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

[lessthaniv]

Cannacord just crossed 69,300 shares...

[lessthaniv]

A thoughtful piece on Seeking Alpha:

 

http://seekingalpha.com/article/4002984-investing-future-money-printing-fortress-paper-hidden-value-89-percent-upside

 

 

[triedtestedand]

http://www.stockhouse.com/news/press-releases/2016/08/31/fortress-paper-announces-normal-course-issuer-bid

 

for shares ... not debs ... 3rd time lucky I'm presuming (i.e. last two times no shares were repurchased)

[lessthaniv]

Hopefully they can find a few blocks to fill out the NCIB as the daily maximum of 1642 shares would otherwise take 648 Market days!

 

[triedtestedand]

+655,300 shares repurchased at $4.60 on Sept6 ... that puts a good dent in the NCIB right off the bat.

 

https://www.sedi.ca/sedi/SVTItdSelectIssuer?locale=en_CA

[lessthaniv]

Volume was close to 1M that day. I was wondering about that. Glad they found a block. Hopefully there is more to finish up the bid.

[lessthaniv]

Here is the automatic security purchase plan we discussed earlier in the thread:

 

Fortress enters automatic securities purchase plan

Fortress Paper Ltd (C:FTP)

Shares Issued 14,813,014

Last Close 9/20/2016 $5.32

Tuesday September 20 2016 - News Release

An anonymous director reports

FORTRESS PAPER ANNOUNCES AUTOMATIC SHARE PURCHASE PLAN PURSUANT TO ITS NORMAL COURSE ISSUER BID

In connection with its previously reported normal course issuer bid, which commenced on Sept. 6, 2016, Fortress Paper Ltd. has entered into an automatic securities purchase plan with its designated broker to facilitate purchases of its common shares under the bid.

The plan allows for purchases by Fortress Paper of common shares at any time, including, without limitation, when the company would ordinarily not be permitted to make purchases due to regulatory restrictions or self-imposed blackout periods. Purchases will be made by Fortress Paper's broker based upon the rules prescribed by the Toronto Stock Exchange and the terms of the parties' written agreement. Outside of such restricted or blackout periods, the common shares may also be purchased in accordance with management's discretion. The plan will terminate on Sept. 5, 2017.

© 2016 Canjex Publishing Ltd.

 

[sculpin]

Raymond James upgrades the common to OP with tgt of $8. SOTP probably much higher in a rising DP environment ($15+??). 2016 deb and 2019 deb have been good plays perhaps now is time for the shares to provide the kicker.

FTP-TSX

 

Daryl Swetlishoff CFA | 604.659.8246 | daryl.swetlishoff@raymondjames.ca David Quezada CFA | 604.659.8257 | david.quezada@raymondjames.ca Bryan Fast CFA (Associate) | 604.659.8262 | bryan.fast@raymondjames.ca Forest Products | Pulp & Paper

 

Strength in Dissolving Pulp Prices Spurs Upgrade to Outperform

Recommendation

 

In light of a recent run in dissolving pulp (DP) prices and our more constructive outlook on the commodity, we are increasing our 2017 forecast from US$900/mt to US$950/mt. With Fortress Paper highly levered to DP prices, and the near-term balance sheet concerns largely addressed through the LSQ and Landqart transactions, our target price increases $3.00/sh to $8.00/sh and we are upgrading the stock to Outperform from Market Perform.

 

Analysis

 

 Recent strength in DP prices calls for increase in forecast – DP prices trended

largely in-line with our 2016 forecast of US$850/mt for the first half of the year, averaging US$847/mt in 1H16. However, more recently the commodity has traded upwards, rising from US$855/mt at the beginning of 3Q16 to a most recent quote of US$965/mt (for the week ending Sep-23). Accordingly, we have updated our 3Q16 estimates to reflect DP pricing to date, and increased our 2017 estimate from US$900/mt to US$950/mt. The impact on our estimates is considerable, as the stock remains highly sensitive to the fluctuations in DP pricing due to the levered balance sheet (albeit improving) and operational concentration. As a result of the changes our 2017 EBITDA forecast increases 15% to $44 mln.

 

 Cotton increase likely supporting surge in DP pricing – We note that cotton spot prices have seen a steady increase since hitting a 2016 low in Mar-2016, up ~25% since. This is important as rayon and VSF (the primary end uses of DP) are seen as substitutes to cotton, which we expect has supported the strength in DP pricing.

 

 De-leveraging of balance sheet continues with active buyback program – Previously a source of concern for investors, we believe Fortress’ balance sheet has been significantly strengthened by the sale-leaseback of the Landqart Mill and the LSQ transaction in recent months (see published notes “Sale and Leaseback of Landqart Mill Address Short-Term Liquidity” on Jun-7-16, price $3.67, and “Disposal of non- operating LSQ pulp mills cleans up balance sheet; impact minimal” on Jun-24-16, price $4.10). Further, recent buybacks of the 2016 converts ($4.025 mln principal at 97.1% cost) and 2019 converts ($6.9 mln principal at 76% cost), and the recent share buyback (655.3k shares) are evidence of much sounder financial footing, in our view. We expect the company to continue to be active in their buyback program of shares, and note the company maintains substantial liquidity to repay the Dec-2016 converts ($36.2 mln outstanding).

 

Valuation

 

Our target increases $3.00/sh to $8.00/sh due to an increase in our 2017 DP price estimates. Our target price is based on a 2017E 6.25x EV/EBITDA which is the midpoint of the 5-year trading range of 5.5x to 7.5x.

[jose]

Finally some tail winds. That only took a couple years.

[triedtestedand]

Jose:

 

Indeed a loooong time.  Tail wind and potentially favorable currents as well presuming status quo remains (stable operations, current prices hold, currencies stay steady), and factor in potential for:

 

- accelerated IQ warrant (1M shares @ $5) exercise if price stays above $6 for 7 more sessions

- ongoing share repurchases via NCIB (w automated option)

- ~Q3/2017 projects to will increase capacity (and reduce unit costs) at both Thurso and Landqart

- refinancing the $25M debs due 2017 to private institution

- Durasafe / higher-margin sales mix for Landqart?

- other?

 

 

 

 

[jose]

triedtestedand - Thanks for that. I've held on to my rather outsized chunk of FTP shares the last few years with the simple thesis below in mind.  Now that FTP has passed the sh*tshow period and have these other tailwinds, they should be able to tread water long enough to catch a nice up cycle in DP. We shall see!

 

 

The investment thesis in 8 words:

 

We need DP price to start trending up.

 

Nothing wrong with a simple thesis.

 

[lessthaniv]

http://seekingalpha.com/article/4012937-cotton-looking-fluffy

 

 

[BargainValueHunter]

BRIEF-Fortress Paper reaches deal with Investissement Québec

9:21am ET, 12/12/2016 - Reuters

 

Dec 12 (Reuters) - Fortress Paper Ltd

 

* Fortress Paper- agreement to amend terms of warrants to purchase up to 1 million common shares of company at an exercise price of $5.00 per common share

 

* Reached an agreement with investissement Québec acting on behalf of government of Québec

[sculpin]

Great - only results in an addtional 125K shares outstanding....

 

Fortress Paper adds cashless exercise to IQ warrants

 

Fortress Paper Ltd (C:FTP)

Shares Issued 14,157,714

Last Close 12/9/2016 $6.60

Monday December 12 2016 - News Release

 

An anonymous director reports

 

FORTRESS PAPER ANNOUNCES AMENDMENT TO INVESTISSEMENT QUEBEC WARRANTS

 

Fortress Paper Ltd. has reached an agreement with Investissement Quebec (IQ), acting on behalf of the government of Quebec, to amend certain terms of the warrants to purchase up to one million common shares of the company at an exercise price of $5 per common share issued to IQ on Dec. 2, 2014.

 

The warrants were amended to include a cashless exercise feature which allows IQ to acquire the lesser of: (i) 125,000 common shares; and (ii) such number of common shares as determined by dividing the aggregate excess of the fair market value of the common shares subject to the warrants over the aggregate exercise price of the warrants by the current market price of the common shares of the company (as determined in accordance with the Toronto Stock Exchange company manual).

 

The amendment did not affect IQ's right to exercise the warrants by paying the $5-per-share exercise price.

 

Subsequent to the warrant amendment, IQ fully exercised the warrants and elected the cashless exercise option which will result in the issuance of 125,000 common shares of the company.

[triedtestedand]

+1  This was a very creative move of benefit to shareholders.

 

Looking ahead:

 

a) On finance side:

- They will pay off the 2016 debs when they mature at the end of the month.

- They still have room in their share NCIB to buy back another 400K of shares thru to next Aug31

- They should be able to renew their deb NCIB in early January to buy back another 10% of their remaining 2019 debs

- I'm keen to see if they can do something creative with their 2017 private debs.

 

b) On capex front:

- At Thurso ... new digester and hemicellulose projects announced, with ridiculously low net company capital employed

- At Landqart ... similarly announced efficiency capex project

 

c) On market side:

- pricing for VSF (and DP) seemingly stable (w DP ~ $950/ADMT +/-)

 

What to wish for?  Two solid quarters of operations/product-mix/EBITDA from both Thurso & Landqart.

 

 

[sculpin]

Hmm must be someone taking a good look at this....

 

Fortress Paper LTD. News Release

FORTRESS PAPER ADOPTS SHAREHOLDER RIGHTS PLAN

 

VANCOUVER, British Columbia, January 16, 2017 – Fortress Paper Ltd. ("Fortress Paper" or the "Company") (TSX:FTP) announces that its board of directors has adopted a shareholder rights plan (the "Rights Plan").

 

The Rights Plan has been adopted to ensure, to the extent possible, that all shareholders of the Company are treated fairly and equally in connection with any take-over bid or other acquisition of control of the Company. The Rights Plan has not been adopted in response to any specific take-over bid or other proposal to acquire control of Fortress Paper and Fortress Paper is not aware of any such pending or contemplated proposals.

 

At the close of business today, one right will be issued and attached to each common share of Fortress Paper outstanding at such time. The rights will automatically attach to the common shares and no further action will be required by shareholders. A right will also automatically attach to each common share of Fortress Paper issued hereafter.

 

Subject to the terms of the Rights Plan and to certain exceptions provided therein, the rights will become exercisable in the event that any person, together with joint actors, acquires or announces its intention to acquire 20% or more of the Company’s outstanding common shares without complying with the "Permitted Bid" provisions of the Rights Plan or in circumstances where the application of the Rights Plan is waived in accordance with its terms. The "Permitted Bid" provisions prevent the dilutive effects of the Rights Plan from operating if a take-over bid is made to all holders of common shares of the Company (other than the bidder) by way of a take-over bid circular that remains open for acceptance for a minimum of 105 days and satisfies certain other conditions. In circumstances where a take-over bid does not comply with the requirements of the Rights Plan or where the application of the Rights Plan is not waived in accordance with its terms, the rights holders (other than the acquiring person and joint actors) will be entitled to purchase additional common shares of the Company at a significant discount to the market price. 

 

The Rights Plan has been conditionally approved by the Toronto Stock Exchange and is subject to ratification by the shareholders of the Company within six months of its effective date. The Company intends to recommend the ratification of the Rights Plan for approval by its shareholders at the next annual meeting of shareholders to be held in 2017. If ratified by the shareholders, the Rights Plan will have an initial term of three years.  If the Rights Plan is not approved by the shareholders within six months of the effective date of the Rights Plan it, together with the outstanding rights, will terminate and cease to be effective.

 

[lessthaniv]

Coming together...

 

Fortress Bioenergy arranges $40-million loan from IAM

 

 

 

2017-01-20 11:18 ET - News Release

 

 

Mr. Yvon Pelletier reports

 

FORTRESS PAPER ANNOUNCES $40,000,000 CREDIT AGREEMENT

 

Fortress Paper Ltd.'s wholly owned subsidiary, Fortress Bioenergy Ltd. (FBEL), as borrower, has entered into a credit agreement with IAM Infrastructure Private Debt Fund LP, as lender, in relation to a $40-million secured loan, which matures 14 years from the date of advance, and is repayable in monthly payments of principal and interest over the term. The IAM loan will accrue interest at a rate of 6 per cent per annum, plus an account maintenance fee of 0.5 per cent per annum, and is expected to be advanced in full in 10 business days, subject to certain customary conditions. FBEL is the owner and operator of the electricity cogeneration facility located at the Fortress Specialty Cellulose Inc. mill in Thurso, Que. The IAM loan is secured against all of the assets of FBEL. The IAM loan is also guaranteed by the company's wholly owned subsidiary, FSC, and Fortress Paper.

 

Investissement Quebec, acting on behalf of the government of Quebec, has agreed to subordinate its security rights in relation to its outstanding loan with FBEL and FSC in favour of the IAM loan. In consideration of such subordination, the company has agreed with IQ to match the interest rate payable on $40-million principal amount of the outstanding IQ loan to that payable pursuant to the IAM loan. All principal payments on the IQ loan made by the company will be applied firstly to the higher interest-bearing principal amount outstanding.

 

The company intends to use the proceeds of the IAM loan to repay convertible debentures issued by Fortress Paper and for general corporate purposes.

 

Yvon Pelletier, the company's chief executive officer, commented: "We are pleased to announce the addition of the IAM loan as part of our long-term capital structure. Securing the $40-million loan provides us with greater financial flexibility to manage our outstanding indebtedness and thereby support our long-term growth strategy."

 

Philip Robson, president of IAM's private debt group, commented: "We are excited to support another operational bioenergy project in the province of Quebec. Fortress Paper continues to invest in its Thurso, Que., facilities, and we are pleased to be part of the financing team."

 

About Fortress Paper

 

Fortress Paper operates internationally in two distinct business segments: dissolving pulp and security paper products.

 

We seek Safe Harbor.

 

© 2017 Canjex Publishing Ltd. All rights reserved.

[triedtestedand]

+1

 

Explains:

- not announcing renewal of NCIB for the 2019 debs a few weeks ago when earlier NCIB term for such terminated

- announcement earlier this week of shareholder rights agreement

 

Enables:

- covering the $25M of private convertible debs due mid 2017

- reinstitution for next 12mo of an NCIB for 2019 debs

- opportunistically leveraging existing NCIB for shares (400K of shares still able to buy back w current program)

- flexibility owing to long-term (14 years) nature of loan

 

What to still wish for?  Two solid quarters of operations/product-mix/EBITDA from both Thurso & Landqart.

 

[sculpin]

FTP-TSX

Daryl Swetlishoff CFA | 604.659.8246 | daryl.swetlishoff@raymondjames.ca Bryan Fast CFA (Associate) | 604.659.8262 | bryan.fast@raymondjames.ca

 

Credit Agreement Further Bolsters Balance Sheet

 

 Fortress Paper announced a $40 mln credit agreement with IAM Infrastructure Private Debt Fund (IAM). The $40 mln secured loan matures in 14 years at an interest rate of 6% per year + 0.5% maintenance fee, and is secured by all the assets of the electric cogeneration facility at Fortress’s Thurso mill in Quebec. Proceeds from the loan will be used to repay outstanding convertible debentures and general corporate purposes, as the company has $25 mln in principal 7% converts maturing in June 2017.

 In conjunction with the loan announcement, Fortress and Investissement Quebec (IQ) have agreed to subordinate its security rights in relation to the outstanding loan between Fortress and IQ.

 

Published by Raymond James Ltd

 

Rating

Target Price

Current Price (Jan-19-17) Suitability

January 20, 2017 Company Brief

Outperform C$8.50 C$7.80 High Risk/Growth

 

 At the end of 3Q16, Fortress had $95.3 mln cash on hand (including $17.3 mln restricted) prior to making $36.2 mln in debt repayments before year-end. The company has made good progress improving its balance sheet over the past year through a number of transactions, including the sale and leaseback of the Landqart Mill, and the disposal of the non-operating LSQ mill. In addition, the recent investment of $9 mln (non-repayable) from the government of Canada further solidifies financial footing. With cash on hand, along with this new liquidity source and forecast free cash flow we don’t foresee Fortress having any issue meeting the 2017 debt obligation, nor the next major repayment due December 2019 ($62.1 mln principal).

 

 We have seen Dissolving Pulp prices stabilize over the past month in the US$920-935/mt range after a move in Oct-Nov 16 to a high of US$990/mt. This compares to our 2017 estimate of US$950/mt. With Fortress highly levered to DP prices, and the balance sheet concerns addressed, we look for further operational improvements at the company’s Thurso and Landqart mills and reiterate our Outperform rating.

[KJP]

http://www.marketwired.com/press-release/fortress-paper-announces-early-repayment-of-25000000-debenture-2193378.htm

[Pick52]

Fourth Quarter results

 

http://www.marketwired.com/press-release/fortress-paper-announces-fourth-quarter-2016-results-2204159.htm

[sculpin]

CEO buying...

 

Insider Filings

As of 11:59pm ET March 27th, 2017

Filing

Date Transaction

Date Insider Name Ownership

Type Securities Nature of transaction Volume or Value Price

Mar 27/17 Mar 22/17 Pelletier, Yvon Direct Ownership Common Shares Class A voting without par value 10 - Acquisition in the public market 5,000 $8.25

Mar 27/17 Mar 22/17 Pelletier, Yvon Direct Ownership Common Shares Class A voting without par value 10 - Acquisition in the public market 5,000 $8.25

Mar 27/17 Mar 22/17 Pelletier, Yvon Direct Ownership Common Shares Class A voting without par value 10 - Acquisition in the public market 10,000 $8.16

Mar 27/17 Mar 22/17 Pelletier, Yvon Direct Ownership Common Shares Class A voting without par value 10 - Acquisition in the public market 5,000 $8.25

Mar 27/17 Mar 22/17 Pelletier, Yvon Direct Ownership Common Shares Class A voting without par value 10 - Acquisition in the public market 5,000 $8.20

[triedtestedand]

Sculpin:

 

Thanks for catching that.  $240K worth of shares for Yvon.  That's not chump change.  The fact he's able to buy in means that FTP don't have any immediate big bang corporate initiative gelling, but that he's affirming the solid trends with operations, etc. 

 

That said, I wonder why FTP itself isn't active at all with repurchases (if even in drips and drabs).  They still have about room to purchase 600K shares under their share NCIB expiring at end of August.

[sculpin]

Fortress Paper Thurso EBITDA estimates reflecting the massive upside leverage of the plant. Based on 165,000 ADMT annual production. Dissolving pulp price of $1,200 seems reasonable based on indusry growth & VSF price performance over the last year. Valuation of Thurso alone at 5 multiple on Ebitda of $120mm  would be $600mm versus current market cap of about $115mm and $270mm total corporate enterprise value. That is why the CEO is still buying shares.

 

Page 18 latest FTP presentation...

 

http://fortresspaper.com/wp-content/uploads/2017/02/feb_15_presentation.pdf

 

$850 delivered cost

$0.75 CAD$/USD$

 

Dissolving Pulp Price    $850    $1,200    $1,600

 

EBITDA                  $36MM  $124MM    $212MM

 

Above does not include capacity additions announced in November....

 

In November 2016, Fortress Paper announced a $23.4 million investment

in a digester capacity increase and production of value added products

16

• The project includes the installation of a fifth digester which is expected to result in an

incremental annual production capacity increase of 8,500 ADMT in 2018 and 17,000 ADMT

in 2019

• Strategic project of utilizing birch to manufacture dissolving pulp and development in

hemicellulose derivative products. Birch grows abundantly across Canada and is considered

an underutilized species of tree

• Funding for the project from non-repayable contributions by Federal and Provincial agencies

should approximate $12.5 million with the balance from the Hydro Québec "Rate L" tariff,

cash on hand and operating cash-flows

 

 

 

[sculpin]

A very simplistic break up value of FTP based on the values estimated in the report issued by M Partners. Hinges on the +$300MM value to a private buyer of the FSC mill located in Thurso.

 

Fortress Paper - sum of the pieces

 

Cash position------------------------------$45 million

Thurso private sale estimate--------------$300 million

Landquart land & bldg---------------------$30 million

Landquart operations (mid-range)--------$77 million

FGC mill (low estimate)------------------$8 million

Total Asset Sale Potential----------------$460 million

[i]Less All Debt ----------------------------$246 million

Value to Shareholders--------------------$214 million

 

Value per Share------------------------- $14.65 - based on 14.6 million shares outstanding

Current Share Price--------------------------$2.60

Tracking well now at $8.10 vs the $2.60 back in March of 2015. Great 2 year return on the common! Debentures have been a layup as well. Now believe the Thurso mill could be double the March 2015 estimate of $300mm. Landquart ops most likely now worth much more than $77mm & the land value came in twice above estimate. Will put together a new "simplistic" SOTP estimate over the next few days.