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

[jeffmori7]

Chad is probably not happy with the results either..but the long-term thesis is not broken yet..it's all about execution now..and a strong correlation to the DP princing.

[alertmeipp]

Chad is probably not happy with the results either..but the long-term thesis is not broken yet..it's all about execution now..and a strong correlation to the DP princing.

 

The problem is without the floor on DP pricing, a further dip in DP pricing can create lots of disruptions to the business and Chad may need to do fire sale to see LT thesis play out.

 

 

[jeffmori7]

Chad is probably not happy with the results either..but the long-term thesis is not broken yet..it's all about execution now..and a strong correlation to the DP princing.

 

The problem is without the floor on DP pricing, a further dip in DP pricing can create lots of disruptions to the business and Chad may need to do fire sale to see LT thesis play out.

 

Yes..do they have the balance sheet to wait for the chinese plants to go out of business before them..that's the danger.

 

If it wasn't of Landquart..it would have been ok I think, but now...

[alertmeipp]

Re: Landqart

 

Can someone give me a history of Landqart? How does Fortress end up having it?

 

What does it take to make it become a profitable business? During the call, they were mentioning they are confident to get more order... but the message I got was it will just lose less money...

 

I saw some reports saying that may sell it? but with its lost, who will spend a dime on it?

 

[OptsyEagle]

A Pulp & Paper Canada article on Fortress Paper.

 

http://www.pulpandpapercanada.com/news/fortress-working-out-the-bugs-at-thurso/1001825926/?ref=rss&ctid=1001825926

[alertmeipp]

So, is that how you guys look into this? what other variables you consider?

 

 

Using $80M EBITDA @ average $1100/ton, and each $100/ton = 20M for 200,000 ton capacity

 

@2015 with 450k ton capacity (assume cash cost of ~700)

 

DP @1300 

 

EBITBA will be 160M+80M+50M (wallpaper sub)+40M (co-gen) - 25M (cap ex. + admin) - 30m (banknotes drag) = 275M x  4 multiples = 1.1 billions

 

Say by then debt is 300millions, and share count 20 millions

 

That's ~$40.

 

 

DP@$900

EBITBA will be 160M-80M+50M (wallpaper sub)+40M (co-gen) = 170M  - 55M = 115 x  4 multiples = 460M

 

160M / 20 = 8$

 

 

 

[OptsyEagle]

The TSX reported that an insider of Fortress Paper purchased 7000 shares on Wednesday.

 

 

http://www.tmxmoney.com/HttpController?GetPage=SearchInsiderTrade&Language=en&Submit=Submit&QuerySymbol=ftp&x=49&y=23

 

Toronto Stock Exchange

Company Name : Fortress Paper. Last Updated: November 7, 2012

 

Insider Buy Volume and Dollar Amount

11/07/2012  FTP 7,000 $49,824.00

 

 

(Note: The above link will refresh with new data daily)

 

[OptsyEagle]

Looks like it was Kurt Loewen who bought 5000 shares and Dan Buckle bought 2000 shares.

 

http://canadianinsider.com/node/7?ticker=FTP

 

Not a lot of shares but I doubt Kurt would throw $35,000 at it if he, like current investors, thought that it was "check-mate" for Fortress Paper.

[OptsyEagle]

The TSX reported on Friday, of another purchase by an insider of Fortress Paper.  This time it was 400 shares.

 

http://www.tmxmoney.com/HttpController?GetPage=SearchInsiderTrade&Language=en&Submit=Submit&QuerySymbol=ftp&x=49&y=23

 

Toronto Stock Exchange

Company Name : Fortress Paper. Last Updated: November 9, 2012

 

Insider Buy Volume and Dollar Amount

11/09/2012 FTP 400 $2,800.00

 

(Note: The above link will refresh with new data daily)

 

[triedtestedand]

And a British tabloid (The Independent) has Chad mulling a spin-off?

 

http://www.independent.co.uk/news/business/news/currency-printer-set-to-rival-british-firm-in-london-8303491.html

[jeffmori7]

HUmm..who would want to buy Landquart? According this article, it is worth 300M$ alone?

 

I always thought Fortress would sell Landquart..never thought about a spin-off though..not sure what to think about it!

 

 

IN the case of a spin-off, would a new conglomerate Fortress keep some shares in the new entity?

[triedtestedand]

Jeffmori7:

 

My read of the article is that the combined Dresden+Landqart would be targeted for the $300M valuation.  Landqart is definitely not worth that alone (Dresden possibly though?), and I could not see it getting floated by itself.  It would definitely need to show way more rehabilitation for that, and even then it is too small to attract much interest.  But if any litigation threat is gone (i.e. $1.3M charge in Q3 results to resolve a customer claim), and if they can finally start turning curiosity into serious cash with their Durasafe product, then it could make sense to package it with Dresden (presuming it wasn't a burden), or simply leverage that idea as a ploy to entice a stand-alone bid for it.

 

On the Dresden side, if there is indeed an attractive plan to go to 70K tons/yr (as mentioned on the CC), it shows that it has some more growth to it, and if portion of any IPO proceeds stayed with Euro ops and/or it facilitated them securing debt, then it could provide capital needed to do an eventual step-function investment in new facility (presuming continued market growth supported it?).  Or again, maybe this is simply a way to extract a reasonable bid from a PE firm?

 

The question is how real is this? 

 

Chad mulling about going private a few months ago, or this today ... is still just talk.  That said, with FTP shares at $7/share, there must be at least a few vultures circling/sharks sniffing.  And a $300M valuation for the European ops (which only have ~$30M or so in debt) translates to $20/share to the holdco.    The good thing for shareholders is that Chad has 2.5M shares, so it's not like he's unaligned.

 

We'll see ...

[jeffmori7]

Thanks for your impression. Yes you're right about the 300m, I misread the article.

 

Still, some people find Fortress is a strange beast with 3 different business, but a spin-off like this would still create a 2-headed beast that don't fit along that much. Anyway, I would really like them to keep Dresden if the market is durable.

 

Nonetheless, I also think that Chad has to manage without looking at how the market evaluate Fortress right now. he should purely focus on how to execute and operate well as soon as possible. Valuation will follow then.

[alertmeipp]

Interesting.. especially there is a timeline (early next year).

 

If those truly worth 300M, it implies currently the market view DP plant as liabilities.

 

Obviously, they won't get 300M cash thru the IPO, maybe 100m if their sell 33% shares. Nice thing I see about IPO is the money can go invest in wallpaper sub... on a true stable and growing market, ROI can be nice and even large scale. DP is not worth putting more in from all I can tell.

 

LSQ development should put on hold.

 

[Liberty]

Wow, I go on vacation without internet for a few weeks and come back to market armageddon.

 

I was expecting bad results from Q3 because of the macro environment and the planned and unplanned shutdowns, but this was a bit worse than I expected. I think the market's way overreacting, though, pricing things as if  thurso will never ramp up and the cogen will never be turned on and the US/Europe/China will never come back... Basically only pricing in the short term.

 

I haven't sold a share and might buy some more, and I'm sticking with my plan of waiting for thurso and lsq to ramp up with their cogens. By my count they have more than enough liquidity and access to credit facilities to get there.

[jeffmori7]

Very good interview witch Chad :

 

http://watch.bnn.ca/#clip805458

 

 

Landquart, now a high cost producer..nothing to expect before one year (spin-off, sell, etc). They try to improve it for now.

 

Still believe in the long term thesis with DP, current price unsustainable for a long period for at least one third of the producer. Finally some humility and acceptance that they did not delivered on the ramp up so far. Now producing at 95-96%.

[shoeless]

Very good interview witch Chad :

 

http://watch.bnn.ca/#clip805458

 

 

Landquart, now a high cost producer..nothing to expect before one year (spin-off, sell, etc). They try to improve it for now.

 

Still believe in the long term thesis with DP, current price unsustainable for a long period for at least one third of the producer. Finally some humility and acceptance that they did not delivered on the ramp up so far. Now producing at 95-96%.

 

Thanks for posting.

Unless I misunderstood it sounds like delivered cost per ton is now "mid to high 700's"?

 

[jose]

Thanks for posting.

Unless I misunderstood it sounds like delivered cost per ton is now "mid to high 700's"?

 

 

Yep, that's what he said. Not sure if he is including the $100/ton cogen number in that.

 

I hope there is more urgency behind closed doors about disposing of Landquart.  Landquart could work out swimmingly, but for FTP it's a risk that doesn't make sense at this point. I vomit a little every time I hear the word "Durasafe".

 

If Chad wants to even be around to see his DP long term thesis ( low cost producer, china, cotton vs food, blah) tested, Fortress needs to make sure they can withstand a couple years of low DP pricing.  They can tread water with just Dresden and DP plants easily for a long time.

[alertmeipp]

if you went through the historical interviews in Youtube from before to now, u can see why the market wants to see the company deliver before putting more money in.

 

For some, Chad shows persistence, for others, he is in denial.

 

 

[BRK7]

Very good interview witch Chad :

 

http://watch.bnn.ca/#clip805458

 

 

Landquart, now a high cost producer..nothing to expect before one year (spin-off, sell, etc). They try to improve it for now.

 

Still believe in the long term thesis with DP, current price unsustainable for a long period for at least one third of the producer. Finally some humility and acceptance that they did not delivered on the ramp up so far. Now producing at 95-96%.

 

Thanks for posting.

Unless I misunderstood it sounds like delivered cost per ton is now "mid to high 700's"?

 

I think that is incorrect.  Here is Chad's quote from the 04:21 min mark in the interview:

 

"At our full run rate, we expect to have our cost structure in the mid-to-high $700s delivered to China."

 

The key, IMO, is the phrase "at our full run rate."  I think that Thurso will need to achieve its run rate for a sustained period in order to bring costs down to these levels.  Further, I believe that co-gen will also be needed in order to achieve these levels..and co-gen has not yet started.  For both reasons, I conclude that Chad is not talking about now.

 

Here's a link to the interview:

http://www.bnn.ca/News/2012/11/13/Fortress-CEO-expects-competition-to-wither.aspx

 

[Christopher1]

Updated presentation with some new info on the FTP website: Interesting to see "production cost progress" for thurso (slide #13).

 

http://www.fortresspaper.com/images/pdfs/investor_relations/Fortress%20Paper%20%20Powerpoint%20Nov%202012website.pdf

[FrankArabia]

did Irwin Michael get completely out of this yet?

[OptsyEagle]

did Irwin Michael get completely out of this yet?

 

No.

 

http://apps.cnbc.com/view.asp?country=US&uid=stocks/ownership&symbol=FTP-t&country=CA

[OptsyEagle]

Another article. 

 

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/for-fortress-paper-pulp-for-rayon-plan-still-unfolding/article5276285/

[OptsyEagle]

More insider buying.  This time it was Joe Nemeth who bought 9,500 shares on Wednesday.

 

http://canadianinsider.com/node/7?ticker=FTP

 

Not sure what the 100,000 shares are in respect to Alphonso Ciotola, but they are options related and personally I hope they are options that were taken away from him.  Who knows.  The buys are certainly important.  I doubt you, I, or anyone would put $67,000 into a company without some degree of confidence.