Supporting a merger that would create the world's largest newsprint producer, Canadian Imperial Bank of Commerce is leading a $1.6 billion syndicated bridge loan for Abitibi-Price Inc. and Stone-Consolidated Corp.

The credit would be the largest so far this year for a Canadian firm, and the 11th-largest deal ever for a Canadian corporation, according to Loan Pricing Corp.

A meeting for lenders on the credit is scheduled for April 8, and the loan is expected to close in mid-May.

Montreal-based Stone-Consolidated and Toronto-based Abitibi are merging as equals in a stock swap valued at nearly $3.2 billion, scheduled to close in the second quarter.

The investment-grade loan, with proceeds divided among both companies and the new conglomerate, replaces an Abitibi $163 million asset securitization and $331 million of Stone-Consolidated's senior notes.

CIBC was selected to lead the deal through a competitive bid process, said an Abitibi spokesman. Abitibi's primary commercial bank is Royal Bank of Canada, while Stone-Consolidated's is Toronto-Dominion.

The new credit will be structured as a $364 million, five-year facility for Abitibi, a $874 million facility for Stone-Consolidated, and a $349 million credit for the new Abitibi-Consolidated Inc., according to the spokesman.

The new loan "Increases undrawn facilities at better rates, with greater flexibility," said the Abitibi spokesman.

A consolidation wave that began two years ago among European and Japanese newsprint producers continues to sweep the newsprint and forest- products industry.

This consolidation is driven by an excess of production capacity, sliding prices and limited demand, said analysts. Abitibi-Consolidated Inc. would control an estimated 8% of the global newsprint market, making it the largest supplier of paper for newspapers and telephone directories.

Because both companies have significant holdings in the United States, two sets of merger advisers were engaged. Credit Suisse First Boston represented Abitibi in the United States, while Nesbitt Burns was the company's Canadian adviser. Salomon Brothers Inc. and Toronto-Dominion Securities Inc. advised Stone-Consolidated.

Although the deal will be the largest of several recent ones in the industry, it will not be the last, said Benoit Laprade, an analyst with Montreal-based Levesque Beaubien Geoffrion Inc.

Acquisitions of smaller newsprint companies will continue, and larger diversified paper and forest products producers will continue to sell off newsprint operations, said Mr. Laprade.

As many as five smaller deals are anticipated in the industry this year.

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