Nov. 6 (Bloomberg) -- AbitibiBowater Inc., the world's largest newsprint producer, fell the most in three weeks in New York trading amid concern it may fail to refinance more than $600 million of debt that matures next year.

AbitibiBowater tumbled 38 cents, or 19 percent, to $1.67 at 4:15 p.m. in New York Stock Exchange composite trading. The decline was the biggest since Oct. 15. Shares of the Montreal- based company plunged 92 percent this year.

``It's all about liquidity,'' Rahul Gandhi, a New York-based paper-industry analyst at CreditSights Inc., said today in a telephone interview. Investors are concerned that the company will be unable to refinance a $347 million term loan to its Abitibi-Consolidated unit that matures in March, Gandhi said.

Chief Executive Officer David J. Paterson is trying to conserve cash while seeking to sell $750 million of timberlands and mills to help the refinancing. Proceeds from asset sales in the third quarter were $5 million, down from $205 million in the two previous quarters, according to the company's latest financial results.

The net loss in the quarter widened to $302 million, or $5.23 a share, compared with a loss of $251 million, or $4.36, in the second quarter, the company said today in a statement.

The company, formed in the October 2007 merger of rival newsprint-makers Abitibi-Consolidated Inc. and Bowater Inc., didn't report comparable results a year earlier. Sales increased 2 percent from the previous quarter to $1.73 billion.

AbitibiBowater's third-quarter loss, excluding one-time items, was $1.81 a share, the company said. That matched the average estimate in a Bloomberg survey of 17 analysts.

Closed Mills

The net loss included costs of $154 million for the permanent closing of the company's mills in Donnacona, Quebec, and Mackenzie, British Columbia, the company said. The facilities had previously been indefinitely idled.

Earlier this year, AbitibiBowater refinanced $1.62 billion of debt to avoid default. The company has tried to curb its costs as North American demand for paper contracts.

Newsprint demand in Canada and the U.S. is declining as publishers seek to shave costs by reducing page sizes or using lighter paper amid increasing competition from the Internet for advertising revenue.

Newspaper Demand Declines

Consumption by U.S. daily newspapers fell about 15 percent in September from a year earlier, according to the Montreal-based Pulp and Paper Products Council, an industry group.

``Many of the offshore markets have experienced substantial growth in demand,'' Paterson said today on a conference call with investors and analysts. Customers outside of North America account for almost half of the company's total shipments, he said.

Newsprint producers including AbitibiBowater have raised prices in North America on average by 37 percent to $765 a metric ton in the past year while reducing production capacity, according to research published this week by RBC Capital Markets.

The company's fourth-quarter financial performance will show a ``very significant improvement'' because of weakness in the Canadian dollar against the U.S. currency and declining costs for wood fiber from recycled newspapers and magazines, Paterson said today.

Maintenance Costs

AbitibiBowater's cash on hand at the end of the third quarter fell to $295 million from $341 million in the previous three months, partly because of increased costs for maintenance, the company said.

In addition to debt maturing in March, the company's Bowater Inc. unit has about $248 million of debentures due to mature in August, Gandhi said.

Sales in the most recent three months included 900 acres of timberlands.

Assets still to be sold include some timberlands in Canada and the U.S. as well as facilities in Fort William, Ontario; Lufkin, Texas; West Tacoma, Washington; and Mokpo, South Korea.

To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net.

Last Updated: November 6, 2008 17:00 EST