Fortress Paper Ltd. (TSX:FTP) www.fortresspaper.com (“Fortress Paper” or the “Corporation”) announces the signing by its wholly-owned subsidiary Dresden Papier GmbH (“Dresden”) of a loan agreement for EUR 18.5 million (CDN $26.5M) with GE Capital Bank AG in connection with the rebuild of Landqart AG’s (“Landqart”) papermachine no. 1 (“PM1″) to produce banknote papers. The loan agreement is for a 7 year term, fixed for the first 3 years at 7.09% per annum beginning after final drawdown which is anticipated to be early 2011. During the drawdown period, interest only payments will be required at 6.20% per annum.
The Dresden loan in conjunction with the previously announced Dresden factoring agreement for up to EUR 12 million, the Landqart factoring agreement to be finalized together with cash on hand will provide the necessary financing and cashflow for the rebuild of the PM1 machine. The rebuild increases Fortress’ banknote production capacity from the current 2,500 tonnes per annum to approximately 10,000 tonnes per annum.
PM1 is currently utilized for lower margin specialty papers and low to medium security papers. The rebuild is expected to be completed by the end of 2010, with banknote papers production from this rebuilt machine scheduled to begin in the first quarter of 2011.
MarketWire: Fortress Paper Announces Signing of EUR 18.5 Million Loan for PM1 Rebuild