Posts Tagged ‘fortress paper’

Chad Wasilenkoff Nominated as one of BNN’s Top Newsmakers 2010

Posted: Wednesday, December 22nd, 2010

Chad Wasilenkoff, CEO of Fortress Paper Ltd., made it onto BNN’s Top Newsmaker of the Year 2010, a list that recognizes game-changing business leaders in Canada.

Wasilenkoff was acknowledged this year for picking up the bankrupt pulp mill in Thurso, Quebec and acquiring Optical Security Assets from the Bank of Canada, a division that makes security threads for paper money. His original $2-million investment in Fortress is worth 80 million today, and his stock is up 300% over the last year.

Saskatchewan Premier Brad Wall was chosen as the Top Newsmaker of 2010 for his role in the tabled hostile takeover of Potash Corporation by BHP Billiton.

Source:

Broadcaster: “BNN Names Brad Wall as Year’s Top Business Newsmaker”

Leader Post: “BNN names Premier Brad Wall the Canadian Newsmaker of the Year”

BNN’s Brett Harris Highlights Fortress Paper on “The Close”

Posted: Thursday, December 9th, 2010

Brett Harris, Western Bureau Chief for the Business News Network, discussed Fortress Paper’s recent acquisition in an interview yesterday.

The acquisition of the Bank of Canada’s division of Optical Security Material was described by Brett as a “relatively small, but pretty interesting one.”

According to Brett, the purchase will lower costs for Fortress and make them more competitive.  They will be able to produce something themselves that they had to go elsewhere to buy in the past, which in turn will allow them to push forward with their business.

Stay tuned for more information on the acquisition.

Fortress Paper Announces Acquisition of Optical Security Assets From the Bank of Canada

Posted: Wednesday, December 8th, 2010

VANCOUVER, BRITISH COLUMBIA — (Marketwire – Dec. 8, 2010)

Fortress Paper Ltd. (“Fortress Paper” or the “Corporation”) (TSX:FTP) announces the signing of an asset purchase agreement (the “APA”), by its wholly-owned subsidiary Fortress Optical Features Ltd., to acquire the assets of the Bank of Canada’s Optical Security Material (OSM) division (the “OSM Assets”), which produces the optically variable security material for the security threads contained in Canadian banknotes. The Corporation will be paying a purchase price of $750,000 for the OSM Assets and will be granting the Bank of Canada a royalty-free license to use the intellectual property sold to the Corporation for Canadian banknote applications.

Chad Wasilenkoff, CEO of Fortress Paper, commented, “We are very pleased to announce this new acquisition which will supplement our existing paper-based high security feature offerings and which we intend to market as a security feature to other banknote producers around the world. The OSM features will complement and enhance our Landqart Mill which is a leading producer of banknote paper and other paper-based high security solutions.”

The OSM Assets being acquired by Fortress Paper include certain patent applications and intellectual property rights to optical security features, unique security applications and substantially all of the production equipment and machinery currently used at the OSM division. In connection with this acquisition, Fortress has also secured the services of certain key members of the OSM team to maintain operational continuity and production quality following the purchase of the OSM Assets.

The closing of the APA, which is expected to be in early January, 2011, is subject to customary conditions. Following closing of the acquisition of the OSM Assets, the Corporation intends to relocate the OSM Assets to a new multi-million dollar high security production and research and development facility which the Corporation will be building adjacent to its Thurso Mill in Quebec (the “New OSM Facility”).

About Fortress Paper

Fortress Paper is a leading international producer of security and other specialty papers and products. Fortress 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 NBHK produced at 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 the Corporation’s completion of the APA, its ability to retain key members of the OSM team, its intention to relocate the OSM Assets to the New OSM Facility, the construction of the New OSM Facility and the expected effects of the acquisition on the business of the Corporation. 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 that the Corporation will successfully complete the APA, retain key members of the OSM team, complete construction of the New OSM Facility and successfully relocate and integrate the OSM Assets thereat, and that the OSM Assets will enhance the Corporation’s security paper business. Investors are cautioned that all forward-looking statements involve risks and uncertainties including, without limitation, those relating to changes in the market, potential downturns in economic conditions, foreign exchange fluctuations, regulatory requirements, competition, risks associated with the completion of the APA, the building of the New OSM Facility, that the Corporation will be able to implement its business plan in respect of the OSM Assets as planned or at all, that the acquisition will not have the expected effect on the Corporation’s business, 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. 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.

For further information please contact:

Fortress Paper Ltd.
Chadwick Wasilenkoff
604-904-2328
info@fortresspaper.com
www.fortresspaper.com

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

GLOBE AND MAIL: “Fortress Paper: Outside the Box, Crazy Like a Fox”

Posted: Wednesday, September 1st, 2010

Deep-value investor Chad Wasilenkoff continues to surprise

The first time Dan Buckle walked into the headquarters of Fortress Paper Ltd., he didn’t know what to make of it.

Located above a McDonald’s in North Vancouver, the dark, small office has no interior walls and features a pool table in lieu of a boardroom table. The first thing to greet visitors is a five-foot-tall wooden statue of Buddha.

“I remember walking in, ‘What the heck is this place?’ ” said Mr. Buckle, first an auditor of the company and now its finance director.

The operation, whose value has more than quadrupled to $360-million in the past year, is the brainchild of 38-year-old Chad Wasilenkoff, a deep-value investor who has made his latest fortune in Canada’s most unloved sector – forestry.

He’s in the midst of pulling off his biggest deal yet – resuscitating a dead pulp mill in Quebec. Scraping through the corners of the global bargain bin, he has a dozen more potential deals on the go, from Canada and China to Russia and South Africa, all in a mission to get his company to $1-billion in market capitalization.

Like other deep-value investors, Mr. Wasilenkoff searches for overlooked assets selling at great discounts. But deep-value investing can be a siren’s call: What looks like a deal can be a disaster.

So far Mr. Wasilenkoff has avoided missteps. When he started Fortress four summers ago, he spotted potential in pulp and paper, an area most investors shunned because of concerns over global overproduction. As a result, assets were available cheap.

“If [anything’s] 98 per cent off, I want two,” said Mr. Wasilenkoff in an interview over wings and beer at East Side Mario’s, a favoured haunt. He acknowledges it takes confidence to operate in areas most investors regard with alarm. “I can’t tell you how many times I’ve been called crazy. The more times I’m told I’m wrong, the more I know I’m right.”

He gets called crazy less often now. Joel Lusman, head of New York hedge fund Lusman Capital Management LLC, first heard of Mr. Wasilenkoff in early 2010. When the Quebec deal was announced, he quickly bought hundreds of thousands of Fortress shares. “This is one of the smartest deals I’ve ever seen,” Mr. Lusman said.

Mr. Wasilenkoff first made his name as a broker at investment bank Canaccord Capital in Vancouver, where he led a group of investors that took over a junior gold miner shortly before the price of gold doubled. He had another hit when he acquired a uranium asset when the price for that commodity languished.

After cashing out of uranium when its price spiked, Mr. Wasilenkoff started Fortress in 2006, putting up about $2-million of an $8-million private offering. His first moves at Fortress were to buy a banknote and security paper mill in Switzerland and a specialty wallpaper mill in Germany, both of which he viewed as poorly run, niche assets available at near fire-sale prices.

Within a year, he took Fortress public in a $46-million offering. But the stock languished – and then was sunk by the market crisis. By spring 2009, the price had fallen by nearly half from its IPO level.

Fortress’s decline was the kind that makes investors question an unconventional manager like Mr. Wasilenkoff, who favours ball caps and blue jeans as his working attire. Irwin Michael, head of a Toronto money manager that owns about 10 per cent of Fortress, fielded calls from his own investors about his stake in the company.

“You hear all these very descriptive four-letter words,” says Mr. Michael, who manages about $900-million at I.A. Michael Investment Counsel Ltd. “But we hung in. We had a lot of faith in Chad. [He’s] a workaholic, very methodical.”

By this past spring, when operating profit had doubled at the two mills, the stock too had doubled. And it was then Mr. Wasilenkoff sealed the Quebec deal. For $1.2-million, he bought a bankrupt pulp mill in Thurso, Que., a small town 50 kilometres northeast of Parliament Hill. The mill had once turned hardwood pulp into photographic paper, a business done in by digital cameras.

He saw another possibility. He has been a long-time believer in the potential of rayon, a fabric which is enjoying growing demand in Asia as a substitute for cotton, whose global production is in decline. Rayon is made from dissolving pulp and Mr. Wasilenkoff plans to make that dissolving pulp in Thurso.

“He’s not interested in the typical commodity game forestry usually falls into,” said analyst Daryl Swetlishoff at Raymond James. “He’s extremely driven, a very aggressive risk-taker, a grinder. Focused on value. And he’s not pretentious at all.”

Mr. Wasilenkoff figured he needed about $150-million to re-tool the mill. So he lined up veteran Quebec forestry executive Pierre Monahan to connect with the Quebec government. They eventually convinced Investissement Québec, an economic development company, to provide a low-interest loan of up to $102-million, allowing Fortress to make its plan work while putting up just $15-million of its own money.

In the five months since doing the deal, Fortress shares have doubled. Mr. Wasilenkoff’s original $2-million investment in Fortress is worth roughly $80-million today. He remains the company’s biggest shareholder.

He’s convinced more gains are ahead, but analysts at TD Newcrest say Fortress’s valuation might be stretched and worry about the pitfalls of trying to grow too quickly. RBC Dominion Securities said this month it is “very impressed” but added the share price now reflects the value Mr. Wasilenkoff has uncovered.

Mr. Wasilenkoff has always had an eye for value. In elementary school, he scooped up lost golf balls at a course near his childhood home in Calgary and resold them, soon buying and selling everything from Atari cartridges to Robert Bateman prints. He made enough to buy a used Porsche 911 for $15,000 in high school – which resulted in him being accused by a vice-principal of dealing drugs.

An investor since youth, Mr. Wasilenkoff initially wanted to get into property development. He ended up as a broker after getting a two-month temporary gig at Canaccord stapling stock receipts.

His early forays blew up, as he chased gold stocks in the Bre-X era, then got hammered by the tech-stock crash. Chastened, he embraced a deep-value philosophy in which he tried to build deals, rather than simply buying stocks.

What’s next is more deals – but Mr. Wasilenkoff , who previously insisted that he would only be at Fortress for a few more years and eventually start again from scratch, now gives some thought to sticking around longer. “There’s no guarantee that I’ll stop,” he said. “I am having a lot of fun.”

By Dave Ebner for The Globe and Mail. August 25, 2010.

SOURCE:
The Globe and Mail: “Fortress Paper: Outside the Box, Crazy Like a Fox”

Fortress Paper Announces $40,866,500 Bought Deal Offering

Posted: Tuesday, June 8th, 2010

VANCOUVER, BRITISH COLUMBIA–(Marketwire – June 8, 2010)

Fortress Paper Ltd. (“Fortress Paper” or the “Company”) (TSX:FTP), announces that it has entered into a financing agreement with a syndicate of underwriters led by Dundee Securities Corporation and including Jennings Capital Inc., Raymond James Ltd., and TD Securities Inc. (the “Underwriters”). Pursuant to the agreement, the Underwriters have agreed to purchase, on a bought deal basis, 1,739,000 common shares (“Shares”) of the Company priced at $23.50 per Share (the “Offering Price”), for total gross proceeds of $40,866,500 (the “Offering”).

The Company has agreed to grant the Underwriters an over-allotment option to purchase up to an additional 260,850 common shares of the Company at the Offering Price, exercisable in whole or in part, at any time on or prior to the date that is 30 days following the closing of the Offering. If the over-allotment option is exercised in full, the aggregate gross proceeds of the Offering will be $46,996,475.

Fortress Paper intends to use the net proceeds of the offering to finance certain capital expenditures relating to its Fortress Specialty Cellulose Mill in Thurso, Quebec and its rebuild of papermachine number 1 at its Landqart Mill, and for working capital and general corporate purposes.

The Offering is expected to close on or about July 9, 2010 and is subject to certain customary conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals, including the approval of the Toronto Stock Exchange and the applicable securities regulatory authorities. The offering will be made in Canada by way of a short form prospectus and may be made in jurisdictions outside of Canada on a private placement basis pursuant to prospectus and registration exemptions in accordance with applicable laws. The Company intends to file a preliminary short form prospectus relating to the offering with the applicable securities regulatory authorities in Canada in due course.

The securities being offered have not been, nor will they be, registered under the United StatesSecurities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any of the securities in the United States.

Fortress Paper Announces Equipment Purchase For Its Thurso Mill

Posted: Monday, June 7th, 2010

VANCOUVER, British Columbia, June 7, 2010 – Fortress Paper Ltd. (“Fortress Paper” or the “Corporation”) announces the signing of a purchase agreement by its wholly owned subsidiary, Fortress Specialty Cellulose Ltd. (“Fortress Specialty”) with Stora Enso Oyi Cellulose Inc. to acquire digesters, specialized process equipment and other ancillary equipment to be used in the conversion of its Thurso mill to produce dissolving pulp.

The agreement provides for a purchase price of Euro 3 Million (CAD $3.8Million) and includes the purchase and delivery of a complete displacement cooking plant consisting of 3 batch digesters, liquor accumulators and various associated specialty process equipment and piping.

Chad Wasilenkoff Chief Executive Officer of Fortress Paper, commented: “After spending a considerable amount of time assessing and evaluating the equipment, we are very pleased to be able to secure this equipment. This equipment has operated for only 12 years and we are confident of its quality and performance, which should result in a material reduction in our overall capital investment requirements for the conversion to dissolving pulp. We also believe that by acquiring almost an entire batch cooking system, we reduce the process risk for this transformation. At this time it is still too early to determine the impact this new equipment will have on the completion date.”

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.

NBHK Pulp Production Begins at Fortress Paper’s Thurso Mill

Posted: Tuesday, June 1st, 2010

VANCOUVER, BRITISH COLUMBIA–(Marketwire – June 1, 2010) – Fortress Paper Ltd. (“Fortress Paper” or the “Corporation”) (TSX:FTP) announces that its wholly-owned subsidiary, Fortress Specialty Cellulose Inc. (“Fortress Specialty”), commenced production and sale of NBHK pulp on May 28th. The mill reopened May 1st after being shut down by the former owner in early 2009.
Chad Wasilenkoff, CEO of Fortress Paper Ltd. commented: “The commencement of production at the Fortress Specialty Cellulose Mill marks the achievement of an important milestone at Thurso. 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.

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.

Financial Post: “Canadian forestry sector reseeds

Posted: Thursday, May 27th, 2010

Once-moribund industry sprouts new demand and higher share prices.

A the adage goes, the best time to plant a tree is 20 years ago; the second best time is now.

Ideally, investors planted their money into forestry early enough to see their money grow along with the recent surge in commodity and equity prices.

But the second best time to invest money smartly in the sector is now.

Over the past three years, Canadian forestry has suffered through one of the worst periods in its history. And for an industry already facing seasonal decline, there were several possible factors that could have aggravated the problem. Most of them came true.

In late 2006, the U.S. housing bubble popped, sparking what analysts have come to lament as the “lumber depression.”

In 2008, Canada’s forest, paper and packaging sector was the global industry’s worst performer, with the biggest companies accounting for half of the sector’s losses of US$8-billion. That year, Canada was the only country in the world to post a negative return on employed capital.

For companies focusing on building products, 2009 was no better. Severely curtailed demand drove about one-third of building material suppliers out of business, estimates Paul Quinn, a RBC Capital Markets analyst.

The supply chain is empty.

Extremely low inventory levels, when combined with even the modest uptick in demand in recent months, have sent market prices through the roof and the equities of Canadian forestry companies skyward.

The swift and stunning turnaround is evident in the share-price gains of industry leaders over the past year: Canfor Corp. and West Fraser Timber Co.’s have more than doubled to about $10 and $40, respectively. Shares of Fortress Paper Ltd. are up almost 400% to about $22. Now at about the $70-mark, Domtar Corp.’s shares have risen more than 650%. And Canfor Pulp Income Fund is trading at about $15, more than 11 times higher than in May 2009.

With much uncertainty in demand and prices, the challenge for investors is predicting which forestry stocks are poised to be cut down, having risen too far, too fast, and which still have room to grow.

The answer probably depends on investing style. Put money into lumber for long-term gains, says Daryl Swetlishoff, an analyst at Raymond James. For momentum traders looking to capitalize on inflated prices, pulp and paper are probably the best bet.

The fortunes of a Canadian lumber outfit are, of course, intimately tied to the fluctuations of the U.S. housing market. And in 2009, housing starts in the United States totalled 553,000, down almost 75% from the 2005 peak.

“In housing materials, it was really a depression,” Mr. Quinn says. Companies closed sawmills and curtailed production.

This year, a marginal increase in housing starts has combined with emerging demand in China to put some upward pressure on lumber prices.

But depleted inventories have been the true driving force, Mr. Swetlishoff says. “It’s more of a supply-side event.”

According to price tracker Random Lengths, the composite price for western spruce/pine/fir stands at about US$320 per thousand board feet, up more than 50% since the end of 2009.

“The big question in the building material space is: Are today’s high prices sustainable? And have the stocks gotten ahead of themselves?” Mr. Swetlishoff says.

With much variation in recommendations, most analysts monitoring lumber stocks have “hold” or “sector perform” recommendations on large solid-wood companies.

However, Mr. Swetlishoff says he believes those equities are currently trading at mid-cycle valuations and still have room to run. He has “outperform” recommendations on Canfor, West Fraser and International Forest Products Ltd.

“Our take is that if you’re looking at these stocks, it’s not for a six-month trade, because we see an emerging cycle in lumber products.”

Those less optimistic about the sector believe prices are due to fall and compress valuations.

“To the extent that forest-product stocks need ongoing lumber-price gains to outperform, we are doubtful that the recent spurt of share-price strength will persist,” said a report by Montreal-based think-tank BCA Research Inc.

The lack of consensus reflects a great deal uncertainty around market forces. The timing of the U.S. housing recovery is far from a sure bet, with some predicting a surge of shadow inventory from foreclosures and a double dip in prices.

But the price of lumber may be somewhat insulated from demand fluctuations by other supply constraints, including the destruction wrought by the mountain pine beetle, Mr. Swetlishoff argues.

“Until flying over the B.C. central interior and seeing nothing but red (dead) trees for hours, it is difficult to grasp the scale of the disaster that is the … beetle,” Mr. Swetlishoff said in a note.

Also, the reduction in capacity over the past three years is not immediately reversible, even though demand has picked up. And a strong loonie offsets some of the incentive to crank up production, despite the allure of high prices.

“While restarting mills is relatively easy, a strong Canadian dollar would prolong the lean supply backdrop. The latter raises the break-even cost of restarting Canadian mills and/or adding capacity, given that lumber is priced in U.S. dollars,” the BCA report said.

In fact, Mr. Swetlishoff goes so far as to apply the theory of peak oil to timber, predicting that a number of demand and supply factors will combine to produce a lumber “super cycle.”

That will lead to “sustained elevated pricing associated with structural supply deficits,” he wrote. On that front, he recommends International Forest as a small-cap pick, as well as West Fraser and Canfor.

While the peak lumber theory applies to the long term, Mr. Swetlishoff also predicts that the seasonal industry decline expected in the second half of 2010 will not push prices below break-even levels, and thus will not strip his stock picks as recommendations for deep-value investments.

Without the reliance on U.S. housing, pulp and paper companies were better able to weather the recession, but are still enjoying a recent run in prices due to supply constraints.

After a number of pulp mills closed last year, the earthquake in Chile wiped out about 7% to 8% of global capacity. Pulp is expected to hit US$1,000 per tonne soon, an increase of almost 60% since last May.

In that sector, Domtar has consistently beat earnings expectations, attacked its debt levels and recently announced the reinstatement of its dividend.

And even with big gains already realized, Domtar’s equity is considerably undervalued, Mr. Quinn says.

“Domtar’s our favourite story,” he says. “We love it.”

His share-price target is $100, well above Domtar’s current price of about $70.

“It’s balance sheet is underleveraged, it’s going to generate some significant free cash, almost $10 a share in our estimate in 2010,” Mr. Quinn says.

As a unique pulp and paper investment opportunity, Mr. Swetlishoff has a strong “buy” recommendation on Fortress Paper.

The B.C.-based producer of security and specialty papers recently acquired a hardwood pulp mill and converted it to a facility producing dissolving pulp, which is used in the production of rayon, a substitute for cotton with a large market.

“That is one I do not have to stress my model at all, and I get a lot of upside,” he said. “A lot of the other stocks I cover, I run pretty hard.”

In the wood-panel market, Norbord Inc. continues to garner “buy” recommendations on the strength of an extraordinary price environment for oriented strand board, whose price has soared to the highest levels in five years.

“At this price, they’re making lots of money,” Mr. Quinn says.

By: Tim Shufelt, Financial Post
Source: National Post

Fortress Paper Announces First Quarter 2010 Results

Posted: Tuesday, May 11th, 2010

VANCOUVER, British Columbia, May 11 2010 – Fortress Paper Ltd. (“Fortress Paper” or the “Company”) (TSX:FTP) reported adjusted net income of $3.0 million for the first quarter of 2010 on sales of $50.3 million or adjusted earnings per share of $0.30. In the first quarter of 2009 the Company reported adjusted net income of $2.5 million on sales of $46.6 million or adjusted earnings per share of $0.25. For the fourth quarter of 2009 the Company reported adjusted net income of $4.8 million on sales of $51.0 million or adjusted earnings per share of $0.47.

Analysis of Specific Items Affecting Comparability of Net Income

(thousands of dollars, except per share figures, unaudited) Q1 2010 Q4 2009 Q1 2009
Net income as reported 179 3,720 3,584
Foreign exchange loss (gain) 2,380 1,073 (1,055)
Deferred expenses written off 476 - -
Adjusted net income 3,035 4,793 2,529
Net income per share (EPS), as reported 0.02 0.35 0.35
Impact of above item per share 0.28 0.12 (0.10)
Adjusted net income per share 0.30 0.47 0.25

EBITDA was $5.8 million or 11.5% of sales for the three months ended March 31, 2010. For the three months ended March 31, 2009 EBITDA was $5.0 million or 10.8% of sales. EBITDA was $7.9 million or 15.4% of sales for the three months ended December 31, 2009.

In the first quarter of 2010 the Dresden mill continued to experience strong sales and earnings throughout the quarter. The Landqart mill results reflected the product mix during the quarter. The banknote paper machine remains full and the conversion of paper machine one from a specialty paper machine to a banknote paper machine is on track. The increase in EBITDA relative to the prior year comparative period was partially due to the global financial and economic crisis which impacted sales early in 2009.

EBITDA is defined as net income before interest, income taxes, depreciation, amortization, non-operating income and expenses and stock based compensation which the Company considers to be a key performance indicator. EBITDA is not a generally accepted earnings measure and should not be considered as an alternative to earnings or cash flows as determined in accordance with Canadian generally accepted accounting principles. As there is no standardized method of calculating EBITDA, the Company’s use for the term may not be comparable with similarly titled measures used by other companies.

Chadwick Wasilenkoff, chief executive officer of Fortress Paper, states: “This is an exciting time for the Company. The recently announced acquisition of the Thurso mill will diversify our specialty product mix and we believe will provide a significant financial contribution to Fortress’s growth aspirations. We plan to ramp up operations at the Thurso mill while we immediately begin the conversion into a dissolving pulp operation. The Dresden mill continues to perform extremely well, while the Landqart mill is experiencing results which are reflective of the current product mix of banknotes which offer lower margins.”

Selected Financial Information

The selected financial information presented herein is qualified in its entirety by, and should be read in conjunction with, our audited consolidated financial statements as at and for the year ended December 31, 2009 and the related notes thereon and our Management’s Discussion and Analysis filed on SEDAR.

Three Months Ended March 31, 2010
Selected Financial Information and Statistics

(thousands of dollars, except per unit amounts and shipments, unaudited) Q1 2010 Q4 2009 Q1 2009
Sales 50,304 51,049 46,623
EBITDA 5,808 7,885 5,032
Operating income 4,202 6,292 3,765
Net income 179 3,720 3,584
Basic EPS $0.02 $0.36 $0.35
Weighted average shares outstanding basic (thousands) 10,234 10,234 10,234
Diluted EPS $0.02 $0.35 $0.35
Weighted average shares outstanding diluted (thousands) 10,713 10,487 10,234
Shipments (tonnes
Landqart mill 4,287 3,673 3,721
Dresden mill 12,099 11,618 9,002
Total 16,386 15,291 12,723

Operational Results

Landqart produces various security and specialty papers. Security paper production includes banknote paper which results in varying degrees of EBITDA margin depending on the complexity of the features included. During 2008 Landqart also started producing non-woven wallpaper base. Included in Landqart’s sales number for the quarter ended March 31, 2010 is approximately 1,581 tonnes of non-woven wallpaper base. At the Landqart mill the order log for security papers remains stable.

At the Dresden mill, the wallpaper base market experienced continued strength throughout the quarter. Sales tonnage has increased relative to the prior year comparative periods and profitability remains solid.

Subsequent Events

On April 30, 2010 the Company completed the purchase of a northern bleached hardwood kraft pulp mill located in Thurso, Quebec from Fraser Papers Inc. through a wholly-owned subsidiary, Fortress Specialty Cellulose Inc. (“Fortress Specialty Cellulose”), for the net proceeds of approximately $1.2 million. The Company has announced the intention of converting this mill into a specialty cellulose (dissolving pulp) operation and to build a biomass-based cogeneration plant. The valuation of this acquisition for accounting purposes and the effect on the financial statements of the Company are still being determined.

Concurrent with this acquisition the Company finalized $102.4 million in project financing with a term of 10 years secured by the assets of Fortress Specialty Cellulose. Interest will be calculated at a fixed rate of 5.0% per annum for the first five years, followed by a rate of up to 5.5% for the remaining 5 years.

Also concurrent with this acquisition Fortress Paper issued a $15 million convertible debenture to a financial institution. 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 the holder into common shares of Fortress Paper at any time at a conversion price equal to $20.00 per share. Fortress Paper can redeem the debenture, in whole or in part, at any point after two years at a conversion price of not less than $25.00 per share.

The Company

Fortress Paper is a leading international producer of security and other specialty papers. The Company operates two paper mills, the Landqart mill located in Switzerland and the Dresden mill located in Germany. The Company’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.

Conference Call

A conference call to discuss the financial results for the first quarter 2010 will be held on May 12, 2010 at 8:00 a.m. (PST). To attend the conference call, please dial one of the following numbers:

North America: 1-877-353-9586

International: 1-403-532-8075

Participant pass code: 90198#

A replay of the conference call will be available for 7 days. To access the replay, listeners may dial 1-877-245-4531 from North America or 403-205-4531 International. The pass code to access the replay is 347381#.

For more information, please contact

Fortress Paper Ltd.
Mr. Chadwick Wasilenkoff
Chief Executive Officer
604-904-2328

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.”