Archive for the ‘Specialty Cellulose’ Category

Fortress Paper Appoints Key Dissolving Pulp Managers for the Conversion of its Thurso Mill

Posted: Thursday, June 3rd, 2010

VANCOUVER, BRITISH COLUMBIA–(Marketwire – June 3, 2010) – Fortress Paper Ltd. (TSX:FTP) (“Fortress Paper” or the “Corporation”) announces the following appointments at its wholly-owned subsidiary, Fortress Specialty Cellulose Inc. (“Fortress Specialty”): Peter Vinall as President and Chief Executive Officer, Vincent Byrne as Vice President, Technical Development and Donald Deer as Projects Leader. In addition, Fortress Specialty has added Pierre Monahan to its Board of Directors.

In announcing the appointments, Chad Wasilenkoff, CEO of Fortress Paper commented: “We are very pleased to have someone of Peter Vinall’s extensive experience and track record joining our team. His appointment brings a wealth of experience in running some of the largest dissolving pulp mills in the world and he has a talent for building strong teams and leading business transformations. With Vince Byrne, Donald Deer, Marco Veilleux and Pierre Monahan, we will have an experienced team in place to implement our business plan at the Fortress Specialty Cellulose Mill.”

Peter Vinall commented: “Having recently relocated back to Canada, I am excited to now join the Fortress team and lead the conversion of the Fortress Specialty Cellulose Mill into a high quality specialty cellulose mill. The Mill has good access to fibre supply and a reputation for high quality NBHK production which will continue with the restart which is underway. Our aim is to leverage these strengths and transform the asset base with extensive technological upgrades and a state of the art cogeneration facility with the goal of becoming a low cost producer and industry leader in the specialty cellulose sector.”

Mr. Vinall has approximately 30 years of experience in the pulp and paper industry and was the former President of Sateri International Pulp Group, a global leader in the specialty cellulose business. Prior to joining Fortress Specialty, Mr. Vinall held the position of President and Chief Executive Officer of AV Group where he led the conversion of an NBHK pulp mill to produce dissolving pulp. Mr. Vinall obtained an MBA from Tulane University, New Orleans, and a B.E in Mechanical and Electrical Engineering from Monash University, Melbourne, Australia.

Vincent Byrne has over 30 years of engineering, operations and process optimization experience focused on commodity and specialty pulping processes. Most recently he acted as VP Technical and Engineering at AV Group where he led the development of the conversion of one of their New Brunswick mills into a dissolving pulp operation. Mr. Byrne obtained a B.Sc. in Chemistry from Massey University, New Zealand.

Donald Deer has approximately 40 years of engineering and construction experience in Canada and has managed in excess of $1 billion in capital spending for several major corporations including Tembec Inc. Most recently, Mr. Deer was responsible for construction and completion of the conversion of one of AV Group’s NBHK mills into a dissolving pulp operation. Mr. Deer also has recent experience designing cogeneration and energy optimization projects. Donald Deer has a B.E in Electrical Engineering from Queens University, Ontario and is a member of Professional Engineers Ontario.

Pierre Monahan is a highly experienced senior board member and executive director. Mr. Monahan was formerly the CEO of Alliance Forest Products Inc. and Executive Vice President of Bowater Canada Inc. during which time he oversaw its integration with Alliance Forest Products Inc., an acquisition valued at approximately $1 billion.

In addition Fortress announces that the former Operations Director of Fraser Paper’s Thurso Mill, Marco Veilleux, has been appointed Chief Operating Officer of Fortress Specialty Cellulose. Mr. Veilleux has led the Thurso operation since 2007 having developed his career in a series of operational and technical leadership roles in the pulp and paper sector in Eastern Canada. He was instrumental in initiating the cogeneration project and ensuring the Thurso assets are well positioned for the transformation. Mr. Veilleux has a B.Sc. in Chemistry from the University of Sherbrooke.

About Fortress Paper

Fortress Paper is a leading international producer of security and other specialty papers and products. Fortress Paper operates three mills, the Landqart Mill located in Switzerland, the Dresden Mill located in Germany and the Fortress Specialty Cellulose Mill located in Quebec, Canada. Fortress Paper’s security papers include banknote, passport and visa papers and its specialty papers include non-woven wallpaper base products, and graphic and technical papers. Fortress Paper’s pulp business will include NBHK with the re-start of the Fortress Specialty Cellulose Mill with plans to convert this capacity into dissolving pulp production along with the construction of a biomass based cogeneration plant.

This news release contains certain forward-looking statements that reflect the current views and/or expectations of Fortress Paper with respect to its performance, business and future events, including statements relating to its plans to re-start, convert and build a biomass based cogeneration plant at the Fortress Specialty Cellulose Mill. Forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about the business and the industry and markets in which the Corporation operates, including assumptions relating to the Corporation’s ability to successfully implement its business plan in respect of the Fortress Specialty Cellulose Mill; that the Corporation will be able to receive all required approvals and complete construction of the cogeneration facility; and the expected effects of the cogeneration facility on the business of the Corporation. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Investors are cautioned that all forward-looking statements involve risks and uncertainties including, without limitation, that the Corporation will be unable to implement its business plan in respect of the Fortress Specialty Cellulose Mill as planned or at all; that the Corporation will be unable to receive all necessary approvals to begin construction of the cogeneration facility; and those risks relating to changes in the market, potential downturns in economic conditions, fluctuations in the price and supply of raw materials, foreign exchange fluctuations, labour relations, regulatory requirements, reputation, competition, dependence on major customers, and other risk factors listed from time to time in the Corporation’s public filings. These risks, as well as others, could cause actual results and events to vary significantly. Accordingly, readers should not place undue reliance on forward-looking statements and information, which are qualified in their entirety by this cautionary statement. Fortress Paper does not undertake any obligations to release publicly any revisions for updating any voluntary forward-looking statements, except as required by applicable securities law.

SOURCE:
Fortress Paper Ltd.

Pulp and Paper Canada: “Thurso’s Future Secure with Fortress”

Posted: Wednesday, June 2nd, 2010

There’s a new kid on the block and he’s playing by a different set of rules. Brimming with confidence, enthusiasm, and steadfast resolution to succeed, Fortress Paper offers a fresh perspective for Canada’s pulp and paper sector.

With its recent acquisition of the idled Thurso pulp mill located in the Outaouais region of western Quebec, Vancouver-based Fortress Paper plans not only to make a splash on the market, but a significant profit, too. By ditching the production of northern bleached hardwood kraft pulp in favour of manufacturing dissolving pulp, the company is confident it won’t fall prey to the relentless profit losses so many Canadian forestry companies have witnessed.

“We’re expecting to generate $60 million (EBITDA) but could potentially see profits in the order of $200 million,” says Chad Wasilenkoff, president and CEO of Fortress Paper, with a confidence not often heard in this industry.

Wasilenkoff refers to himself as a “contrarian” investor, as he keeps a punctilious eye on industries widely considered to be depressed, only to pounce on opportunities to grab world class assets at heftily discounted prices. For his $3 million* purchase price, Wasilenkoff pocketed $85 million worth of assets in buying the Thurso facility from insolvent Fraser Papers.

Fortress Paper currently owns and operates two pulp mills in Europe — in Germany and Switzerland. With an emphasis on specialty papers, the company’s product portfolio includes non-woven wallpaper base products, graphic papers, and technical papers. Fortress officially incorporated in 2006, with the intention of taking a closer look at investments in the forestry sector. The company was not specifically seeking to invest in Canada, but had been observing the dissolving pulp market for a number of years. When the Thurso pulp mill came on the market, the timing and price were compelling.

The acquisition is also welcome news to the 320 people formerly employed by the mill, who will, with only a few minor exceptions, be back on the job in June 2010.

“The Quebec government was very interested in getting people back to work,” Wasilenkoff confirmed. “We were informed that not only does the mill provide work for 320 people, but an additional 2900 indirect jobs are supported by the operation, as well.” The provincial government’s motivation to see the facility up and running translated to a cash infusion of $102 million, in the form of a 10-year loan.

It’s money that Wasilenkoff anticipates no difficultly in repaying. “We’re extremely comfortable with the underlying fundamentals,” he says, explaining the overall growth in the market his newly purposed mill will be supplying. “Asia will be our biggest market, and the textile industry there is very strong. As more and more people move into middle income brackets, research indicates consumption of clothing increases, and yet, cotton is an expensive material to produce. Rayon has very similar characteristics to cotton but is more absorbent and breathable, and is less expensive to produce. As a result, the finished product almost always trades at a premium compared to cotton. We consider this to be a very, very low-risk and high-return venture.”

Fortress has two additional multi-million dollar goodies in its bag: the company is entitled to $10 million from the federal Green Transformation Program, as well as $15 million from the Green Infrastructure Fund. Both are initiatives designed to encourage green energy generation and environmentally-friendly production upgrades. Fortress’ decision to construct a biomass-based cogeneration plant at the facility to produce green electricity positioned the company to benefit from these grants.

The mill won’t be making an immediate switch from NBHK production to dissolving pulp, however. Thurso will continue to churn out kraft pulp for another full year before producing its new product line starting in June 2011. Once the transition is over, the mill will produce 200,000 tonnes of air-dried product annually. The company plans to capitalize on bolstered demand for NBHK first. Wasilenkoff expects the restructuring to be a smooth process, however, as it requires very little in the way of retrofitting. Much of the equipment currently in the mill will be suitable for the production of dissolving pulp as it shares much in common with the process of manufacturing NBHK.

With a secure and reasonably priced fibre source (the company has a 50% Crown allocation), a ready-made labour force, and strong market fundamentals, Fortress appears poised for success. Coupled with Chad Wasilenkoff’s unstoppable “can-do” attitude, Canada’s pulp and paper sector may have a new market leader, and mentor, for the future.

* After price adjustments, Wasilenkoff notes, the final price paid for the Thurso facility may be in the order of $900,000.

By Heather Lynch for Pulp and Paper Canada. June 2, 2010.

SOURCE:
Pulp and Paper Canada: “Thurso’s Future Secure with Fortress”

Pulp And Paper Canada: “Fortress Paper’s Thurso Mill Resumes Production Ahead of Schedule”

Posted: Wednesday, June 2nd, 2010

Fortress Specialty Cellulose Inc. began production and sale of NBHK pulp from the company’s mill in Thurso, Que., on May 28. The mill reopened May 1 after being shut down by its former owner in early 2009.

Chad Wasilenkoff, CEO of parent company Fortress Paper Ltd., commented: “We are pleased that production has commenced ahead of schedule and this will enable us to take advantage of the current strong NBHK pulp prices.”

Fortress Specialty’s Thurso Mill is expected to produce approximately 250,000 air dried metric tonnes per annum of high grade northern bleached hardwood kraft pulp. Fortress Specialty intends to produce NBHK pulp while undergoing transformation to become a dissolving pulp producer in mid 2011.

SOURCE:
Pulp And Paper Canada: “Fortress Paper’s Thurso Mill Resumes Production Ahead of Schedule”

Fortress Paper Announces Pulp Purchase And Sale Agreement For Fortress Specialty Cellulose

Posted: Monday, May 10th, 2010

VANCOUVER, British Columbia, May 10 2010 – Fortress Paper Ltd. www.fortresspaper.com (“Fortress Paper” or the “Corporation”) (TSX:FTP) announces that its wholly-owned subsidiary, Fortress Specialty Cellulose Inc. (“Fortress Specialty”) has entered into a pulp purchase and sale agreement (the “Agreement”) with International Forest Products Corp. (“IFP”) of Foxboro, Massachusetts.

Pursuant to the terms of the Agreement, IFP will be the exclusive distributor for the sale of northern bleached hardwood kraft (“NBHK”) pulp produced at the Thurso Mill for the duration of such production.

The Thurso Mill is expected to commence commercial production in June of this year and is anticipated to produce approximately 250,000 air dry metric tonnes of high quality NBHK pulp per year. The re-start plans are on track and the mill expects to promptly deliver the high quality that it was well known for in the market place.

“Everyone at International Forest Products Corporation (IFP) is extremely pleased to be working with Fortress Paper on this exciting venture,” said Daniel Kraft, President and CEO of IFP. “This relationship will align IFP with one of the world’s premier specialty paper producers.”


Fortress Paper Closes Acquisition To Enter The Specialty Cellulose and Bio Energy Sectors And The Associated Financing

Posted: Sunday, May 2nd, 2010

VANCOUVER, British Columbia, April 30, 2010 – Fortress Paper Ltd. (“Fortress Paper” or the “Corporation”), a leading producer of security and specialty papers, is pleased to announce the successful completion of its acquisition of the assets of a northern bleached hardwood kraft (“NBHK”) manufacturing facility located in Thurso, Quebec (the “Thurso Mill”) from Fraser Papers Inc. (“Fraser”) for net proceeds of approximately $1.2 million. With this successful acquisition, Fortress Paper will commence the conversion of the Thurso Mill into a world class, low cost, specialty cellulose (dissolving pulp) operation. Concurrently, Fortress Paper intends to build a biomass-based cogeneration plant at the Thurso Mill which will produce green electricity resulting in material net energy savings (income).

Chad Wasilenkoff, CEO of Fortress Paper, states, “We are pleased to announce the transaction has closed. We intend to move aggressively to ramp up operations at the Thurso Mill and anticipate production of NBHK to commence in mid June of this year during the interim period while we immediately begin the conversion of the Thurso Mill into a dissolving pulp operation. We are finalizing the terms of employment with several key individuals with extensive experience in dissolving pulp conversions and should be able to provide more details on this matter in the coming weeks. This acquisition will diversify our specialty product mix and we believe will provide a significant financial contribution to Fortress’ growth aspirations.”

The acquisition of the Thurso Mill has been completed through its wholly-owned subsidiary Fortress Specialty Cellulose Inc. (“Fortress Specialty”). The Corporation intends to incur capital expenditures of approximately $153 million to convert the non‑operating NBHK mill into a high quality specialty cellulose mill and to construct a new cogeneration facility.

Concurrent with the completion of the acquisition the Company has finalized $102.4 million project financing with Investissement Québec (“IQ”) and a $15 million convertible debenture (the “Debenture”) with Solidarity Fund QFL. Additionally, included in the assets being purchased is approximately $9.9 million in credits (black liquor credits) granted under the Canadian government’s Pulp and Paper Green Transformation Program. Fortress Paper also intends to apply for approximately $15.2 million in federal credits under the Green Infrastructure Fund program of the Minister of Transport, Infrastructure & Communities relating to the planned cogeneration project.

New collective agreements have been negotiated with all three unions which will be in effect until 2016. The defined benefit pension plan which existed under the previous collective agreements has been replaced with a defined contribution pension plan, eliminating the risk of future unfunded pension liabilities. Under these new agreements, Fortress will not be assuming any of the previous pension liabilities. Management is confident that these agreements will ensure a positive partnership with the union and a stable, efficient cost structure through the transition into dissolving pulp.

Further Details:

Fortress Paper has completed a loan agreement whereby Investissement Québec has agreed to provide up to $102.4 million to Fortress Specialty to support the proposed business plan in respect of the Thurso Mill. The loan is secured by the capital assets of Fortress Specialty and has a term of 10 years. Interest will be calculated at a fixed rate of 5.0% per annum for the first five years, followed by a rate based on the cost of IQ’s funds plus 2.0% for the remaining five years, up to a maximum of 5.5% per annum.

Fortress Paper has also issued a $15 million convertible debenture (the “Debenture”) to Solidarity Fund QFL. The convertible debt matures in five years with an interest rate of 7% per annum. The Debenture is convertible, in whole or in part, at the option of Solidarity Fund QFL into common shares of Fortress Paper at any time after closing of the debenture at a conversion price equal to $20.00.

The Solidarity Fund QFL is a development capital company that channels the savings of Québec residents into investments in all sectors of the economy to help create and maintain jobs and to further Québec’s economic growth. The Fund is a partner, either directly or through its network members, in approximately 2,000 companies.

The specialty cellulose mill is planned to have an annual production capacity of more than 200,000 air dried metric tonnes and is expected to be completed in mid-2011. In entering into the specialty cellulose sector, Fortress Specialty will focus on producing dissolving grade cellulose for the textile industry, primarily targeting viscose fibre (rayon) products which have shown strong growth of approximately 10% in China and 7% worldwide over the past five years. Rayon is a technically evolved and versatile fibre with many advantages, particularly in the warmer and higher growth regions of the world.

Fortress Paper also plans to construct an approximately 25 megawatt cogeneration facility to service a net 18.8 megawatt power supply agreement over a 15 year term. The location of the cogeneration facility provides it with access to on‑site generation of biomass and an extensive local network of chip and other biomass suppliers. The cogeneration facility is expected to be supplying electricity in the fourth quarter of 2012.

A New Lease on Life for the Outaouais Cellulose Pulp Mill—Québec Government Loan Enables Fortress Specialty Cellulose Inc. to Convert its Thurso Mill

Posted: Friday, March 26th, 2010

Thurso, March 26, 2010 – Québec Premier Jean Charest and the Minister for Transport, Minister responsible for the Outaouais region and MNA for Papineau, Norman MacMillan, announced today a $102.4 million interest-bearing loan to Fortress Specialty Cellulose Inc. (FSCI) for its Thurso facility, formerly owned by Fraser Papers Inc. Awarded through Investissement Québec, the financial assistance will be used to convert the former pulp mill for cellulose production.

With a total estimated value of nearly $175 million, the FSCI initiative is designed to convert the Thurso mill from a facility that manufactures kraft pulp for paper into a cellulose pulp production facility and to set up a cogeneration power plant. The plant’s new product targets the viscose fibre (rayon) market, which is showing strong worldwide growth. Viscose fibre is most often blended with cotton, wool and polyester fibre to produce textiles and knits for the apparel industry.

“Putting the Thurso mill back into production is good news for the forest industry and part of an industrial development strategy that focuses on high value-added products,” declared the Premier. “The success of this operation will no doubt serve as a model for the forest industry’s future,” he added.

On the employment front, the outlook for the conversion project is bright. In addition to enabling the facility to call back 290 employees who worked for Fraser Papers, it will also help maintain some 1,500 direct and indirect jobs in the forest industry and throughout regional businesses.

“I am very pleased with today’s announcement, not only for the region but also for the forest industry. Fortress’s project proves that it is possible to find promising new solutions to help stimulate the forest industry and the Outaouais region’s economy,” said Minister Norman MacMillan.

“We are pleased to receive the Québec government’s support for the conversion of the Thurso mill. Fortress is confident that this undertaking will be a success, given Québec’s favourable business environment and the positive outlook for world markets,” affirmed Mr. Chad Wasilenkoff, President and CEO of Fortress Specialty Cellulose and Fortress Paper.

In addition to converting the mill for an industry that offers greater potential for long-term growth, the project will keep the city of Thurso’s water treatment plant in operation with no additional investments. In fact, all the necessary equipment can be found at the mill.

The Thurso facility was mothballed in June 2009, resulting in layoffs for 330 people in the single-industry municipality. The closing also had a major impact on the forestry activities of some 30 Québec companies.

About the Ministère du Développement économique, de l’Innovation et de l’Exportation

The department’s mission is to support economic development, innovation, export trade and research by fostering coordinated and concerted efforts by stakeholders representing the economic, scientific, social and cultural arenas. In so doing, it seeks to promote job creation, economic prosperity, scientific development and sustainable development.

In addition, the department portfolio encompasses various government corporations, agencies and funding bodies, including Investissement Québec.

SOURCE:
Investissement Québec: “A New Lease on Life for the Outaouais Cellulose Pulp Mill—Québec Government Loan Enables Fortress Specialty Cellulose Inc. to Convert its Thurso Mill”

The Globe and Mail: “Rayon is Fortress’s True Story”

Posted: Tuesday, March 23rd, 2010

Most investors cringe and run when they learn that the company they’ve invested in is abruptly changing course.

Chadwick Wasilen 547962gm a 300x168 The Globe and Mail: Rayon is Fortresss True Story

Fortress Paper President and CEO Chad Wasilenkoff. Source: The Globe and Mail

That explains why Fortress Paper shares were bruised last Friday, after the company announced that it was buying a pulp mill from a bankrupt operator in Quebec.

Fortress is a smart little company that literally makes money. To be precise, the company makes bank notes for Switzerland and euros for 10 countries. It also makes passport and other security papers. Plus it makes high-end wallpaper. It’s been a great little investment, returning more than 100 per cent since it started trading less than three years ago and 300 per cent since it bottomed in the market crash a year ago.

At first glance, the pulp purchase looks like a change of strategy. While Fortress is technically in the paper business, it’s nowhere near pulp on the food chain. No one wants pulp, which explains how the mill ended up in bankruptcy protection.

But this is not a change of strategy. It fits in very well with how Fortress has made such gains for investors, and analysts have figured it out, which is why the stock was up so much yesterday. If it works out – and CEO Chadwick Wasilenkoff told me yesterday that he thinks this is the best deal he’s ever done – the stock has lots of room to rise.

While it’s true that pulp demand is in decline as we consume less paper, demand for rayon is climbing briskly. Rayon is a substitute for cotton, and according to the U.S. Department of Agriculture, cotton production is dropping, down by about a sixth in the past four years. The economics don’t make sense for farmers who can make more by growing food or ethanol feed stocks.

Demand for cotton, meanwhile, is growing. But there isn’t enough of it, so demand for rayon is climbing at about 7 per cent a year, according to Fortress.

What does that have to do with a pulp mill in poor old Thurso, Quebec? With a healthy investment, the mill can be converted to produce what’s called “dissolving pulp,” which is what they use to make rayon among other things. And that’s what Mr. Wasilenkoff intends to do.

Fortress is paying all of $3-million for the mill. It has to invest $153-million to convert the plant – $91-million for the actual conversion and another $62-million to build co-generation, which produces electricity. Once up and running, the refurbished plant will, analysts figure, be a cash cow.

Why? Well, since there’s a shortage of production capacity out there, dissolving pulp is changing hands for $1,500 a tonne – that compares nicely to the $800 a tonne the mill’s pulp product fetches now.

What’s more, Mr. Wasilenkoff arranged for attractive and cheap government financing for much of the acquisition. Fortress is putting up equity of only $15-million in total. The risk to shareholders is limited.

The analysts whose reports I looked at show, on average, a doubling of earnings before interest, taxes, depreciation and amortization over the next two or three years. The new price targets are twice as high as the stock price today, which may seem ambitious and may even be ambitious but isn’t ridiculous.

Meanwhile, Fortress’s other divisions – wallpaper and security paper – also show promise. The wallpaper mill is one of the lowest-cost mills in the world, and Fortress has about half of the global market share of coated and uncoated non-woven wallpaper.

And the banknote business is also stable with room to grow, although Fortress needs to make investments to modernize the works. Fortress’s EBITDA grew 125 per cent from 2006 to 2009.

The truth is that this deal fits in perfectly with what Mr. Wasilenkoff has been doing all along: being a contrarian, buying cheap, seeing opportunities others overlook, allocating capital intelligently and being patient – the sorts of things only CEOs who own a lot of stock (23 per cent in this case) do.

Asked what is most challenging about his job, Mr. Wasilenkoff says “the stock price. We think it’s lower than it should be and that’s frustrating.”

While small companies bear risks that bigger ones don’t, like concentrated customer sales, I think he’s right. The stock does look cheap, especially given that he’s demonstrated an ability to make money for not only central banks but investors as well.

By: Fabrice Taylor for The Globe and Mail. Tuesday, March 23, 2010.

SOURCES: The Globe and Mail: “Rayon is Fortress’s True Story”.

Fortress Paper

Fortress Paper Announces an Acquisition to Enter the Specialty Cellulose and Bio-Energy Sectors

Posted: Thursday, March 18th, 2010

Fortress Paper Ltd. (“Fortress Paper” or the “Corporation”) (TSX:FTP), a leading producer of security and specialty papers, in a major strategic move today announces the signing of an asset purchase agreement (“APA”) to acquire the assets of a northern bleached hardwood kraft (“NBHK”) manufacturing facility located in Thurso, Quebec (the “Thurso Mill”) from Fraser Papers Inc. (“Fraser”) with the intention to convert this operation into a world class, low cost, specialty cellulose (dissolving pulp) operation. Concurrently, Fortress Paper intends to build a biomass-based cogeneration plant at the Thurso Mill which will produce green electricity resulting in material net energy savings (income).
Upon closing of the acquisition of the Thurso Mill, which will be completed through its wholly-owned subsidiary Fortress Specialty Cellulose Inc. (“Fortress Specialty”), the Corporation intends to incur capital expenditures of approximately $153 million to convert the non-operating NBHK mill into a high quality specialty cellulose mill and to construct a new cogeneration facility. In connection with the proposed capital expenditures, Fortress Paper is pleased to announce that it has pre-arranged specific financing initiatives to fund the conversion and cogeneration projects.

The specialty cellulose mill is planned to have an annual production capacity of more than 200,000 air dried metric tonnes and is expected to be completed in mid-2011. In entering into the specialty cellulose sector, Fortress Specialty will focus on producing dissolving grade cellulose for the textile industry, primarily targeting viscose fibre (rayon) products which have shown strong growth of approximately 10% in China and 7% worldwide over the past five years. Rayon is a technically evolved and versatile fibre with many advantages, particularly in the warmer and higher growth regions of the world.

Fortress Paper also plans to construct a 25 megawatt cogeneration facility to service a net 18.8 megawatt power supply agreement over a 15 year term. The location of the cogeneration facility provides it with access to on-site generation of biomass and an extensive local network of chip and other biomass suppliers. The cogeneration facility is expected to be supplying electricity in the fourth quarter of 2012.

Chad Wasilenkoff, CEO of Fortress Paper, states, “We are very pleased to announce this new acquisition which we believe will add significant shareholder value in the years to come. Both the Board of Directors and management of Fortress Paper feel that this new opportunity warrants the diversification of the Corporation into other specialty sectors as it has the potential to materially enhance shareholder value. Once the conversion and cogeneration projects are complete, we will be entering a new product segment which offers long-term growth prospects and attractive margins. During the interim period, we will capitalize on the current strength of the NBHK pulp market. We feel it is important to emphasize that this is not an acquisition to enter into the pulp industry, but rather the opportunity to acquire assets that are ideally suited to be converted into a bio-refinery and produce high value-added products. We intend to strategically enter this sector at a time when demand exceeds current capacity. We believe this trend will continue over the next several years given the limited announced new capacity.”

Pursuant to the terms of the APA, Fortress Paper will pay Fraser $3 million in cash at closing, subject to certain adjustments. The closing of the APA is subject to various conditions, including (i) as a result of Fraser and its subsidiaries having filed for creditor protection under theCompanies’ Creditors Arrangement Act (the “CCAA”) in Canada, the approval of the transaction by the Ontario Superior Court of Justice (Commercial List) in connection therewith, (ii) Fortress Specialty entering into renewed collective agreements with all unionized employees of the Thurso Mill, and (iii) the Corporation and Fortress Specialty securing financing as necessary to implement their proposed business plan at the Thurso Mill. Fortress is optimistic that it will be able to finalize mutually satisfactory renewed collective agreements with the three unions imminently and looks forward to building a mutually beneficial relationship with the community of Thurso. The closing of the acquisition is anticipated to occur on or about April 30, 2010.

Investissement Quebec (“IQ”) has committed, by way of an agreement in principle, to grant Fortress Specialty a loan in the amount of up to $102.4 million to support Fortress Paper’s proposed business plan in respect of the Thurso Mill. The loan will be secured by the capital assets of Fortress Specialty and will have a term of 10 years. Interest will be calculated at a fixed rate of 5.0% per annum for the first five years, followed by a rate based on the cost of IQ’s funds plus 2.0% for the remaining five years, up to a maximum of 5.5% per annum. The loan is subject to receiving the requisite approval of the Government of Quebec and is subject to completion of definitive documentation.

Fortress Paper has also signed a conditional commitment letter with a Quebec financial institution providing for the subscription of an unsecured convertible debenture of Fortress Paper (the “Debenture”) in the principal amount of $15 million maturing in five years with an interest rate of 7% per annum. The Debenture will be convertible, in whole or in part, at the option of the Quebec financial institution into common shares of Fortress Paper at any time after closing of the debenture at a conversion price equal to the lesser of 145% of the trading price of the common shares on the Toronto Stock Exchange (the “TSX”) and $20.00.

The Debenture will be redeemable, in whole or in part, at the option of Fortress Paper, from the second anniversary date of its issuance at par plus all accrued and unpaid interest, provided that the volume weighted average trading price of the common shares of Fortress Paper on the TSX is not less than 125% of the conversion price. The Debenture financing is subject to various conditions, including approval by the decision-making authorities of the Quebec financial institution, satisfactory due diligence, the concurrent completion of the IQ financing, the closing of the APA, receipt of TSX approval for the issuance by Fortress Paper of the Debenture and the completion of definitive documentation.

Included in the assets being purchased from Fraser is approximately $9.9 million in credits (black liquor credits) granted under the Canadian government’s Pulp and Paper Green Transformation Program (the “GTP”). The GTP aims to improve the environmental performance of Canada’s pulp and paper industry by funding approved capital projects with environmental benefits. Fortress Paper also intends to apply for approximately $15.2 million in federal credits under the Green Infrastructure Fund program of the Minister of Transport, Infrastructure & Communities relating to the planned cogeneration project.

As no definitive agreements have been entered into with respect to the financing initiatives described above, there can be no assurance at this time that the financing in connection with the Thurso Mill will be completed on terms acceptable to Fortress Paper or at all.

For more information on the Fortress Specialty Cellulose project you can access the Fortress Specialty Cellulose PowerPoint Presentation by going directly to the link atwww.fortress.presenternet.com

A prerecorded voice presentation is available to accompany the PowerPoint and can be accessed at:

Prerecorded Presentation dial-in number 1-877-353-9587 or from overseas 403-699-1055 and follow the prompts. When prompted, enter the 6 digit conference reference number 274464 followed by the number sign (#). The recording will be available for 7 days.

Future replays of the PowerPoint Presentation can be accessed by a link on the front page of our website at www.fortresspaper.com and alternatively at www.fortress.presenternet.com.

About Fortress Paper

Fortress Paper is a leading international producer of security and other specialty papers. Fortress Paper operates two paper mills, the Landqart Mill located in Switzerland and the Dresden Mill located in Germany. Fortress Paper’s security papers include banknote, passport and visa papers and its specialty papers include non-woven wallpaper base products, and graphic and technical papers. As an extension of its security papers business, the Landqart Mill has been actively developing and marketing innovative paper-based security products.

This news release contains certain forward-looking statements that reflect the current views and/or expectations of Fortress Paper with respect to its performance, business and future events, including statements relating to the Corporation’s completion of the APA and the outcome of its financing initiatives; its intention to convert the Thurso Mill into a specialty cellulose (dissolving pulp) operation; its plans to build a biomass based cogeneration plant and the financial results and production capacity expected therefrom; its ability to complete the necessary financing to make planned capital expenditures; the expected effects of the acquisition of the Thurso Mill on the business of the Corporation; the state of the market in the specialty cellulose and green bio-energy sectors; and its intended application for federal tax credits. Forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about the business and the industry and markets in which the Corporation operates, including assumptions relating to the Corporation’s ability to complete the APA; its ability to complete the necessary financing to successfully implement its business plan in respect of the Thurso Mill; the success and profitability of the specialty cellulose operation and cogeneration plant; the expected effects of the acquisition of the Thurso Mill on the business of the Corporation; the state of the market in the specialty cellulose and green bio-energy sectors; and the Corporation’s ability to obtain certain federal tax credits. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Investors are cautioned that all forward-looking statements involve risks and uncertainties including, without limitation, that the Corporation will not complete the APA; will not obtain the necessary financing to complete its business plan in respect of the Thurso Mill; will be unable to implement its business plan in respect of the Thurso Mill as planned or at all; that the specialty cellulose operation and cogeneration plant will not be successful or profitable and will not meet anticipated production capacities; that the Corporation will not obtain the federal tax credits; and those risks relating to changes in the market, potential downturns in economic conditions, fluctuations in the price and supply of raw materials, foreign exchange fluctuations, labour relations, regulatory requirements, reputation, competition, dependence on major customers, and other risk factors listed from time to time in the Corporation’s public filings. These risks, as well as others, could cause actual results and events to vary significantly. Accordingly, readers should not place undue reliance on forward-looking statements and information, which are qualified in their entirety by this cautionary statement. Fortress Paper does not undertake any obligations to release publicly any revisions for updating any voluntary forward-looking statements, except as required by applicable securities law.