twelve months
immediately preceding the occurrence of such vacancy or the creation of such new
directorship, or (ii) a vote of at least 75% of the Continuing Directors (as
defined in the Certificate of Incorporation) then in office, though less than a
quorum, if an Acquiring Stockholder has become such in the twelve months
immediately preceding in the occurrence of such vacancy or the creation of such
new directorship. Each director so chosen shall hold office until the next
election of directors of the class of which he is a member and until his
successor is duly elected and shall qualify, or until his earlier death,
resignation or removal. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. When one or more
directors shall resign from the board effective at a future date, the directors
then in office, including those who have so resigned, shall have power to fill
such vacancy or vacancies by acting in the manner specified in the first
sentence of this Section (except that for purposes of determining whether clause
(i) or clause (ii) shall be applicable, a vacancy shall be deemed to have
occurred at the time of such resignation), the vote thereon to take effect when
such resignation or resignations shall become effective; and each such director
so chosen shall hold office as provided in this Section in the filling of other
vacancies.
Section 4.5. Powers of Directors.
The business and affairs of the Corporation shall be managed by or
under the direction of its Board of Directors which shall have and may exercise
without limit all the powers of the Corporation and do all lawful acts and
things on its behalf, except as otherwise provided by law, the Certificate of
Incorporation or these By-Laws.
Section 4.6. Meetings of the Board of Directors.
Regular meetings of the Board of Directors may be held at such place
and at such times as the Board may by vote from time to time determine, and, if
so determined, no notice thereof need be given. If any meeting date shall fall
upon a legal holiday, such meeting shall be held on the next succeeding business
day at the same hour and at the same place at which the meeting was to have been
held.
Special meetings of the Board of Directors may be held at any time and
at any place when called by the Chairman, Vice Chairman, President or by any
four or more directors, upon five days' notice thereof (which may include
Sundays and holidays) being given to each director in the manner specified in
Article 5 hereof, or at any time without call or formal notice, provided all the
directors are present or waive notice thereof in writing, signed before or after
the meeting.
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Section 4.7. Meetings by Telephone Conference.
Members of the Board of Directors, or any committee designated by the
Board, may participate in any meeting of the Board or such Committee by
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to these By-Laws shall constitute presence in person at such
meeting.
Section 4.8. Quorum of the Board of Directors.
A majority of the whole Board of Directors shall constitute a quorum
for the transaction of business. A majority of the directors present, whether or
not a quorum, may adjourn any meeting from time to time, and the meeting may be
held as adjourned without further notice. When a quorum is present at any
meeting, the vote of a majority of the directors in attendance thereat shall be
the act of the Board of Directors, except where a vote of a larger number of the
directors is required by law, by the Certificate of Incorporation or by these
By-Laws.
Section 4.9. Organization of Meetings.
At each meeting of the Board of Directors the Chairman, or, in his
absence, the Vice Chairman, or, in their absence, the President, or, in all
their absence, a director chosen by a majority of the directors present, shall
act as chairman; and the Secretary, or, in his absence, an Assistant Secretary,
or, in the absence of the Secretary and all Assistant Secretaries, a person whom
the chairman of such meeting shall appoint, shall act as secretary of such
meeting and keep the minutes thereof.
Section 4.10. Action by Written Consent.
Any action required or permitted to be taken at any meeting of the
Board of Directors or of any committee thereof may be taken without a meeting,
if all members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the board or committee.
Section 4.11. Committees of Directors.
The Board of Directors may, by resolution or resolutions passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of two or more of the directors of the Corporation, which, to the extent
provided in said resolution or resolutions, and subject to the authority of the
Board of Directors, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation when
the
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Board is not in session, and may have power to authorize the seal of the
Corporation to be affixed to all papers which may require it. The Board of
Directors may designate one or more directors as alternate members of any
committee who may replace any absent or disqualified member at any meeting of
such committee. In the absence or disqualification of any member of such
committee or committees, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in the place of such absent or disqualified member. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors. The foregoing and any other
provision of these By-Laws notwithstanding, any delegation to a committee of the
power of the Board of Directors to take such actions as would require a greater
than majority vote or a specified vote of a specified class of the directors in
order for the Board itself to adopt such actions must be made by such greater
than majority vote or such specified vote of the specified class of directors.
Section 4.12. Restrictions on Authority of Committees.
No committee shall have any power or authority to amend the Certificate
of Incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the Board of Directors, fix any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the Corporation), to adopt an agreement of
merger or consolidation, to recommend to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
to recommend to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, to amend the By-Laws of the Corporation, or, unless
the resolution creating such committee expressly so provides, to declare a
dividend, authorize the issuance of stock or adopt a certificate of ownership
and merger pursuant to Section 253 of the Delaware General Corporation Law.
Section 4.13. Procedures for Committees.
Each committee shall keep regular minutes of its proceedings and all
action by such committee shall be reported to the Board of Directors at its
meeting next succeeding such action. Each committee shall fix its own rules of
procedure, provided that such rules are consistent with these By-Laws, and shall
meet where and as provided by such rules or by resolution of the Board of
Directors. The presence of a majority of the then appointed number of each
committee shall constitute a quorum and in every case in which a quorum is
present an affirmative vote by a majority of the members of the Committee
present shall be the act of the committee.
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Section 4.14. Compensation of Directors.
The directors shall receive such compensation for their services as the
Board of Directors may from time to time determine; provided, however, that
directors who are also officers or employees of the Corporation or a subsidiary
of the Corporation shall not be entitled to any such compensation as a director;
and all directors shall be reimbursed for their expenses of attendance at each
regular or special meeting of the Board of Directors. Members of any committee
of directors may be allowed like compensation and reimbursement for expenses for
serving as members of any such committee and for attending committee meetings.
Section 4.15. Mandatory Retirement.
Inside directors - those employed by the company - are required to
resign at age 65 (or at the time of retirement or other termination from company
employment, if earlier). Except as provided in the following sentence, no
Outside Director shall be eligible to stand for re-election to a term on the
Board of Directors after he or she has reached age 70. The Board of Directors
may, however, by resolution waive the mandatory retirement requirement with
respect to an Outside Director if the Board of Directors determines that such
action is in the best interests of the Corporation.
ARTICLE 5
NOTICES
Section 5.1. Method of Giving Notice.
Whenever, under the provisions of any statute, or the Certificate of
Incorporation or these By-laws, notice is required to be given to any director
or stockholder, such notice shall be in writing and may be delivered personally
or by mail. If mailed, notice is given when deposited in the United States mail,
postage prepaid, directed to such person at this address as it appears on the
records of the Corporation. Notice to any director may also be given by
telegram, cable or telex or by leaving he notice at the residence or usual place
of business of such director.
Section 5.2. Waiver of Notice.
Whenever any notice is required to be given under the provisions of any
statute, the Certificate of Incorporation or these By-laws, a waiver thereof in
writing, signed by the person or persons entitled to said notice, whether given
before or after the time stated therein, shall be deemed equivalent thereto.
Attendance of a person at a meeting of stockholders, in person or by
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proxy, or at a meeting of the Board of Directors shall constitute a waiver of
notice of such meeting, except when a person attends such meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Except in the case of a special meeting of stockholders or of the
Board of Directors, neither the business to be transacted at, nor the purpose
of, any meeting need be specified in any written waiver of notice unless so
required by the Certificate of Incorporation or these By-laws.
ARTICLE 6
OFFICERS AND AGENTS
Section 6.1. Election, Tenure, etc.
The Board of Directors shall choose a President and a Secretary, and it
may, if it so determines, choose a Chairman of the Board and a Vice Chairman of
the Board from among its members. The Board of Directors may determine from time
to time which officers shall be designated Chief Executive Officer and Chief
Financial Officer, respectively, of the Corporation. The Board of Directors may
also choose one or more Vice Presidents, a Controller and one or more Assistant
Controllers, a General Counsel and one or more Assistant General Counsels, one
or more Assistant Secretaries, a Treasurer and one or more Assistant Treasurers.
Each such officer shall hold such office until the first meeting of the Board of
Directors after the annual meeting of stockholders next succeeding his election,
and until his successor is elected and qualified or until his earlier death,
resignation or removal. Any officer may resign by written notice to the
Corporation and may be removed at any time with or without cause by the Board of
Directors. The officers shall receive such remuneration for services under such
terms as the Board of Directors shall determine. Except in respect of the
offices of President and Secretary, any person may hold two or more offices.
Each officer shall have in addition to such duties and powers herein set forth
such duties and powers not inconsistent with these By-laws as the Board of
Directors shall from time to time designate.
Section 6.2. Executive Officers.
The Chairman, the Vice Chairman, the President, and the Vice
President(s) shall have such powers and functions as shall be determined by the
Board of Directors.
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Section 6.3. Treasurer.
The Treasurer shall, subject to the direction and the supervision of
the Board of Directors (or such officer as the Board may appoint), have the care
and control of the funds of the Corporation. He shall maintain banking
arrangements and receive, have custody of and distribute the Corporation's
monies. He shall invest the surplus funds of the Corporation as required and
provide for the custody and delivery of the investment securities in exchange
for cash when appropriate. The Treasurer shall have such number of Assistant
Treasurers to assist him in his duties having such powers as the Board of
Directors shall from time to time determine and appoint.
Section 6.4. Controller.
The Controller shall, subject to the direction and under the
supervision of the Board of Directors (or such officer as the Board may
appoint), keep or cause to be kept accurate books of accounts which shall be the
property of the Corporation. He shall establish, coordinate and administer, as
an integral part of management, an adequate system for the control of
operations. He shall maintain systems for measuring actual operations with
operating plans and standards and report thereon. He shall establish and
maintain internal fiscal controls. The Controller shall have such number of
Assistant Controllers to assist him in his duties, having such powers as the
Board of Directors shall from time to time determine and appoint.
Section 6.5. Secretary.
The Secretary shall have custody of the valuable papers of the
Corporation (except the books of account) and of the corporate seal and shall
record all the proceedings of the meetings of the stockholders, the Board of
Directors and the various committees of the Board in books kept for those
purposes and in the absence of the Secretary from any such meeting an Assistant
Secretary or a Secretary pro tempore shall record the proceedings thereof.
The Secretary shall have such number of Assistant Secretaries to assist
him in his duties having such powers as the Board of Directors may from time to
time determine.
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ARTICLE 7
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
Section 7.1. Authority of Officers.
The Board of Directors, except as otherwise provided in these By-laws,
may authorize any officer or officers, agent or agents or employee or employees
of the Corporation to enter into any contract or execute and deliver any
instrument in the name and on behalf of the Corporation, and such authority may
be general or confined to specific instances; and, unless so authorized by the
Board of Directors, no officer, agent or employee shall have any power or
authority to bind the Corporation by any contract or engagement or to pledge its
credit or to render it liable pecuniarily for any purpose or to any amount.
Section 7.2. Authorized Loan; Security.
No loan shall be contracted on behalf of the Corporation, and no
negotiable paper shall be issued, endorsed or accepted in its name, unless
authorized by the Board of Directors. Such authority may be general or confined
to specific instances. When so authorized, the officer or officers thereunder
authorized may effect loans and advances at any time for the Corporation from
any bank, trust company or other institution, or from any firm, corporation or
individual, and of such loans and advances may make, execute and deliver
promissory notes or other evidences of indebtedness of the Corporation; and,
when authorized as aforesaid, as security for the payment of any and all loans,
advances, indebtedness and liabilities of the Corporation, such officers may
mortgage, pledge, hypothecate or transfer any real or personal property at any
time owned or held by the Corporation, and to that end execute instruments of
mortgage or pledge or otherwise transfer such property.
Section 7.3. Endorsement of Checks, etc.
All checks, drafts, bills of exchange or other orders for the payment
of money, obligations, notes or other evidences of indebtedness, bills of
lading, warehouse receipts and insurance certificates of the Corporation shall
be signed or endorsed by such officer or officers, agent or agents, attorney or
attorneys or employee or employees of the Corporation as shall from time to time
be determined by resolution of the Board of Directors. Each such officer or
employee shall give such bond, if any, as the Board of Directors may require.
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Section 7.4. Deposit of Funds.
All funds of the Corporation not otherwise employed shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies or other depositaries as the Board of Directors may from time to time
designate, or as may be designated by an officer of officers, agent or agents,
attorney or attorneys or employee or employees of the Corporation to whom such
power may be delegated by the Board of Directors.
Section 7.5. Bank Accounts.
The Board of Directors may from time to time authorize the opening and
keeping of general and special bank accounts with such banks, trust companies or
other depositaries as it may designate or as may be designated by an officer or
officers, agent or agents, attorney or attorneys or employee or employees of the
Corporation to whom power in that respect shall have been delegated by the Board
of Directors. The Board may make such special rules and regulations with respect
to such bank accounts, not inconsistent with the provisions of these By-laws, as
it may deem expedient.
Section 7.6. Rights of Corporation as Stockholder.
Unless otherwise provided by resolution adopted by the Board of
Directors, the President or any Vice President may from time to time appoint an
attorney or attorneys, or agent or agents, to exercise in the name and on behalf
of the Corporation the powers and rights which the Corporation may have as the
holder of stock or other securities in any other corporation, to vote or to
consent in respect of such stock or other securities; and the President or any
Vice President may instruct the person or persons so appointed as to the manner
of exercising such powers and rights and may execute or cause to be executed in
the name and on behalf of the Corporation and under its corporate seal, or
otherwise, all such written proxies, powers of attorney or other written
instruments as he may deem necessary or appropriate in order that the
Corporation may exercise such powers and rights.
ARTICLE 8
UNCERTIFICATED SHARES AND STOCK CERTIFICATES
Section 8.1. Uncertificated Shares.
The Board of Directors may provide by resolution or resolutions that
some or all of any or all classes or series of the Corporation's stock shall be
uncertificated shares. Any such resolution
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shall not apply to shares represented by a certificate until such certificate is
surrendered to the corporation. Within a reasonable time after the issuance or
transfer or uncertificated stock, the Corporation shall send to the registered
owner thereof a written notice containing (a) any written restriction on the
transfer or registration of transfer of such stock which is imposed by the
Certificate of Incorporation or these By-Laws, (b) if such stock is issued
pursuant to a voting trust agreement, a statement of that fact and (c) if the
Corporation shall be authorized to issue more than one class of stock or more
than one series of any class, a full or summary statement of, or a statement
that the Corporation will furnish without charge to each stockholder who so
requests, the powers, designations, preferences and relative participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights. Except as expressly provided by law, the rights and obligations of the
holders of uncertificated stock and the rights and obligations of the holders of
certificates representing stock of the same class and series shall be identical.
Section 8.2. Stock Certificates.
Notwithstanding the adoption by the Board of Directors of a resolution
providing for uncertificated shares, every holder of stock represented by
certificates and upon request every holder of uncertificated shares shall be
entitled to a certificate, in such form as shall in conformity to law be
prescribed from time to time by the Board of Directors, representing the number
of shares owned by him in the Corporation and registered in certificate form.
Such certificate shall be signed by, or in the name of the Corporation by the
Chairman, the Vice Chairman, the President or a Vice President, and by the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary,
and shall bear the seal of the Corporation; provided, however, that, where such
certificate is signed (1) by a transfer agent or an assistant transfer agent or
(2) by a transfer clerk acting on behalf of the Corporation and a registrar, the
signatures of the Chairman, Vice Chairman, President, Vice President, Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary may be facsimile. In case
any officer or officers who shall have signed, or whose facsimile signature or
signatures shall have been used on, any such certificate or certificates shall
have ceased to be such officer or officers of the Corporation, whether because
of death, resignation or otherwise, before such certificate or certificates is
issued, such certificate or certificates may be issued by the Corporation with
the same effect as if he were such officer at the date of issue.
Section 8.3. Registration of Transfer.
The Board of Directors shall cause suitable records to be kept for the
registry and transfer of the shares of the capital stock of the Corporation.
Upon presentation to the Corporation or its transfer agent of a certificate for
shares duly indorsed by an appropriate person or an instruction requesting the
transfer, pledge or release of uncertificated shares originated by the
appropriate person, together with reasonable assurance that such indorsement or
instruction is genuine and effective and such evidence of the payment of
transfer taxes and compliance with other provisions
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of law as the Corporation or its transfer agent may require, the transfer,
pledge or release shall be registered as requested. No transfer of shares of
stock represented by a certificate shall be valid except upon the surrender and
cancellation of the old certificate or as provided in section 8.4 of these
By-Laws.
Section 8.4. Loss of Certificate.
In case of the mutilation or of the alleged loss, theft or destruction
of a certificate of stock, a new certificate of stock or uncertificated shares
may be issued in the place thereof. In the case of the mutilation, loss, theft
or destruction of a certificate, the Board of Directors may, in its discretion,
require the owner of the mutilated, lost, stolen or destroyed certificate, or
his legal representative, to give the Corporation a bond sufficient to indemnify
the Corporation against any claim that may be made against it on account of the
alleged mutilation, loss, theft or destruction of such certificate or the
issuance of such new certificate or uncertificated shares, accompanied by
appropriate affidavit of mutilation, loss, theft or destruction. A new
certificate or uncertificated shares may be issued without requiring a bond when
in the judgment of the Board of Directors it is proper to do so. The Board of
Directors, however, may in its discretion refuse to issue any such new
certificates or uncertificated shares except pursuant to legal proceedings under
the laws of the State of Delaware.
Section 8.5. Restrictions on Transfer.
The Board of Directors may impose restrictions on the transfer of the
rights, to be distributed as a dividend pursuant to the Rights Agreement, dated
as of April 22, 1986, by and between the Corporation and Morgan Guaranty Trust
Company of New York, as and to the extent required by such Rights Agreement, as
amended from time to time.
ARTICLE 9
GENERAL PROVISIONS
Section 9.1. Fixing Record Date.
In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders of any adjournment
thereof, or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than
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sixty nor less than ten days before the date of such meeting, nor more than
sixty days prior to any other action. If no record date is fixed, then (a) the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given or, if notice is waived, at the close
of business on the day next preceding the day on which the meeting is held and
(b) the record date for determining stockholder for any other purpose shall be
at the close of business on the day on which the Board of Directors adopts the
resolution relating thereto. A determination of stockholders of record entitled
to notice of, or to vote at, a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting in which case notice of the
adjourned meeting shall be given to each stockholder of record entitled to vote
at the meeting.
Section 9.2. Registered Stockholders.
The Corporation shall be entitled to recognize a person registered on
its books as the holder of shares as the sole owner of such shares for all
purposes, and to hold liable for calls and assessments a person registered on
its books as the owner of shares, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of Delaware. Without limiting the
generality of the foregoing, the Corporation shall be entitled to recognize the
exclusive right of a person whose holding of shares is so registered on its
books as of any record dated fixed or determined pursuant to section 9.1 of
these By-Laws to be treated as the sole owner of such shares for the purpose for
which such record date was so fixed or determined.
Section 9.3. Dividends.
Dividends upon the outstanding stock of the Corporation, of any class
or series, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the corporation of any class or series, subject to the provisions of
the Certificate of Incorporation.
Section 9.4. Reserves.
Before payment of any dividend, there may be set aside out of any funds
of the Corporation available for dividends such sum or sums as the directors
from time to time in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other purpose as the
directors shall think conducive to the interest of the Corporation, and the
directors may modify or abolish any such reserve in the manner in which it was
created.
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Section 9.5. Fiscal Year.
Except as from time to time otherwise provided by the Board of
Directors, the fiscal year of the Corporation shall be the calendar year.
Section 9.6. Seal.
The seal of the Corporation shall, subject to alteration by the Board
of Directors, consist of a flat faced circular die with the words "Bowater
Incorporated, Delaware, 1964, Corporate Seal" cut or engraved thereon. The seal
may be used by causing it or a facsimile thereof, to be impressed or affixed or
in any other manner reproduced.
ARTICLE 10
AMENDMENTS
New By-Laws of the Corporation may be adopted or the By-Laws of the
Corporation may be amended or repealed by a vote of either a majority of the
directors of the Corporation or a majority of the voting power of the
Corporation; provided, however, that any By-Laws concerning the election of
removal of directors, the range of the number of directors, the exact number of
directors within such range or the method of fixing either such range or the
exact number of directors within such range, the classification of the Board of
Directors, the filling of vacancies on the Board of Directors, the requirement,
if then in the Certificate of Incorporation and these By-Laws, that all
stockholder action must be taken at an annual or special meeting, the calling of
special meetings of the stockholders, or the method of adopting, amending or
repealing of By-Laws may not be amended, adopted or repealed, nor shall any
other By-Law be amended, adopted or repealed which will have the effect of
modifying or permitting the circumvention of such By-Laws, unless such adoption,
amendment or repeal is approved by the affirmative vote of 75% of the Continuing
Directors (where such adoption, amendment or repeal may be effected by the Board
of Directors) or by the affirmative vote of the holders of not less than 75% of
the voting power of the Corporation. The foregoing notwithstanding, in case of
any irreconcilable inconsistency between the Certificate of Incorporation and
the By-Laws of the Corporation, provisions in the Certificate of Incorporation
shall prevail.
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EXHIBIT 5
[LETTERHEAD OF ANTHONY H. BARASH ]
June 26, 1998
Bowater Incorporated
55 East Camperdown Way
Post Office Box 1028
Greenville, South Carolina 29602
Gentlemen:
As set forth in the Registration Statement on Form S-3 (the "Registration
Statement") filed on June 26, 1998, by Bowater Incorporated, a Delaware
corporation (the "Company"), with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), relating to 21,645,334 shares (the "Shares") of the Company's common
stock, par value $1.00 per share, certain legal matters in connection with the
Shares are being passed upon for the Company by me. The Shares are subject to
issuance upon the exchange (by way of redemption or purchase) of exchangeable
shares (the "Exchangeable Shares") of Bowater Canada Inc., a corporation
incorporated under the laws of Canada ("Bowater Canada"), which Exchangeable
Shares are to be issued pursuant to the terms of the Amended and Restated
Arrangement Agreement by and between the Company and Avenor Inc. ("Avenor")
dated as of March 9, 1998 (the "Arrangement Agreement"), such exchange to be in
accordance with (i) the rights, privileges, restrictions and conditions
attaching to the Exchangeable Shares set forth in Exhibit I to the Plan of
Arrangement in the form of Schedule A to the Arrangement Agreement (the
"Exchangeable Share Provisions") and (ii) the Voting and Exchange Trust
Agreement to be entered into among Bowater, Bowater Holdings Incorporated,
Bowater Canada and a trustee (the "Voting and Exchange Trust Agreement"). The
Shares may also be issued upon the exchange of Exchangeable Shares issued upon
the conversion of the 7.5% Convertible Debentures due 2004 (the "Avenor
Convertible Debentures") of Avenor in accordance with the terms of a
supplemental indenture (the "Supplemental Indenture") to be entered into among
Bowater, Bowater Canada, Avenor and Montreal Trust Company, as trustee. At your
request, this opinion of counsel is being furnished to you for filing as Exhibit
5 to the Registration Statement, and I consent to such filing.
In my capacity as your counsel in the connection referred to above, I have
examined the Company's Restated Certificate of Incorporation and Amended Bylaws,
each as amended to date, and have examined the originals, or copies certified or
otherwise identified to my satisfaction, of corporate records of the Company,
certificates of public officials and of representatives of the Company, statutes
and other instruments and documents as a basis for the opinion hereinafter
expressed. In giving such opinion, I have relied upon certificates of officers
of the Company with respect to the accuracy of the material factual matters
contained in such certificates.
On the basis of the foregoing, and subject to the assumptions, limitations
and qualifications hereinafter set forth, I am of the opinion that:
1. The Company is a corporation duly organized and validly existing in good
standing under the laws of the State of Delaware.
2. Following and subject to approval and adoption of the Arrangement
Agreement and the transactions contemplated thereby by the shareholders
of Avenor and, in the case of Exchangeable Shares to be issued upon
conversion of Avenor Convertible Debentures, the execution and
effectiveness of the Supplemental Indenture, and the approval of the
issuance of Shares pursuant to the Arrangement Agreement and the
transactions related thereto by the holders of the Shares, the Shares,
upon issuance in accordance with the terms of the Exchangeable Share
Provisions or the Voting and Exchange Trust Agreement, as the case may
be, will be duly authorized, validly issued, fully paid and
nonassessable.
<PAGE> 2
This opinion is limited solely to the existing Delaware General Corporation
Law ("DGCL"), is rendered as of the date hereof and applies only to the matters
specifically covered by this letter. No opinion is given as to any law other
than the DGCL.
Subject to the last sentence of the first paragraph above, this opinion may
not be used, relied upon or quoted by any person or entity other than the
addressee, or for any purpose other than in connection with the Registration
Statement, without my prior written consent.
Very truly yours,
/s/ ANTHONY H. BARASH
Anthony H. Barash
2
<PAGE> 1
EXHIBIT 8.1
[LETTERHEAD OF DAVIES, WARD & BECK ]
June 26, 1998
Bowater Incorporated
55 East Camperdown Way
Post Office Box 1028
Greenville, South Carolina
U.S.A. 29602
Dear Sirs:
We have acted as counsel for Avenor Inc. ("Avenor") in connection with the
arrangement contemplated by the Amended and Restated Arrangement Agreement,
dated as of March 9, 1998, between Avenor and Bowater Incorporated ("Bowater"),
as described in the Registration Statement of Bowater on Form S-3 filed with the
Securities and Exchange Commission on June 26, 1998 (the "Registration
Statement").
We hereby confirm, based on the assumptions and subject to the
qualifications and limitations set forth therein, that the statements contained
in the section of the Registration Statement captioned "Income Tax
Considerations -- Canadian Federal Income Tax Considerations", to the extent
that such statements describe Canadian federal income tax law or legal
conclusions with respect thereto, are our opinion, as of the date hereof, with
respect to the matters set forth therein. No opinion is expressed on matters
other than those specifically referred to therein.
We assume no obligation to supplement our opinion if any applicable laws
change after the date of the Registration Statement or if we become aware, after
the date of the Registration Statement, of facts that might change the opinions
expressed therein.
This letter is solely for your benefit and the benefit of the holders of
exchangeable shares of Bowater Canada Inc., an indirectly owned subsidiary of
Bowater, and may not be relied upon in any manner or for any purpose by any
other person.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the captions
"Income Tax Considerations -- Canadian Federal Income Tax Considerations" and
"Legal Opinions". In giving this consent, we do not hereby admit that we are in
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933.
Yours very truly,
/s/ DAVIES, WARD & BECK
<PAGE> 1
EXHIBIT 8.2
[LETTERHEAD OF FRASER & BEATTY]
June 26, 1998
Bowater Incorporated
55 East Camperdown Way
Post Office Box 1028
Greenville, South Carolina 29602
Dear Sirs:
We have acted as your counsel in connection with the arrangement
contemplated by the Amended and Restated Arrangement Agreement, dated as of
March 9, 1998, between Avenor Inc. ("Avenor") and Bowater Incorporated
("Bowater"), as described in the Registration Statement of Bowater Incorporated
on Form S-3 filed with the Securities and Exchange Commission on June 26, 1998
(the "Registration Statement").
We hereby confirm, based on the assumptions and subject to the
qualifications and limitations set forth therein, that the statements contained
in the section of the Registration Statement captioned "Income Tax
Considerations -- Canadian Federal Income Tax Considerations", to the extent
that such statements describe Canadian federal income tax law or legal
conclusions, are our opinion, as of the date hereof, with respect to the matters
set forth therein. No opinion is expressed on matters other than those
specifically referred to therein.
We assume no obligation to supplement our opinion if any applicable laws
change after the date of the Registration Statement or if we become aware, after
the date of the Registration Statement, of facts that might change the opinions
expressed therein.
This letter is solely for your benefit and the benefit of the holders of
the exchangeable shares of Bowater Canada, Inc., an indirectly owned subsidiary
of Bowater, and may not be relied upon in any manner or for any purpose by any
other person.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the captions
"Income Tax Considerations -- Canadian Federal Income Tax Considerations" and
"Legal Opinions". In giving this consent, we do not hereby admit that we are in
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933.
Yours very truly,
/s/ FRASER & BEATTY
FRASER & BEATTY
<PAGE> 1
EXHIBIT 8.3
[LETTERHEAD OF FRIED FRANK]
June 26, 1998
Bowater Incorporated
55 East Camperdown Way
Post Office Box 1028
Greenville, South Carolina 29602
Ladies and Gentlemen:
We acted as special United States tax counsel for Avenor Inc., a
corporation existing under the laws of Canada ("Avenor"), in connection with the
arrangement contemplated by the Amended and Restated Arrangement Agreement,
dated as of March 9, 1998, between Avenor and Bowater Incorporated, a
corporation existing under the laws of the state of Delaware ("Bowater"), as
described in the Registration Statement of Bowater on Form S-3 filed with the
Securities and Exchange Commission on June 26, 1998 (the "Registration
Statement").
We hereby confirm, based on the assumptions and subject to the
qualifications and limitations set forth therein, that the statements contained
in the section of the Registration Statement captioned "Income Tax
Considerations -- United States Federal Income Tax Considerations" which refer
to Fried, Frank, Harris, Shriver & Jacobson (a partnership including
professional corporations), to the extent that each such statement constitutes a
statement of United States federal income tax law or a legal conclusion with
respect thereto, is our opinion, as of the date hereof, with respect to the
matters set forth therein. No opinion is expressed on matters other than those
specifically referred to herein.
We assume no obligation to supplement this opinion if any applicable laws
change after the date hereof or if we become aware of facts that might change
the opinions expressed herein after the date hereof.
The opinion expressed herein is solely for your benefit and the benefit of
holders of exchangeable shares of Bowater Canada Inc., an indirectly owned
subsidiary of Bowater, and may not be relied upon in any manner or for any
purpose by any other person.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the captions
"Income Tax Considerations -- United States Federal Tax Income Considerations"
and "Legal Opinions". In giving this consent, we do not hereby admit that we are
in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /s/ ROBERT CASSANOS
-----------------------------------------
Robert Cassanos
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITOR'S CONSENT
The Board of Directors
Bowater Incorporated:
We consent to the use of our report dated February 6, 1998, except as to
Note 2, which is as of March 9, 1998, on the consolidated financial statements
of Bowater Incorporated as of December 31, 1997 and 1996, and for each of the
years in the three-year period ended December 31, 1997, incorporated herein by
reference, and to the reference to our firm under the heading "Experts" in the
prospectus.
/s/ KPMG Peat Marwick LLP
Greenville, South Carolina
June 26, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF PRICE WATERHOUSE
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of Bowater
Incorporated of our report dated February 13, 1998 relating to the consolidated
financial statements of Avenor Inc., which appears on page FS-27 of the Joint
Management Information Circular and Proxy Statement for Bowater Incorporated and
Avenor Inc. (the "Circular"). We also consent to the references to us under the
heading "Experts" in the Prospectus and under the heading "Avenor Selected
Consolidated Financial Data" in the Circular. However, it should be noted that
Price Waterhouse has not prepared or certified such "Avenor Consolidated
Financial Data".
/s/ Price Waterhouse
Chartered Accountants
Montreal, Canada
June 26, 1998
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
BOWATER INCORPORATED
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a director of
Bowater Incorporated, a Delaware corporation (the "Corporation"), which is to
file with the Securities and Exchange Commission (the "SEC") under the
provisions of the Securities Act of 1933, as amended, one or more Registration
Statements on Form S-3, or other appropriate form, for shares of capital stock
of the Corporation, hereby constitute and appoint Anthony H. Barash, David G.
Maffucci and Wendy C. Shiba, and each of them, my true and lawful
attorneys-in-fact and agents, with full power to act, together or each without
the others, for me and in my name, place and stead, in any and all capacities,
to sign, or cause to be signed electronically, any and all of said Registration
Statements (which Registration Statements may constitute post-effective
amendments to registration statements previously filed with the SEC) and any and
all amendments to the aforementioned Registration Statements and to file said
Registration Statements and amendments thereto so signed with all exhibits
thereto, and with any and all other documents in connection therewith, with the
SEC and appropriate stock exchanges, hereby granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as I might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 20th day of May, 1998
/s/ Francis J. Aguilar
--------------------------------------
Director
<PAGE> 2
EXHIBIT 24
POWER OF ATTORNEY
BOWATER INCORPORATED
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a director of
Bowater Incorporated, a Delaware corporation (the "Corporation"), which is to
file with the Securities and Exchange Commission (the "SEC") under the
provisions of the Securities Act of 1933, as amended, one or more Registration
Statements on Form S-3, or other appropriate form, for shares of capital stock
of the Corporation, hereby constitute and appoint Anthony H. Barash, David G.
Maffucci and Wendy C. Shiba, and each of them, my true and lawful
attorneys-in-fact and agents, with full power to act, together or each without
the others, for me and in my name, place and stead, in any and all capacities,
to sign, or cause to be signed electronically, any and all of said Registration
Statements (which Registration Statements may constitute post-effective
amendments to registration statements previously filed with the SEC) and any and
all amendments to the aforementioned Registration Statements and to file said
Registration Statements and amendments thereto so signed with all exhibits
thereto, and with any and all other documents in connection therewith, with the
SEC and appropriate stock exchanges, hereby granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as I might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 20th day of May, 1998
/s/ H. David Aycock
--------------------------------------
Director
<PAGE> 3
EXHIBIT 24
POWER OF ATTORNEY
BOWATER INCORPORATED
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a director of
Bowater Incorporated, a Delaware corporation (the "Corporation"), which is to
file with the Securities and Exchange Commission (the "SEC") under the
provisions of the Securities Act of 1933, as amended, one or more Registration
Statements on Form S-3, or other appropriate form, for shares of capital stock
of the Corporation, hereby constitute and appoint Anthony H. Barash, David G.
Maffucci and Wendy C. Shiba, and each of them, my true and lawful
attorneys-in-fact and agents, with full power to act, together or each without
the others, for me and in my name, place and stead, in any and all capacities,
to sign, or cause to be signed electronically, any and all of said Registration
Statements (which Registration Statements may constitute post-effective
amendments to registration statements previously filed with the SEC) and any and
all amendments to the aforementioned Registration Statements and to file said
Registration Statements and amendments thereto so signed with all exhibits
thereto, and with any and all other documents in connection therewith, with the
SEC and appropriate stock exchanges, hereby granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as I might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 20th day of May, 1998
/s/ Richard Barth
--------------------------------------
Director
<PAGE> 4
EXHIBIT 24
POWER OF ATTORNEY
BOWATER INCORPORATED
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a director of
Bowater Incorporated, a Delaware corporation (the "Corporation"), which is to
file with the Securities and Exchange Commission (the "SEC") under the
provisions of the Securities Act of 1933, as amended, one or more Registration
Statements on Form S-3, or other appropriate form, for shares of capital stock
of the Corporation, hereby constitute and appoint Anthony H. Barash, David G.
Maffucci and Wendy C. Shiba, and each of them, my true and lawful
attorneys-in-fact and agents, with full power to act, together or each without
the others, for me and in my name, place and stead, in any and all capacities,
to sign, or cause to be signed electronically, any and all of said Registration
Statements (which Registration Statements may constitute post-effective
amendments to registration statements previously filed with the SEC) and any and
all amendments to the aforementioned Registration Statements and to file said
Registration Statements and amendments thereto so signed with all exhibits
thereto, and with any and all other documents in connection therewith, with the
SEC and appropriate stock exchanges, hereby granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as I might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 20th day of May, 1998
/s/ Kenneth M. Curtis
--------------------------------------
Director
<PAGE> 5
EXHIBIT 24
POWER OF ATTORNEY
BOWATER INCORPORATED
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a director of
Bowater Incorporated, a Delaware corporation (the "Corporation"), which is to
file with the Securities and Exchange Commission (the "SEC") under the
provisions of the Securities Act of 1933, as amended, one or more Registration
Statements on Form S-3, or other appropriate form, for shares of capital stock
of the Corporation, hereby constitute and appoint Anthony H. Barash, David G.
Maffucci and Wendy C. Shiba, and each of them, my true and lawful
attorneys-in-fact and agents, with full power to act, together or each without
the others, for me and in my name, place and stead, in any and all capacities,
to sign, or cause to be signed electronically, any and all of said Registration
Statements (which Registration Statements may constitute post-effective
amendments to registration statements previously filed with the SEC) and any and
all amendments to the aforementioned Registration Statements and to file said
Registration Statements and amendments thereto so signed with all exhibits
thereto, and with any and all other documents in connection therewith, with the
SEC and appropriate stock exchanges, hereby granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as I might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 20th day of May, 1998
/s/ Charles J. Howard
--------------------------------------
Director
<PAGE> 6
EXHIBIT 24
POWER OF ATTORNEY
BOWATER INCORPORATED
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a director of
Bowater Incorporated, a Delaware corporation (the "Corporation"), which is to
file with the Securities and Exchange Commission (the "SEC") under the
provisions of the Securities Act of 1933, as amended, one or more Registration
Statements on Form S-3, or other appropriate form, for shares of capital stock
of the Corporation, hereby constitute and appoint Anthony H. Barash, David G.
Maffucci and Wendy C. Shiba, and each of them, my true and lawful
attorneys-in-fact and agents, with full power to act, together or each without
the others, for me and in my name, place and stead, in any and all capacities,
to sign, or cause to be signed electronically, any and all of said Registration
Statements (which Registration Statements may constitute post-effective
amendments to registration statements previously filed with the SEC) and any and
all amendments to the aforementioned Registration Statements and to file said
Registration Statements and amendments thereto so signed with all exhibits
thereto, and with any and all other documents in connection therewith, with the
SEC and appropriate stock exchanges, hereby granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as I might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 20th day of May, 1998
/s/ Donald R. Melville
--------------------------------------
Director
<PAGE> 7
EXHIBIT 24
POWER OF ATTORNEY
BOWATER INCORPORATED
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a director of
Bowater Incorporated, a Delaware corporation (the "Corporation"), which is to
file with the Securities and Exchange Commission (the "SEC") under the
provisions of the Securities Act of 1933, as amended, one or more Registration
Statements on Form S-3, or other appropriate form, for shares of capital stock
of the Corporation, hereby constitute and appoint Anthony H. Barash, David G.
Maffucci and Wendy C. Shiba, and each of them, my true and lawful
attorneys-in-fact and agents, with full power to act, together or each without
the others, for me and in my name, place and stead, in any and all capacities,
to sign, or cause to be signed electronically, any and all of said Registration
Statements (which Registration Statements may constitute post-effective
amendments to registration statements previously filed with the SEC) and any and
all amendments to the aforementioned Registration Statements and to file said
Registration Statements and amendments thereto so signed with all exhibits
thereto, and with any and all other documents in connection therewith, with the
SEC and appropriate stock exchanges, hereby granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as I might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 20th day of May, 1998
/s/ James L. Pate
--------------------------------------
Director
<PAGE> 8
EXHIBIT 24
POWER OF ATTORNEY
BOWATER INCORPORATED
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a director of
Bowater Incorporated, a Delaware corporation (the "Corporation"), which is to
file with the Securities and Exchange Commission (the "SEC") under the
provisions of the Securities Act of 1933, as amended, one or more Registration
Statements on Form S-3, or other appropriate form, for shares of capital stock
of the Corporation, hereby constitute and appoint Anthony H. Barash, David G.
Maffucci and Wendy C. Shiba, and each of them, my true and lawful
attorneys-in-fact and agents, with full power to act, together or each without
the others, for me and in my name, place and stead, in any and all capacities,
to sign, or cause to be signed electronically, any and all of said Registration
Statements (which Registration Statements may constitute post-effective
amendments to registration statements previously filed with the SEC) and any and
all amendments to the aforementioned Registration Statements and to file said
Registration Statements and amendments thereto so signed with all exhibits
thereto, and with any and all other documents in connection therewith, with the
SEC and appropriate stock exchanges, hereby granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as I might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 20th day of May, 1998
/s/ John A. Rolls
--------------------------------------
Director
