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

[BargainValueHunter]

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.

 

Anyone using the sleeping market's delay in noticing this to accumulate during this time of good news?

[ECCO]

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.

 

Im not sure, but it could be because markets are closed now...  ;)

 

Anyway, even with cogen running "for now" without problems, with FTP every good news usually come with 2 bad news....so stay tuned.

[triedtestedand]

Glad that's done (for now?).  9 months late (-~$15M in revenue as result) and (XXM over budget - including penalties), but who's counting. 

 

The fact that their COGEN power generating rates were above spec may provide glimmer of possibility that their corresponding operating rates may be improving, but I wouldn't hazard to correlate that too much given history.  Also, the inventory build-up so can make fewer, more cost-efficient shipments will mean one-time reduction in revenue per quarter, which will put another drag in the quarter's financial numbers, but this quarter just closed we should finally get to see what operating rate is for a full quarter ... that said,  the upcoming quarter has a planned shutdown of a week, so that will drag on the look-forward, as will the anti-dumping.

 

As relates the anti-dumping ... the fact is ... they could always revert back to NBHK production ... and current NBHK pulp prices are actually about the same right now as DP, and the rated NBHK capacity for Thurso is 20% to 25% greater.  So with COGEN, and presuming re-entry into NBHK didn't impact market too much, and that they could get market contract vs discounted spot rates, etc. ... they would make way more money out of it (and ship it to closer customers at lower transport costs).

[Liberty]

Good news.

 

I doubt we'll see much price movement before the end of the year because any move up will be matched by selling pressure from tax loss selling, but what matters is that there's now a substantial new source of cash coming in. Q4 should (finally) start to look better, and we might get an update on the future of LSQ during Q3 CC.

 

Maybe that'll also trigger some common stock buyback if they feel more secure. We'll see.

[Alekbaylee]

In French, but interesting nonetheless...

 

http://www.lapresse.ca/le-droit/economie/201310/02/01-4695846-la-pate-kraft-de-retour-a-thurso.php?utm_categorieinterne=trafficdrivers&utm_contenuinterne=cyberpresse_B9_economie_86612_section_POS1

[BRK7]

In English:

 

http://www.globalpost.com/dispatch/news/the-canadian-press/131002/fortress-paper-looks-at-partial-conversion-thurso-mill-back-

 

[alertmeipp]

The share price is representing a very pessimistic scenario.

 

As mentioned by many, part of this company's debt is non-recourse, we are paying very little option value (net of cash) for potential good news from China and DP pricing front.

 

Still not seeing any buyback. Frustrating.

[Liberty]

Still not seeing any buyback. Frustrating.

 

Is there a way to see if there are debentures buybacks before the next Q comes out?

[alertmeipp]

I use canadianinsider to check. Didn't see any.

[Liberty]

I use canadianinsider to check. Didn't see any.

 

I use it too, and I know it would report buybacks for the common. But I don't think debenture buybacks would show when looking at "FTP", and I don't see a way to go check "FTP.DB" and "FTP.DB.A".

[alertmeipp]

it should, i used to own lrt.un debt, their buyback was showing.

 

three reasons they dont buy back i can think of. hold on to cash until Th becomes profitable for the forseeable future, ie tax issues resolved first. second is they think it is overpriced, third is they have material insider info.

 

Place your bet ;)

[Liberty]

I asked IR to make sure, and they say debenture buybacks would show up, but that under their NCIB they only have to report once a month.

[triedtestedand]

http://seekingalpha.com/article/1732762-fortress-paper-high-yield-paper-made-cheap-and-safe?source=feed

[jeffmori7]

Thanks for sharing, triedtestedand.

 

One question, why after a quite long period of time of depressed DP prices, we don't see any shutdown occurring even if there are supposed to be so many high cost producers?

[triedtestedand]

Jeffmori7:

 

I'm sure there has been shutdown of production in China ... which is no doubt a primary reason for the anti-dumping probe ... just not enough of it there and elsewhere, and offset by new (and low cost?) production coming online in the interim as well. 

 

And per article last week, FTP themselves are now is also looking at "opportunistically" shifting some production back to non-DP grades, which makes sense given N. American NBHK list prices are currently roughly the same as Chinese DP prices ... and given the Thurso plant can produce far-more-for-cheaper-and-less-costly-to-ship NBHK than DP, is not a bad idea if they can nail down a couple of targeted customers, even if they get to utilization rates they have been aspiring towards for past 12+ months.

[alertmeipp]

how much would a 200k nsbk plant worth to a buyer? Probably less than its debt.

[lessthaniv]

http://seekingalpha.com/article/1732762-fortress-paper-high-yield-paper-made-cheap-and-safe?source=feed

 

somebody reads the berk/Fairfax board.  :)

[alertmeipp]

RBC gives a target price of 4 - see increased chance of Chinese import taxes. Don't see valid explanation on why the increase.

[Liberty]

RBC gives a target price of 4 - see increased chance of Chinese import taxes. Don't see valid explanation on why the increase.

 

Anyone has the RBC report? I'd love to have a look.

 

(If you do but don't want to reply here, you can message me in private. Thanks.)

[alertmeipp]

I don't have the full report

 

Investment Rationale

We have turned negative on Fortress Papers due to market concerns, export tax risk, and the

continued operational issues at Thurso. While the short-term outlook appears quite negative, with

significant commodity DP additions over the next year, we do expect Fortress to eventually get on

track. However, in the near term, we are cautioning investors to await resolution on the Chinese duty

investigation and better commodity DP market conditions. With a high-risk profile and downwardly

revised financial forecast, we have changed our rating to Underperform (from Sector Perform).

 

Valuation

 

Our price target is based on a blended 3.0x EV/EBITDA multiple of our trend EBITDA estimate of $60

million (85%) and our 2014 EBITDA estimate of ($7MM) (15%) which remain unchanged. We have

lowered our valuation multiple from 3.5x due to increased likelihood of a significant Chinese commodity

DP import tax. We believe Fortress should trade at a multiple below the bottom of the typical Canadian

Paper & Forest Products trading range (4.5x to 6.5x), reflecting the uncertain outlook for commodity DP

pricing and risks associated with the LSQ mill conversion and Chinese anti-dumping investigation.

[alertmeipp]

wow, down to low 6 on pathetic volume.

 

still see no buyback, i think chance is good that they will try to drag on LSQ, could be a very valuable asset after this china mess and stubborn dp price.

[Liberty]

Well, I suppose it's good that they haven't done buybacks yet* if the price is going to tank like that. I can't expect it recovering before 2014 because of all the tax loss selling, unless they have some really interesting things to say on the next CC.

 

At the end of Q2 they had $136m of cash on the balance sheet.

 

*Though if they only report once a month, they could be doing them in October and we'll only find out in November..

[OptsyEagle]

I doubt there will be a lot of tax loss selling this year.  There may be a little from some who didn't sell last year but most people that bought in 2013, haven't necessarily lost a lot of money.  They lost money, just not a lot.  I think it was about $7 going into this year.

 

Anyway, the biggest drag on this stock are current DP prices.  Move those up and all the other problems will fade into the background.  Just wish I knew when they were going to go back up.

[alertmeipp]

todays volume is 50k, 300k dollars worth.

i am not too worry about tax loss selling, people buying today wont tax loss next week and i suspect many wont risk not having this crap after all these years. plus, this is selling close to liquidation price.

 

for sure have someone liquidating its position, when that stops, it will do fine.

 

are u selling urs?

[OptsyEagle]

It's Swing time:  Love it if it works and doesn't cost too much.

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

 

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Oct. 11, 2013) - Fortress Paper Ltd. ("Fortress Paper" or the "Company") (TSX:FTP) announces that it has completed its initial strategic assessment and testing of alternatives for the Fortress Specialty Cellulose Mill ("FSC Mill") and has determined that the best possible strategy is to operate the FSC Mill as a "swing mill". With minor modifications and no capital expenditure, the FSC Mill will be capable of swinging production from dissolving pulp to northern bleached hardwood kraft (NBHK) pulp. As a result of the flexibility derived from being a "swing mill", the FSC Mill will be able to lower its cost structure accordingly when redirecting production from dissolving pulp to NBHK pulp, which, relative to dissolving pulp, is simpler to produce and has a higher yield derived from the same fibre source. In addition, the simplified production process and higher yield of NBHK pulp will result in an increase in production capacity at the FSC Mill by approximately 25% based on producing NBHK pulp compared to dissolving pulp.

 

In keeping with the Company's strategy of producing low-cost, high-quality pulp products, the FSC Mill will produce, among other products, specialty maple NBHK pulp, a product ideally suited for premium packaging, tissues & toweling, and other technical and specialty papers, due to its excellent smoothness, opacity, bulk and cleanliness and dissolving pulp. The production of other specialty hardwood pulp will be evaluated over the next few months.

 

The FSC Mill has extensive experience in both NBHK pulp and dissolving pulp production. Leveraging this expertise, the Company anticipates the FSC Mill will require no down-time to modify operations into a swing mill.

 

The primary difference between dissolving pulp production and NBHK pulp production is the additional chemical processes that dissolving pulp must undergo. This results in lower yields and higher costs. Given current market conditions for dissolving pulp, the Company has determined that the FSC Mill can improve margins by redirecting its production capacity to lower-cost NBHK pulp production, which does not require this additional process. The ability of the FSC Mill to pivot its production in this manner to improve margins is reflective of the strategic benefit to the Company of diversifying the FSC Mill's production capabilities. The "swing mill" capability serves as a hedge against price shocks and demand changes in the market for dissolving pulp. In addition, this improved production flexibility will allow the Company to mitigate any adverse impacts resulting from the threatened imposition of a dumping tariff by China's Ministry of Commerce on the import of Canadian dissolving pulp into China.

 

Yvon Pelletier, President of Fortress Specialty Cellulose Inc., commented: "The redesign of the FSC Mill will create an exciting opportunity for Fortress Paper to operate as a 'swing producer' of pulp products. We will now be capable of quickly shifting production at the FSC Mill between different products to maximize margins in response to changing market conditions. This opportunity is unique to us due to the configuration of the FSC Mill and our extensive experience in producing both dissolving pulp and NBHK pulp and eventually other specialty hardwood grade pulps. We believe we can leverage this expertise to improve our bottom line."