FGE.to - Fortress Paper (formerly FTP.to)

[alertmeipp]

Slide under 7 on light volume. Still no buyback.  :'(

[tombgrt]

Answering here:

 

I'm in the latter camp as well. Love the price action on this little news release. More please!

 

tombrgt, are u still holding on to your FTP shares? Are u adding?

 

I (sadly) held most all the way down. If I had sold all my FTP shares and then just invested them in the rest of my holdings I would have made back that loss and then some. Loss aversion etc... At current prices I'm not interested in selling.

Luckily FTP didn't leave me crippled long because of incoming savings. I'm up 90%+ on the rest of my portfolio this year and believe it could go higher with some additional luck. I can leverage because I do hold some cash and can save at a fast rate.

 

I was on a four day holiday so I'll translate the article later.

[giofranchi]

I'm up 90%+ on the rest of my portfolio this year and believe it could go higher with some additional luck.

 

Very well done, tombgrt! ;)

Despite your recent successes, I would proceed with at least some caution… Do not ever forget:

Any man can make a dollar, but it takes a wise man to keep it!

Cheers!

 

giofranchi

 

[tombgrt]

Good point gio. I'm aware and try to keep it in the back of my mind. I hope watching 2008-2009 unfold and the ftp debacle have learned me something about the ever-present risk in investing (and even life).

[Liberty]

Did something leak about the cogen? Up over 5% and can't seem to find news.

[jeffmori7]

Did something leak about the cogen? Up over 5% and can't seem to find news.

 

I don't know, but for sure I thought we would have hear about it by now...quite disappointed with the lack of news on this front...again...

[alertmeipp]

Actually, other than the cogen, they may have something for LSQ as well.

On top of that, we may hear back from China as well.

 

 

[Liberty]

Both debentures have been moving up, now trading at $81 and $76, with some relatively high volume days lately.

 

The more I'm thinking about it and the more I believe that management has decided to start the buyback there. They probably feel it's more prudent because it immediately reduces their interest expenses, and if things work out well, it'll be the equivalent of having bought back shares (since the debentures are convertible into equity, though at prices much higher than today's).

 

I wish they would buy back the common too, though.

[muscleman]

Both debentures have been moving up, now trading at $81 and $76, with some relatively high volume days lately.

 

The more I'm thinking about it and the more I believe that management has decided to start the buyback there. They probably feel it's more prudent because it immediately reduces their interest expenses, and if things work out well, it'll be the equivalent of having bought back shares (since the debentures are convertible into equity, though at prices much higher than today's).

 

I wish they would buy back the common too, though.

 

Hi Liberty,

    I just started reading FTP. It sounds like you started buying around the $20-30 range. Are you still holding or adding to the position?

    I haven't done much research here, but this company has been losing money for two straight years. Now that the Securities paper business has been sold, the only business remaining is the dissolving pulp business. What is the thesis here? Are you expecting a turnaround?

 

 

Thanks!

MM

[Liberty]

Hi Liberty,

    I just started reading FTP. It sounds like you started buying around the $20-30 range. Are you still holding or adding to the position?

    I haven't done much research here, but this company has been losing money for two straight years. Now that the Securities paper business has been sold, the only business remaining is the dissolving pulp business. What is the thesis here? Are you expecting a turnaround?

 

Hey Muscle,

 

My cost average is about 20. I could've brought it down by buying more, but I felt I had put enough money into the idea.

 

Basically everything that could go wrong went wrong, delay after delay, DP prices going down, the Euro driving up the Swiss Franc and eating Landquart's margins, etc... Only Dresden stayed a rockstar through the years. For most of these, I'm not blaming management (at least not entirely -- I've written about that previously), which is why I still have enough confidence in them to hold. Maybe that's a mistake?

 

Thesis at this point is to be patient and wait for Thurso to be ramped up with cogen running. No sense in even considering doing anything before then.

 

I still believe that with a fully ramped up Thurso and slightly more rational DP prices (where a big chunk of the industry isn't losing money), this could be worth multiples of what the market is pricing it at right now. I see the downside as quite limited now that they have lots of cash on the balance sheet (from the sale of Dresden) and that Landquart is close to break even. All that's left is to finally get Thurso going for real (and LSQ is an option at this point, they might never do anything with it, or partner up with someone else, we'll see).

 

I certainly don't have the confidence in the business that I used to have because of all that's happened since, but then, the question always is, is that more than priced in? The problems we've seen would've been a lot more worrying at $40 than at $7. So I try not to anchor on my average cost and just look at what's the best decision going forward. Right now, I believe it's to be patient; I don't want to be the guy who held for years and then sold right before operations reach escape velocity.

[Myth465]

The thesis in a nut shell, is you cant keep insetting losing hands and at some point they have to catch a break.

They are on the cusp of massive cash flow, and if it happens holders buying at $6 and $7 will make a lot of money.

 

You can hold your underwater shares and continue to watch. You know the story, and are in the 6th inning. A guy with a hell of a lot more on the line (The CEO) is working to get there, and you can step in and buy under$10 after the turn. If the turn happens you make a lot of money, if not you lose your equity investment, but you know the story and have the knowledge and can act much faster then someone who isnt up to speed.

 

So now we wait....

[no_free_lunch]

My take on it is it's all based on the price of DP, which is affected by the price of cotton, which is affected by ag prices in general due to subsitution effects.  So it is basically a very leveraged bet on what you see happening with crop prices.  Of course there are a lot of other paths and caveats.  The currency unit in switzerland, chinese government tarriffs, etc. but that is what I simplify it down to.  Agriculture.

[lessthaniv]

The farm bill saga is ridiculous.

[Liberty]

The farm bill saga is ridiculous.

 

Can you elaborate on what you mean here?

[lessthaniv]

The farm bill is about to expire on Sept 30th. It actually expired last year and in the wee hours before expiry was extended into 2013. It has implications for the cotton market. The cotton market is one of the most heavily subsidized exports. Brazil made a WTO challenge years ago and won. The US subsidies are not compliant with WTO guidelines. So, US taxpayers have been paying $150M annually to Brazil farmers (hush money to some extent) until a new WTO compliant farm bill gets passed. A new farm bill should reduce the subsidies and therefore supply. Oxfam estimated a 10%-15% climb in cotton prices.  But the Republicans/Democrats keep kicking their bipartisan can down the road. The republicans submitted a bill proposing to cut back the food stamps program which Obama will obviously veto. The two sides are miles apart. Meanwhile, US taxpayer money spills out the country. And I'm Canadian!

 

Edit:

Here is a good paper on the subject.

 

http://www.law.illinois.edu/bljournal/post/2012/02/02/United-States-Last-Option-in-Cotton-Dispute.aspx

 

 

[Liberty]

Thanks! I knew a little bit about that, but definitely sounds worth digging deeper (not that it's something we have any control over, but interesting nonetheless...).

[muscleman]

My take on it is it's all based on the price of DP, which is affected by the price of cotton, which is affected by ag prices in general due to subsitution effects.  So it is basically a very leveraged bet on what you see happening with crop prices.  Of course there are a lot of other paths and caveats.  The currency unit in switzerland, chinese government tarriffs, etc. but that is what I simplify it down to.  Agriculture.

 

So if the crop prices goes down, it will be good for FTP, and if it goes up, it will be bad?

[lessthaniv]

My take on it is it's all based on the price of DP, which is affected by the price of cotton, which is affected by ag prices in general due to subsitution effects.  So it is basically a very leveraged bet on what you see happening with crop prices.  Of course there are a lot of other paths and caveats.  The currency unit in switzerland, chinese government tarriffs, etc. but that is what I simplify it down to.  Agriculture.

 

So if the crop prices goes down, it will be good for FTP, and if it goes up, it will be bad?

 

The basic relationship is cotton to dissolving pulp. If cotton prices rise the textile market tends to substitute with things like rayon thereby lifting DP prices. But other crops are important too. For instance, high corn or soybean crop prices results in less cotton plantings as farmers chase the more lucrative crops.

[OptsyEagle]

Better late then never.

 

http://finance.yahoo.com/news/fortress-paper-provides-corporate-130000902.html

 

20.25 MW per hour.  I think the objective was only 18.8MW, so that is very nice to see.

[Liberty]

Better late then never.

 

http://finance.yahoo.com/news/fortress-paper-provides-corporate-130000902.html

 

20.25 MW per hour.  I think the objective was only 18.8MW, so that is very nice to see.

 

Good to see that they did install it on Sept. 16 after all and just didn't announce it until now because of the 100-hour test issues (though what's most important is that the cogen operates well, and 94 + 71 hours is a pretty good indication that it does, if they had to stop for issues unrelated to it, as they say. I just hope the unrelated issues are normal ramping up tweaks and not more serious problems).

 

The LSQ stuff is not surprising since they are not on the original timeline anymore. If the do go forward with LSQ, it would certainly be nice if they could increase the cogen contract to 42 megawatts (a 23.5% increase).

 

The logistics cost-cutting and efficiency tweaks were mentioned on the last CC. Good to hear they're making progress.

 

"Inventories at the FSC Mill may also increase as a result of the uncertainty caused by MOFCOM's investigation resulting in Chinese buyers suspending purchase orders for dissolving pulp."

 

This is a bit more worrying. You never know what can happen with political decisions... But as previously discussed, if the Chinese are rational about it, they won't hurt their much larger textile industry to help their smaller DP industry. This should be especially true if, as some have said, the Chinese were confused between specialty DP pricing and commodity DP pricing...

 

I'm a bit puzzled at the lack of market reaction to these news, but oh well, what matters is they're getting operations ever closer to the point where Thurso is fully ramped up with a fully contributing cogen.

[alertmeipp]

Better late then never.

 

http://finance.yahoo.com/news/fortress-paper-provides-corporate-130000902.html

 

20.25 MW per hour.  I think the objective was only 18.8MW, so that is very nice to see.

 

Good to see that they did install it on Sept. 16 after all and just didn't announce it until now because of the 100-hour test issues (though what's most important is that the cogen operates well, and 94 + 71 hours is a pretty good indication that it does, if they had to stop for issues unrelated to it, as they say. I just hope the unrelated issues are normal ramping up tweaks and not more serious problems).

 

The LSQ stuff is not surprising since they are not on the original timeline anymore. If the do go forward with LSQ, it would certainly be nice if they could increase the cogen contract to 42 megawatts (a 23.5% increase).

 

The logistics cost-cutting and efficiency tweaks were mentioned on the last CC. Good to hear they're making progress.

 

"Inventories at the FSC Mill may also increase as a result of the uncertainty caused by MOFCOM's investigation resulting in Chinese buyers suspending purchase orders for dissolving pulp."

 

This is a bit more worrying. You never know what can happen with political decisions... But as previously discussed, if the Chinese are rational about it, they won't hurt their much larger textile industry to help their smaller DP industry. This should be especially true if, as some have said, the Chinese were confused between specialty DP pricing and commodity DP pricing...

 

I'm a bit puzzled at the lack of market reaction to these news, but oh well, what matters is they're getting operations ever closer to the point where Thurso is fully ramped up with a fully contributing cogen.

 

There is NOT much in the PR for the market the react. The cogen is closer buy not done. Nothing on LSQ. I don't care if that's 42MWh or 2MWh there, show us a partner or just shut it down. The MOFCOM piece is nothing but the mention of Chinese buyer hesitating is negative obviously.

[jeffmori7]

There is currently an important public consultation on energy issues in Quebec, and while reading the different documents, I found this one, prepared by Fortress :

 

http://consultationenergie.gouv.qc.ca/memoires/20130910_041_Marco_Veilleux_M.pdf

 

It is in French, sorry, but to summarize, it is asking the Quebec province to take into account the importance of natural gas supply over fuel oil for the future LSQ project.

[Liberty]

There is currently an important public consultation on energy issues in Quebec, and while reading the different documents, I found this one, prepared by Fortress :

 

http://consultationenergie.gouv.qc.ca/memoires/20130910_041_Marco_Veilleux_M.pdf

 

It is in French, sorry, but to summarize, it is asking the Quebec province to take into account the importance of natural gas supply over fuel oil for the future LSQ project.

 

Thanks. Expected savings of 4.6m/year at LSQ if they can go forward with this. I know they also mentioned that using nat gas at Thurso was a possibility and could reduce costs there (and probably much easier to do than get gas in a CNG or LNG form up to LSQ... savings might proportionally be higher since probably no need to build CNG/LNG hardware).

[lessthaniv]

Page 1 

 

1

 

Public consultation on energy issues in Quebec

 

September 10, 2013

 

Lebel-sur-Quévillon

 

Reference Energy

 

1.  Fortress

 

Cellulose Fortress Global Ltd. is the company that has a

 

memory for its plant in Lebel-sur-Quévillon.  The company

 

is wholly owned by its parent company under the name

 

Fortress Paper Ltd..  Publicly traded company under the sign

 

FTP.TO.

 

2.  Goal

 

The main reason Fortress Global Cellulose

 

This is a memory to ensure that the commission is

 

capture the importance of having an alternative energy other

 

that of heavy fuel oil (# 6) for the operation of its plant

 

Lebel-sur-Quévillon.

 

The alternative to heavy fuel oil that we

 

considering is the use of natural gas.  Given that

 

plant Lebel-sur-Quévillon does not receive pipeline, it

 

becomes imperative that the region of Nord-du-Québec sees equip

 

 

--------------------------------------------------------------------------------

 

Page 2 

 

2

 

a supply liquefied natural gas option or

 

compressed.

 

The closest point served by the distribution network

 

natural gas is located in Val D'or, which at first glance seems

 

a possibility.  Against the installation by a station or to

 

liquefied or compressed gas is currently

 

commercially impossible.  The constraint being the capacity of the

 

distribution of natural gas that could Abitibi

 

meet the needs of our operations.

 

3.  Issues

 

a.  Economic

 

The plant in Lebel-sur-Quévillon consume nearly 24 million

 

liters of heavy fuel oil per year.  There is reason to believe that 90% of

 

This volume may be replaced by natural gas.

 

The majority of this volume is used in the lime kiln, the

 

biomass boiler and the waste heat boiler.

 

Only two fuels can be used so

 

Economic: gas or heavy oil.  The substitution of oil

 

heavy with natural gas could generate savings of 6.5

 

million if the distribution network served our

 

site.  As the option of connecting to the network

 

unlikely possibilities were evaluated.

 

There is a possibility of using compressed gas requiring

 

investment in a master station compression

 

 

--------------------------------------------------------------------------------

 

Page 3 

 

3

 

the order of 2 to 3 million dollars.  Deliveries would be made ​​by

 

trucked to the plant from the site of the master station.  This

 

how to do already exists in the Maritime provinces.  With this

 

Fortress Global Cellulose scenario estimates that for its plant

 

Lebel-sur-Quévillon, savings could be near

 

$ 4.6 million annually always comparing with the

 

HFO using the region as Taschereau point

 

connection (600 km).  Any improvement in the capacity

 

the current distribution network to bring the point

 

connection, improves the economic model.

 

The advantage of natural gas prices has a significant impact on

 

companies' ability to withstand the competition and enter

 

more export markets.

 

The savings in energy costs contribute to

 

job creation, and also collective wealth.

 

b.  Environment

 

Natural gas emits virtually no particles

 

cause acid rain and smog.

 

Natural gas emits 32% less greenhouse gases and reduces NOX to

 

73%.  In addition, emissions of SO2 are 99% lower

 

that HFO.

 

For purposes of recall, Quebec is the province that consumes

 

more heavy oil in Canada, according to Statistics Canada.

 

 

--------------------------------------------------------------------------------

 

Page 4 

 

4

 

c.  Regional

 

The network coverage is currently limited.  This

 

stems from the fact that the distribution of natural gas service

 

regulated by the Régie de l'énergie public.  This ensures that

 

new deployments are sufficient to avoid

 

rate increases to existing customers.

 

Potential users are already established in the region are

 

disadvantage compared to other regions with access

 

natural gas because they can not benefit from

 

savings resulting from the use of gas

 

natural.

 

For example, the pulp mill St-Felicien will access gas

 

natural to lower energy costs.

 

The absence of natural gas also means that some

 

commercial and industrial establishments are in

 

other locations which hinders the development of the regions

 

unserved.

 

Quebec will stand at the economic level and

 

Environmental promoting the use of the gas network

 

or facilitating the development of a die

 

supply liquefied natural gas or LNG gas

 

CNG compressed.

 

 

--------------------------------------------------------------------------------

 

Page 5 

 

5

 

4.  Cost of Energy

 

Different opinions suggest that there is an abundance of natural gas and

 

This surplus will still be available for many years.  This

 

the effect of keeping costs down.  For HFO much

 

speculation and uncertainties in prices.

 

5.  Requests and recommendations

 

The preferred option would be the installation of a gas pipeline to serve the

 

region, but we are aware that the implementation costs

 

would be very important make this option unrealistic.

 

The Régie shall promote, in the short term, the construction of a

 

network master station to compress the gas so that it

 

latter to be routed to users within 200

 

300 Km

 

As part of a coordinated energy policy, the Québec

 

should see the passage of heavy fuel oil to natural gas as a

 

step towards the gradual migration of users to energy

 

green.

[LongTerm]

Cogen up and running .... finally!

 

http://finance.yahoo.com/news/fortress-paper-announces-completion-cogeneration-123000067.html

 

but no movement in the share price. Maybe nobody cares! That would be a positive indication it seems to me.