Posts Tagged ‘banknotes’

Fortress Paper to Release Fourth Quarter 2011 Earnings

Posted: Thursday, February 16th, 2012

Fortress Paper Ltd. (“Fortress Paper” or the “Corporation”) (TSX:FTP) announced today that it intends to release its fourth quarter financial results for the period ended December 31st, 2011 after the close of the market on Monday, March 5th, 2012. In connection with the release of its results, Fortress Paper Ltd. will host a conference call Tuesday, March 6th, 2012 at 9:30 a.m. (PST) to discuss the financial results and the Corporation’s operations. Mr. Chadwick Wasilenkoff, Chief Executive Officer, Alfonso Ciotola, President, Kurt Loewen, Chief Financial Officer and Peter Vinall, President and Chief Executive Officer of Fortress Specialty Cellulose Inc. will host the call.

To participate in the conference call, please dial one of the following numbers:

Dial In Numbers: 604-681-8564 Vancouver
403-532-5601 Calgary or International
780-429-5820 Edmonton
416-623-0333 Toronto
613-212-0171 Ottawa
514-687-4017 Montreal
Toll Free Dial In Number: 1-855-353-9183 from Canada and USA
Participant Pass Code: 15086#
Conference Reference Number: 765945
A replay of the conference call will be available for 7 days. To access the replay, listeners may dial 1-855-201-2300 from Canada & the USA. The conference reference number is 765945 # and the participant pass code to access the replay is 15086 #.

SOURCES:

Fortress Paper Ltd., and Marketwire

Fortress Paper Announces Acquisition of Lebel-sur-Quevillon Pulp Mill Assets

Posted: Tuesday, January 31st, 2012

Fortress Paper Ltd.  (“Fortress Paper” or the “Company”) (TSX:FTP) is pleased to announce that it has, through its wholly owned subsidiary, Fortress Global Cellulose Ltd.(“Fortress Global”), signed an asset purchase agreement (the “APA”) with 9109-3294 Quebec Inc., a wholly owned subsidiary of the Quebec Ministere du Developpement economique, de l’Innovation et de l’Exportation (“9109″), and Domtar Inc., whereby Fortress Global will acquire the buildings, equipment and other ancillary property relating to the non-operating pulp mill located at Lebel-sur-Quevillon, Quebec (the “LSQ Mill”) and 9109 will acquire the lands relating thereto. In connection with the acquisition, Fortress Global intends to enter into arrangements with 9109 whereby Fortress Global will have full and unconditional ownership and access rights to the LSQ Mill assets. Fortress Global intends to convert the LSQ Mill into a low cost dissolving pulp operation. Concurrently, Fortress Global will acquire a 30 megawatt non-operating cogeneration facility at the LSQ Mill which it intends to restart which will result in material net energy savings (income). An additional cogeneration project will provide up to 50 megawatts of total power for which the company is seeking a long-term power supply agreement with Hydro Quebec.

Upon completion of the acquisition of the LSQ Mill, the Corporation intends to invest estimated capital expenditures of approximately $222 million to convert the non-operating northern bleached softwood kraft pulp mill into a low cost, high quality dissolving pulp mill and to increase the capacity of the cogeneration facility. In connection with the proposed capital expenditures, Fortress Paper has arranged certain financing initiatives to fund the conversion and cogeneration projects.

The LSQ Mill is planned to have an annual production capacity of approximately 236,000 air dried metric tonnes (ADMT) and is expected to be completed in late 2013. The LSQ Mill would significantly increase Fortress Paper’s annual dissolving pulp production capacity to over 437,000 ADMT, initially targeting viscose fibre (rayon) products.

Chad Wasilenkoff, Chief Executive Officer of Fortress Paper Ltd. , states, “The acquisition of the LSQ Mill and its planned conversion into a dissolving pulp operation represents an important milestone towards Fortress Paper becoming a leader in the global dissolving pulp industry. This project demonstrates the insight and perseverance of the Quebec Government and Fortress Paper Ltd.  in developing a unique opportunity which has been latent for several years, but when completed will revitalize the community of Lebel-sur-Quevillon and the surrounding areas of Northern Quebec. We are very pleased to be able to partner with Investissement Quebec on this project to build from our recent successful conversion of the Fortress Specialty Cellulose Mill, and also look forward to working closely with the city of Lebel-sur-Quevillon.”

Pursuant to the terms of the APA, at closing Fortress Global will pay a nominal cash amount and agree to contribute pursuant to a trust agreement in escalating tranches over the next 5 years an aggregate of $7.5 million and an additional contingent amount of $2.5 million only in the event of a permanent closing of the LSQ Mill in respect of environmental remediation costs. The closing of the APA is subject to various conditions, including (i) Fortress Global entering into a collective agreement with the unionized employees of the LSQ Mill, (ii) Fortress Global entering into a loan agreement with Investissement Quebec securing financing to implement its proposed business plan at the LSQ Mill, (iii) the parties to the APA entering into a trust agreement, (iv) Fortress Global and 9109 entering into satisfactory lease and other ownership and access agreements, (v) Fortress Global finalizing satisfactory fibre supply arrangements with the Quebec Government, (vi) an order in council by the Quebec Government authorizing the transaction, and (vii) Domtar completing its agreement with the City of Lebel-sur-Quevillon in respect of certain property taxes. The closing of the APA is expected to occur within 75 days.

The cost structure of the LSQ Mill will be materially impacted by the ability of Fortress Global to upgrade the cogeneration facility and to service the facility through a long-term power supply agreement with Hydro Quebec on satisfactory terms. In addition, Fortress Global is negotiating with the City of Lebel-sur-Quevillon for a mutually beneficial, long term municipal tax arrangement in respect of the capital expenditure program at the LSQ Mill which will assist in revitalizing the Northern Quebec region. Training and relocation grants discussions are ongoing with various government agencies, although no formal commitments have been provided at this time.

Investissement Quebec (“IQ”) has committed, by way of an agreement in principle, to grant Fortress Global a loan in the amount of up to $132.4 million comprised of two tranches to support Fortress Paper Ltd. proposed business plan in respect of the LSQ Mill. The loan will be secured by the capital assets of Fortress Global and will accrue interest at a fixed rate of 5.0% per annum for the first five years, followed by a rate not to exceed 5.5% per annum for the remaining five years, and will include an equity compensation in the form of 715,000 share purchase warrants of Fortress Paper Ltd. on terms to be determined. The first tranche of $102.4 million will have a term of 10 years and the second tranche of $30 million will have a term of three years. The loan is subject to completion of definitive documentation. As no definitive agreement has been entered into with respect to the IQ financing, there can be no assurance at this time that such financing will be completed on terms acceptable to Fortress Global or at all.

Fortress Paper Ltd. has also signed a subscription agreement with a Quebec financial institution providing for the subscription of an unsecured convertible debenture of Fortress Paper Ltd. (the “Debenture”) in the aggregate principal amount of $25 million maturing in five years with an interest rate of 7% per annum. The Quebec financial institution will have the option to convert its Debenture, in whole or in part, into common shares of Fortress Paper Ltd.  at any time after closing of the APA at a conversion price equal to the volume weighted average price of the common shares of the Corporation on the Toronto Stock Exchange (the “TSX”) for the five trading days immediately Fortress Paper Ltd. preceding the closing of the APA plus a premium equal to 50% of such trading price. 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 Ltd.  on the TSX is not less than 125% of the conversion price. The Debenture financing is subject to various conditions, including the concurrent completion of the IQ financing, the closing of the APA and receipt of the requisite TSX approval.

In connection with the LSQ Mill acquisition, Fortress Paper Ltd.  will be hosting a teleconference to discuss the acquisition rationale in the form of a Presentation which is available by sending a request to info@fortresspaper.com and will also be posted at www.fortresspaper.com in due course. The teleconference will be limited in scope to the subject matter contained in this press release and the Presentation.

Teleconference Date: Tuesday, January 31, 2012
   
Time: 1:30pm (PST) / 4:30pm (EST)
   
Dial In Numbers: 604-681-8564 Vancouver
403-532-5601 Calgary or International
780-429-5820 Edmonton
416-623-0333 Toronto
613-212-0171 Ottawa
514-687-4017 Montreal
   
Toll Free Dial In Number: 1-855-353-9183 from Canada and USA
   
Participant Pass Code: 98030#
Confirmation Number: 764917

PLAYBACK ON DEMAND USER INFORMATION

To listen to a POD call:

  1. Dial 1-877-353-9587 from Canada or the USA or dial 403-699-1055 from local Calgary or International.
  1. Enter the 6 digit Conference Reference Number, 764917 followed by the # key.
  1. Also enter the participant code 98030# when prompted.

SOURCES:

Fortress Paper Ltd., and Marketwire

Fortress Paper Updates Status of Dissolving Pulp Production

Posted: Tuesday, January 17th, 2012

Fortress Paper Ltd.  (“Fortress Paper” or the “Company”) (TSX:FTP)  is pleased to announce that it has ramped up production of dissolving pulp at its Fortress Specialty Cellulose Mill to approximately 60% of final targeted capacity since it announced production of dissolving pulp had commenced on December 5, 2011. The ramp up of production continues substantially as planned and we expect meaningful improvements in the short term followed by smaller productivity gains as we approach our targeted production capacity. Our dissolving pulp is meeting customer specifications and after aggregating inventory, customer shipments commenced in the final week of December.

Chad Wasilenkoff, Chief Executive Officer of Fortress Paper, commented: “We are extremely pleased with the speed at which the ramp up of dissolving production is proceeding at our Fortress Specialty Cellulose Mill and are focused on achieving our planned production capacity as soon as possible. With the shipment of our first orders, we have demonstrated our ability to successfully produce dissolving pulp that meets the stringent specifications of our customers.”

SOURCES: Fortress Paper Ltd., and Marketwire

Fortress Paper Announces Increase in Previously Announced Public Offering of Convertible Debentures to $35 Million

Posted: Thursday, December 8th, 2011

Fortress Paper Ltd. (TSX:FTP) (“Fortress Paper” or the “Company”) is pleased to announce that, in response to strong investor demand, it has increased its previously announced bought deal public offering from $30 million to $35 million principal amount of convertible unsecured subordinated debentures (the “Debentures”) on the same terms as the previously announced offering. A syndicate led by Raymond James Ltd. and including Canaccord Genuity Corp., Dundee Securities Ltd., RBC Capital Markets, Scotia Capital Inc., TD Securities Inc., Cormark Securities Inc. and Acumen Capital Finance Partners Ltd. (collectively, the “Underwriters”) have agreed to purchase the Debentures at a price of $1,000 per Debenture. Fortress Paper has also granted the underwriters an over-allotment option to purchase up to an additional $5.25 million aggregate principal amount of debentures for a period of 30 days following closing to cover over-allotments.

The net proceeds of the financing will be used for repayment of debt, the funding of capital expenditures relating to the Fortress Specialty Cellulose Mill, working capital and general corporate purposes.

The offering is scheduled to close on or about December 22, 2011 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the Toronto Stock Exchange.

A preliminary short-form prospectus will be filed with securities regulatory authorities in all provinces of Canada.

Please refer to the press release issued by the Company on December 7, 2011 for further details with respect to the offering.

This news release shall not constitute an offer to sell or the solicitation of any offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities offered will not be and have not been registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) and may not be offered or sold in the United States except pursuant to exemptions from the registration requirements of the U.S. Securities Act and applicable state securities laws.

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 includes dissolving pulp produced at the Fortress Specialty Cellulose Mill.

SOURCES: Fortress Paper Ltd., and Marketwire

Fortress Paper Commences Dissolving Pulp Production and Provides Corporate Update

Posted: Monday, December 5th, 2011

Fortress Paper Ltd. (“Fortress Paper” or the “Company”) (TSX:FTP) announced today that it has commenced dissolving pulp production at its Fortress Specialty Cellulose Mill in Thurso, Quebec. The centerpiece of the project, a new state of the art pre-hydrolized kraft cooking plant, came on line successfully on Sunday. The commencement of dissolving pulp production signifies the successful completion of the conversion of the Fortress Specialty Cellulose Mill into a dissolving pulp operation.

Chad Wasilenkoff, Chairman and Chief Executive Officer of Fortress Paper, commented: “This is a momentous day in the history of Fortress Paper and a culmination of our work at the Fortress Specialty Cellulose Mill since acquiring the mill in April 2010. We are very proud to join the limited group of dissolving pulp producers in the world and look forward to completing our first shipments. We would like to thank all those involved in helping bring this project on line.”

Dresden Mill

The Dresden Mill continues to lead the non-woven wallpaper base market globally. The order book remains strong and its recent upgrades to improve speed and capacity have been successfully implemented. During the past few months, Fortress Paper in its normal course has been reviewing each of its business divisions and assessing all options as part of its strategy to enhance shareholder value. As part of this ongoing evaluation, management identified a potential divestiture opportunity relating to its non-woven wallpaper base division. Given the financial uncertainties and lack of financial confidence in the Euro zone, Fortress Paper management decided not to pursue any divestiture option for the Dresden Mill. With the support of its management team in Germany, Fortress Paper intends to continue to grow this business division organically and potentially through strategic acquisitions.

Landqart Mill

The Landqart Mill has continued to experience challenges throughout the fourth quarter as a result of a strong Swiss franc, high raw material costs, and less than optimal production efficiency on its paper machines. The company expects that these issues will continue to materially impact results of operations in the fourth quarter. The Company anticipates that it will overcome many of these challenges with the new banknote paper orders that have recently been placed at the mill and which represent a significant portion of the mill’s 2012 banknote capacity.

 

SOURCE: Fortress Paper Ltd., and Marketwire.

Financial Post Q and A with Fortress Paper CEO

Posted: Tuesday, November 22nd, 2011

Fortress Paper CEO looks for opportunity where others see problems, “Paper Profit”. The Canadian forest and paper products sector is far away from it’s peak. Companies have been hit hard by the financial crisis, penalized by the strong Canadian dollar, and crippled by balance sheets that are over leveraged. However, out of challenging times, emerges opportunity for Canadian business. Chad Wasilenkoff, CEO of Fortress Paper Ltd. — which operates a banknote business, a wallpaper business and a pulp mill and Financial Post reporter Jonathan Ratner sat down for lunch to discuss how he is capitalizing the market.

Q The economy is on everyone’s mind these days. Are your businesses equally sensitive to growth?
A Our banknote business generally could be considered recession-proof. Banknotes are growing at 4% per year and they’ve done that for decades. Even in a financial crisis there is a little bit of noise, but not very much. Countries used to change over their banknotes every 14 or 15 years, but with the advent of colour photocopiers, scanners and digital processing equipment, they are changing their series every seven or eight years. There is also quite a bit of growth globally in emerging economies. They are all moving up in income status, but they still buy their fruits, vegetables and sandals off street vendors. That means more and more ATM machines on street corners, which is actually a driver for our business.

Q What about the wallpaper business?
A We had a few bad months, but we found it was just our customers reducing inventory. They were uncertain, but once they ran out of product, they quickly came back and had to order more. Historical data show that wallpaper also happens to be somewhat recession-proof. During the recession, people were forced to stay in their existing homes a little bit longer. But they still want to improve their surroundings, so they are do more renovations.

Q What’s the status of your third business?
A We’re going through a major conversion to make dissolving pulp at the mill we bought in Quebec. It will be shipped over to China, go through more conversion processes, then ultimately be made into rayon. The finished product is a substitute for cotton. Typically, rayon trades at a premium to cotton because it is a better product. However, the cost structure is significantly lower than cotton, so there is always going to be some margin whether it is for us, or the rayon producers. We’ve actually pre-sold about 80% of our production — half on dissolving pulp spot prices and the other half on the rayon price. So wherever the margin goes, we’ll be sharing in it fairly consistently.

Q How do you deal with fluctuating commodity prices?
A While there are no synergies between the businesses, we end up with some natural hedges, which helps. For example, when cotton prices take off, it hurts our banknote business. But at the same time, our dissolving pulp — being a replacement for cotton — does exceptionally well. Similarly, as prices go up it’s great for our paper pulp mill, but it hurts margins at our wallpaper division. When cotton spiked at the start of the year, the specialized cotton we use in banknotes was up 350% in the course of four months. It is very, very difficult to try to maintain any margins when you’re bidding on a deal today, and you’re underwater by the time you get the cotton.

Q When you make a pitch to investors, how do you characterize Fortress?
A We’re a growth story and we’re very opportunistic. There are very few synergies between our different segments and businesses, but the similarities are that they have very high barriers to entry, a good macro environment in terms of the growth profile, and supply and demand drivers. I always look at the industry first, then I go and try to find the best assets available in the world. I’m always interested is growing out each of those divisions individually, but at the same time they are also for sale at all times.

Q What is your experience doing business in China?
A I have a strong focus on China. I have been doing business there for about eight years and go there at least once a quarter. But I learned some hard lessons during the first couple of trips. I went over with a Western business style, but never got those return calls. So I’ve since hired cultural coaches to help understand how the Chinese do business. It’s all about developing relationships and trust.

Q How did you break into the ultra-exclusive banknote business?
A It was by far the most challenging investment I’ve ever had to make. It is a very secretive industry. They obviously don’t want a lot of publicity or press in terms of people knowing what is going on with security features and things like that. You have to have clearance. Once we owned a mill and we were part of this closed group, people still didn’t like to talk. A lot of the companies have been around for decades and are still family-owned. The customers — national banks — are very slow, conservative and methodical. You may have a great product and the right price, but everything needs to be absolutely perfect and the timing must be right. Once we develop the relationship and help cultivate it, it is great business because it is very sticky. The national banks are reluctant to change once you’re their supplier.

Q What is the biggest misconception about this industry?
A Most of the forestry sector is going through tough times. They spent a lot of capital and they are high-cost producers, so it is difficult to compete. We get thrown in with forestry companies where everyone says nobody can make money. But we are one of these unique companies in that we are coming in late, picking up assets at next to nothing because nobody else is looking, then turning them around. We have a longer growth profile, so we are not in a hurry. We’re also always looking to be the lowest-cost producer in anything we get involved in, so we can ride out these trends. I don’t know when forestry is going to turn or come back in vogue — if it ever will — but in the meantime we have to be prepared for a long, hard slog through these different businesses.

SOURCE:

 

BBC Features Fortress Paper’s Banknote Facility

Posted: Friday, September 23rd, 2011

BBC News visited Fortress Paper’s facility in Landquart, Switzerland this week to learn about the process of making banknotes.

In a video featured in the BBC’s Business section, Marco Ziethen, the production manager at Landquart, takes reporter Lucy Burton through a step-by-step guide to manufacturing banknotes. From importing, refining and bleaching cotton, Ziethen showed how cotton gets turned into currency. Ziethen also explained how, as the paper is being made, security features are embedded in order to prevent counterfeiting of whatever currency is being produced.

The Landquart facility produces an astonishing number of banknotes each day, said the BBC.

“Each pallet has 18,000 sheets of paper on it. Each sheet will eventually be cut into 54 notes. That is an impressive 972,000 notes on each pallet. The mill runs 24 hours a day and it takes half an hour to make a pallet. So, overall, the mill can turn out around 46,656,000 notes per day,” Burton wrote. “If they are making 500-euro notes that day, the amount of money passing through these doors is simply mind-boggling.”

Vancouver-based Fortress Paper Ltd., has made significant strides in production since they began running the Swiss mill, going from “producing less than 1,000 tonnes of paper per year to 10,000 tonnes per year,” according to the BBC article.

Getting to this point, however hasn’t been easy. In another video posted on their site, Fortress Paper CEO Chad Wasilenkoff said the business provided some initial challenges.

“The banknote and passport industry is a very closed group of people,” he said. “A lot of the companies that are operating in this space have been operating since the 1500s or 1600s so we’re a fairly new entry into this.”

Getting reference orders and new contracts with national banks can be challenging, said Wasilenkoff, but Fortress has made some impressive in-roads acquiring large contracts with countries such as Switzerland to produce the Swiss franc – considered to be an industry standard in security.

In addition to these contracts, the banknote industry is one that is perpetually in flux. As technologies change, national banks have to keep updating security features on their banknotes to curb counterfeiting.

“Fortress hopes that the Landquart mill can help banks to ‘stay ahead of the curve’ and of course – make some money in the process,” Burton wrote.

Read the full BBC article and watch the videos HERE.

SOURCE:
BBC News: “How To Make Money From Making Money”

Leaders Magazine: “Making Money and Wallpaper”

Posted: Tuesday, June 29th, 2010

An interview with Chadwick Wasilenkoff, Chairman, Chief Executive Officer, and Director, Fortress Paper Ltd.

Editors’ Note: As Fortress Paper’s Chairman, Chief Executive Officer, and Director, Chad Wasilenkoff oversees the company’s production of security and other specialty papers. Most recently, Wasilenkoff was the Chief Executive Officer and Director of Titan Uranium Exploration Inc. from July 2004 to July 2006 and an independent private equity investor from October 2002 to January 2004. From 1997 to 2002, Wasilenkoff was an investment advisor and financial planner at Canaccord Capital Corp. He has a Bachelor of Arts degree from The University of British Columbia.

Company Brief: Fortress Paper is a leading international producer of security and other specialty papers and pulp. The company operates three mills: the Landqart Mill in Switzerland, the Dresden Mill in Germany, and the recently acquired Fortress Specialty Cellulose Mill in Thurso Quebec, Canada. Fortress Paper’s security paper includes banknotes, passport, and visa papers and its specialty papers include non-woven wallpaper base products and graphic and technical papers. Its specialty pulp business currently includes NBHK and the mill is undergoing a conversion to dissolving pulp for the textile industry in Asia. As an extension of its security papers business, the Landqart Mill has been actively developing and marketing innovative paper-based security products.

What did you see in the market that made you feel Fortress Paper would be successful?

My background is as more of a contrarian investor, so I always start from the bottom up. I was looking at the forestry sector – everything else was taking off, but this was still in a steady decline and had been for 12 to 15 years. So I evaluated pulp companies and commodity paper companies, and found these two niche paper mills that were world class in what they did. They had growth industries in both of their core products, but what they lacked was a strong and focused management team and growth capital. So that’s how we built the company.

What is produced at each of the mills?

Our German mill, located just outside Dresden, specializes in a non-woven wallpaper base. Most wallpapers are traditionally made from a regular kraft pulp, and that is what leads to the problem of trying to remove the paper. Because of that, the industry was going through challenging times. It had been in about a 10 to 12 decline, it has since steadied and been fairly stable and mature. The reason for that stability is because the industry got together and created this non-woven product where we put synthetic fibers into the paper. With those synthetic fibers, we get the strength characteristics and it becomes dry-stoppable. So now, once you’re able to pull a corner away, it comes off in one pull. While the overall wallpaper market is stable, this non-woven product is growing within it at about a 15 to 20 percent per annum growth rate, and we currently represent 50 percent of the world production of non-woven wallpaper.

The other mill is our Landqart mill, based in Switizerland, and it specializes in high-security paper. What we’re best known for is the banknote side of things. We’re the sole maker of the Swiss Franc, which is the industry standard – it is the currency by which all international banks measure themselves. It has more security features than any other currency in the world and one of the lowest counterfeit rates. It has never had a professional counterfeit attempt against it.

We also make the Euro for about 10 different countries, passports for dozens of countries, the entry visa sticker for India and China, and brand protection for companies like Rolex.

Our latest acquisition, Fortress Specialty Cellulose, was a shut down NBHK Mill in Thurso Quebec, Canada. We put together a plan to purchase the mill and convert it to a higher margin product, dissolving pulp, which is primarily used for producing rayon in Asia. Most of the financing for the $153 conversion was provided by the Quebec government.

What impact is new technology having on counterfeit issues?

Probably the biggest change in the global counterfeiting market has been the advancement of color photocopier standards. Now anybody can go onto eBay and buy regular home officer equipment and do a half decent job of counterfeiting. A lot of money goes into research and development and new technologies to try to make it as difficult as possible for these counterfeiters. Unfortunately some of these products are too successful and they get commercialized. For instance, the hologram that you typically find on a banknote, you can now buy holographic wrapping foil, and with a fairly rudimentary stamp, create your own hologram with that denomination on it. So while it was a spectacular feature when it began, it is slowly losing ground. They are now continuing to work on holograms to try to improve them, to make them a lot more complex and difficult.

What are your key priorities over the coming year to make sure the growth continues and the brand remains strong?

When I bought the company, I had a three-stage long-term plan: stage one was to change and focus on hiring and retaining good management; the second stage was dealing with internal or organic growth, and leveraging off our existing assets; the third stage was going external, so now it’s more of a focus on mergers and acquisitions.

In our industry, especially on the banknote side, cost is probably fifth or sixth on the list for national banks. It’s reputation first and foremost. It’s and industry that is not going to shift over to low-cost production regions. It’s just too important of a product worry about coming from a low-cost environment. So it’s about reputation, quality, new innovative products, high-security measures, and staying ahead of the counterfeiter. It’s such an important product that they’re willing to pay for a new world-class innovative technology and security feature. We’d like to find small companies that have these great products but can’t break into the banknote industry because it is so conservative. A lot of the printers or papermakers have been around for more than 300 years, so nobody wants to take a chance on a little supplier. We can take a small company that has a world-class product, and acquire it or do a joint venture or at least enable the security of that particular product, and we can launch it under our umbrella, giving it the reputation.

Do you see yourself in this business for the long term?

We have a lot to accomplish with Fortress Paper and one of our biggest challenges today is our share price. While our stock is currently undervalued, we are working to ensure that our shares trade closer to the industry averages that will enable us to make creative acquisitions that increase our reach and technological acumen. At some point in the foreseeable future, I am likely to relinquish the CEO title but stay on Chairman and a happy shareholder.

From Leaders Magazine, Volume 33 Number 3.

BC Business: “Outside The Box Business Strategies”

Posted: Tuesday, June 29th, 2010

When life deals you pulp, you make cellulose. Learn how to recognize business opportunities, then reach out and grab them.

Any business needs a coherent strategy if it hopes to succeed. However, in a climate where marketplace and financial changes are becoming ever more rapid, clinging mindlessly to a strategy can be a recipe for disaster. Simply put, companies today must be more agile in their thinking to take advantage of business opportunities that may present themselves.


The Problem

North Vancouver’s Fortress Paper Ltd. has carved out a good and growing business niche since it began in 2006. That’s when CEO and chair Chadwick Wasilenkoff bought separate paper mills in Germany and Switzerland to produce specialty papers: security paper used in banknotes, passports and visas; and specialty papers such as non-woven wallpaper-base products and graphic and technical paper. But in 2009, the crushing downturn in the overall forestry industry threw an opportunity at Wasilenkoff that would move the company in a completely different direction. He had to decide: should Fortress stick with successful execution of a strategy or take advantage of an opportunity?


The Solution

Wasilenkoff has always approached business as an investor instead of as a manager, and so he applied solid investment principles in order to reach his decision. One of the primary ones, he believes, is that “it’s better to be lucky than good.” 


When Toronto’s Fraser Papers, which made printing and publishing papers, became a victim of the recession and filed for creditor protection in June 2009, Wasilenkoff started looking at its assets, especially Fraser’s shuttered hardwood pulp mill in Thurso, Quebec. The mill drew Wasilenkoff’s interest because it had the perfect technology for an idea he’d been playing with for some time: the conversion of hardwood pulp to dissolving cellulose, a commodity that was being sought by Asian textile producers. As the price of cotton soared, Asian textile companies wanted to replace it with rayon, which is derived from dissolving cellulose. 


Wasilenkoff decided the opportunity was too good to pass up and went for it. He formed a subsidiary that obtained the Thurso mill for the fire-sale price of $1.2 million. After a $153-million conversion, it will switch from producing northern bleached hardwood kraft (NBHK) pulp to dissolving cellulose. 


Wasilenkoff brought Quebec on board by providing jobs for union workers who had been laid off since the mill closed. The Quebec government was only too happy to lend him the funds needed for the conversion. Also, the Quebec and federal governments were willing to help fund a green 25-megawatt co-generation power plant fueled with wood waste and other biomass. 


The mill will begin turning out dissolving cellulose in 2011, but in the meantime Fortress also got lucky. The NBHK market, which was in a severe downturn, turned up because of factors such as the Chile earthquake and a strike in Sweden. Suddenly, the plant that was closed because of low NBHK prices was turning a profit that will continue during the conversion.


Lessons

• Get out of the groove. People tend to get caught up in groupthink. Wasilenkoff could see an opportunity because he takes a contrarian and long-term view of his and other industries. 


• Think like an investor. Fortress earlier moved into wallpaper because a new method had appeared that made it profitable. Wasilenkoff determined that the Thurso mill was low risk and high return. 


• Don’t drink the Kool-Aid. Look at everything around you from many angles. Wasilenkoff was able to make his decision because Fortress wasn’t a typical forest products company, which is usually concerned more with cost-cutting than its product mix.

By Tony Wanless for BC Business. July 7, 2010.

SOURCE:
BC Business: “Outside The Box Business Strategies”

VIDEO: Chad Wasilenkoff Interviewed on First Business

Posted: Thursday, April 8th, 2010

First Business, a nationally syndicated television show, interviewed Fortress Paper CEO Chad Wasilenkoff. Learn why investors should pay attention to the specialty paper business and how Fortress Paper plans to power thousands of homes with a new green energy initiative.