Posts Tagged ‘thurso’

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”

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.

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 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.

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