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

[lessthaniv]

I can't see the WTO being ok given the data presented by Michael Stone. It's pretty clear to everyone what's going on.

[jose]

FTP's response:

 

http://www.fortresspaper.com/images/pdfs/releases/Fortress%20Paper.Press%20Release%20-%20Anti%20Dumping%20Nov%206%202013.pdf

[OptsyEagle]

I found this very interesting.  I believe the import tariffs started yesterday.  When I look up the price changes for VSF, cotton linter pulp and dissolving pulp, I found this.

 

 

VSF 1.5D*38mm *                    + 100  11/08 

Staple-grade cotton linter pulp *  + 220  11/08 

Cotton linter *                            +  20  11/08 

Dissolving pulp CIF China *          +  10  11/08 

Bright VFY 120D *                      +100  11/08 

 

 

http://www.ccfgroup.com/informs/index_prod.php?subClass_ID=510000&Class_ID=500000

 

Especially VSF and cotton linter pulp, this is a pretty large one day move to the upside.  DP didn't move much but it tends to only trade once or twice every couple of weeks, so I will give it time.

 

In any event maybe this tariff might move up the prices of DP higher then it would have otherwise been.  If it moves it more then 13% this tariff becomes beneficial to Fortress Paper and it just might since many of our competitors were slapped with a much higher percentage.  Being below this average may actually be a huge boost, as someone has already mentioned.

 

Anyway, very interesting.

[alertmeipp]

As noted previously, we will probably need DP price to go up 30% to see nice some profit for FTP.

 

Thought we can have an update and again someone dump last minute to make it close flat.

[crackspread]

I thought investing in this company at $6.00 was a good investment and it looks like I am turning out to be horribly wrong.

[alertmeipp]

I thought investing in this company at $6.00 was a good investment and it looks like I am turning out to be horribly wrong.

 

Don't judge too early. I, probably like many, see this now as cheap option on DP price. The key now is to pro-long the option duration (reduce cash burn)

 

100$ raise above their full cost in DP pricing translates to 20million revenue or about 1.4$ per share. A multiple of 3x is about the current price. Obviously, it's very leverage to DP pricing.

 

Landqart is becoming a key business unit here, hope it keep improving, they put quite a bit of money in there. If they can get back what's the put in.... I will be happy to see 2-3 millions EBITDA from there, but that seems like a tall order.

 

LSQ - what do you guys think Fortress will do with it? Will they able to get a partner?

[triedtestedand]

One thing I wonder about in all this is the fine print in FTP's 3 DP supply contracts in China.  I'm guessing they could still fulfill, albeit at a 13% tariff penalty, but what is effect of FTP transitioning to NBHK for any period? Do they still hold value if don't provide supply for extended period?  Is there any leverage to negotiate with another non-tariffed DP supplier to fulfill contracts with such 3rd party supply, and with some type of quid-pro-quo w such 3rd party, esp. if Chinese DP prices rise as result?  I don't know ... guess it depends on not the contract, but the relationship between FTP and the VSF producers, as am sure people would be wary of strength of contract subsequent to floors being broken last year.

[alertmeipp]

I was going through my notes and saw that once the production is fully ramp full, the production cost will be mid to high 700 delivered to China so that would imply full price including 13% is 900 bucks?

 

Did they up their production cost estimation since end of 2012? or the mid 700 all in except duties is still in place?

 

 

 

[lessthaniv]

Daryl Swetlishoff reports that channel checks suggest  Chinese DP prices have already risen US$65/mt since the tariff announcement.  Also, they expect the proposed 50% tariff on new entrants to the DP industry will likely scuttle several new projects in North America and Brazil totaling ~10-12% of global capacity. I'm not sure if LSQ gets exposed to that or not?

 

 

[alertmeipp]

Report out:

 

http://www.marketwired.com/press-release/fortress-paper-announces-third-quarter-2013-results-tsx-ftp-1851492.htm

 

Fortress Paper Announces Third Quarter 2013 Results

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Nov. 12, 2013) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Fortress Paper Ltd. (TSX:FTP) ("Fortress Paper" or the "Company") reported 2013 third quarter EBITDA loss of $7.3 million. The Dissolving Pulp Segment generated EBITDA loss of $6.6 million and the Security Paper Products Segment generated EBITDA of $1.6 million. Corporate costs contributed $2.3 million to EBITDA loss.

Fortress reported adjusted net loss from continuing operations of $15.6 million, or diluted loss per share of $1.07 for the third quarter of 2013 on sales of $53.2 million. In the second quarter of 2013, the Company reported adjusted net loss from continuing operations of $20.6 million or diluted loss per share of $1.42 on sales of $59.9 million, and for the third quarter of 2012, adjusted net loss from continuing operations of $23.2 million or diluted loss per share of $1.61 on sales of $38.3 million. Adjusted net loss in the second quarter of 2013 was impacted by an expense of approximately $3.5 million recorded as a deferred tax accrual.

Fortress reported a net loss from continuing operations of $13.4 million, or diluted loss per share of $0.92 for the third quarter of 2013. In the second quarter of 2013, the Company reported a net loss from continuing operations of $20.9 million or diluted loss per share of $1.43, and for the third quarter of 2012, net loss from continuing operations of $24.1 million or diluted loss per share of $1.67.

Fortress reported a net loss, including discontinued operations, of $12.4 million, or diluted loss per share of $0.85 for the third quarter of 2013. In the second quarter of 2013, the Company reported a net income, including discontinued operations of $134.1 million or diluted earnings per share of $9.23. Included in discontinued operations was a $153.3 million gain on the sale of the Dresden mill. In the third quarter of 2012, the Company reported a net loss of $19.1 million or diluted loss per share of $1.32, including discontinued operations.

The Dissolving Pulp Segment has experienced another difficult quarter due to depressed market prices, delays in the cogeneration facility completion and operational and maintenance issues. The Fortress Specialty Cellulose ("FSC") mill cogeneration facility project was successfully completed on October 2, 2013 and began delivering power to the Hydro Québec grid at the contracted commercial rate. This is a significant milestone for the reduction of the overall cost structure at the mill.

As a result of a strategic assessment and testing of alternatives for the FSC mill, the Company has been pursuing a strategy of modifying the mill to be capable of swinging production from dissolving pulp to northern bleached hardwood kraft (NBHK) pulp. This redesign is expected to enable the Company to maximize margins in response to changing market conditions.

The Security Paper Products Segment has experienced a third consecutive quarter with sales, volumes and revenues significantly higher relative to any comparative period in 2012 and 2011. The Landqart mill continues to implement new programs to improve efficiencies and profitability. EBITDA for the Security Paper Products Segment for the quarter ended September 30, 2013 was $7.4 million higher when compared to the third quarter of 2012, and $1.1 million higher compared to the previous quarter. However, less than favourable conditions, including the strength of the Swiss franc against the Euro, overcapacity in the banknote paper industry and increased competition for orders, continue to adversely impact the results of the Security Paper Products Segment.

Management's Outlook

Dissolving Pulp Segment

Dissolving pulp markets remained challenging during the third quarter of 2013 due to continued excess supply. The average market price of dissolving pulp in China, as reported by China Chemical Fibers & Textiles Consultancy Group (CCF), a leading professional data analysis company relied upon in the dissolving pulp industry, was approximately US$880 per air dried metric tonne (ADMT) during the third quarter of 2013. Management believes that the current depressed dissolving pulp prices are indicative of unusual market conditions and are not sustainable in the long term. Following the interim anti-dumping duty announcement of the Ministry of Commerce of China ("MOFCOM") on November 6, 2013 for Canadian, American and Brazilian companies, based on its preliminary assessment, the Company believes that the supply of dissolving pulp will decrease significantly and lead to a price increase in the short to medium term. The Company also believes that if the interim duty for all other unnamed Canadian, American and Brazilian dissolving pulp producers remains unchanged, it will have a long term deterrent effect on supply dynamics. See "Subsequent Event - China Anti-Dumping Investigation".

Prior to the third quarter of 2013, viscose producers in China had decreased operating rates to manage inventory and stabilize prices. However, operating rates in the third quarter have increased which has eroded viscose staple fibre prices to their lowest levels in many months. Dissolving pulp is the main raw material input for the production of viscose staple fibre. Cotton prices remained relatively stable in China during the third quarter of 2013 and well above viscose staple fibre prices. Viscose staple fibre is a substitute for cotton.

The FSC mill operated more efficiently during the third quarter of 2013 relative to the prior quarter. Cash costs continued to improve in the third quarter but were higher than expected due to operational and maintenance issues and delay in the cogeneration facility start-up.

Shortly after quarter end the cogeneration project was successfully completed and the facility commenced delivering power to the Hydro Québec grid at the contracted commercial rate. The cogeneration start-up was delayed due to unexpected mechanical failure of the high pressure water pump and the back-up pump which were resolved when a new supplier was engaged and the 100 hour test could be completed.

Although depressed dissolving pulp prices continue to impact FSC mill results, the Company expects to realize significant cost-savings from production improvements, cost reduction initiatives and the cogeneration facility in the fourth quarter of 2013 and into fiscal 2014.

Finished goods inventory levels of dissolving pulp at the end of the third quarter were higher than previous periods. During the third quarter of 2013, the FSC mill implemented a plan to reduce logistics, transportation and distribution costs. Dissolving pulp inventory levels were higher due to the mill retaining ownership of the inventory for a longer period in the sales cycle, as well as ongoing negotiations with Chinese buyers resulting from the uncertainty surrounding the ongoing China dissolving pulp anti-dumping investigation. Subsequent to the quarter end, dissolving pulp sales with our existing customers have resumed.

The Company is evaluating the impact of the MOFCOM decision on the Fortress Global Cellulose ("FGC") mill project in Lebel-sur-Quévillon, Québec. The Company is also continuing the process of exploring strategic options for the FGC mill project, to mitigate the financial risk, including alternative financing structures, joint ventures and partnership opportunities. The Company will be comparing the FGC mill investment opportunity to other strategic options for shareholder value creation. The Company is currently in discussions with prospective equity investors for the project and is in the process of discussing potential revised terms for its project financing to provide greater flexibility. Approximately $25 million has been spent to date on the FGC mill project. Due to changing economics and market conditions, there is no assurance that definitive investment arrangements will be concluded or that the FGC mill project will proceed to completion as previously planned.

Due to a change in timelines relating to the FGC mill project, the Company reviewed with Hydro Québec its electricity supply agreement dated September 28, 2012, resulting in the agreement no longer being in effect. The FGC mill intends to submit a tender for a new power supply agreement under Hydro Québec's power purchase program request for proposals expiring December 21, 2013. Among other things, the new tender will include a request for an increase in the amount of power to be supplied by the cogeneration facility from the previously approved 34 megawatts to 42 megawatts. There is no assurance that the Company will be granted another power supply agreement.

Security Paper Products Segment

The Landqart mill has had a strong third quarter order intake including a contract extension on one of the mill's more significant orders. The pipeline of opportunities to year end is strong and consists of a mix of tender and repeat order possibilities which, if successfully secured, will further improve an already stable order book for next year.

Subsequent Event

China Anti-Dumping Investigation

In February 2013, MOFCOM announced the commencement of an anti-dumping investigation on the importing of cellulose pulp originating from Canada, the United States and Brazil, after receiving a petition from certain manufacturers in China. The announcement included Fortress Specialty Cellulose Ltd. ("Fortress Specialty") as one of the Canadian producers that is subject to the investigation. Fortress Specialty registered with MOFCOM the same month and submitted its responses to MOFCOM.

On November 6, 2013, the Company announced that MOFCOM made a preliminary determination to impose an interim duty on the import of dissolving pulp into China from each of the originating countries. The interim duty applied against Fortress Specialty's dissolving pulp imports has been calculated at 13% of the CIF price to China, and will be payable in cash bonds in respect of prospective imports during the period between MOFCOM's preliminary and final determination. The interim duty applied against the Company's imports is consistent with that applied against other Canadian dissolving pulp importers who were specifically named in the investigation. The interim duty applied to American dissolving pulp producers ranged from 18.7% to 21.7% and 6.7% for one Brazilian producer which were named in the investigation. All other unnamed current or future Canadian, American and Brazilian dissolving pulp producers will be subject to an interim duty of 50.9%, 49.8% and 49.4%, respectively.

The Company believes that MOFCOM's preliminary decision may serve to materially harm the business of Chinese viscose staple fibre (VSF) producers and continues to believe, as previously submitted to MOFCOM, that the assessment of injury to China's dissolving pulp market and allegations of 'dumping' activities by Canadian producers are unsupported by the facts. Chinese VSF producers have petitioned to MOFCOM against the duty as being harmful to their businesses. The Company is evaluating its legal options to reverse the preliminary decision of MOFCOM. Fortress Specialty will initially have 10 days to submit a response to MOFCOM's preliminary determination. The Company is also preparing further submissions to be made to MOFCOM prior to its final determination and is reviewing the possibility of requesting a public hearing. MOFCOM's final determination is expected to be made in February 2014, unless the investigation period is further extended. If MOFCOM calculates a final dumping margin lower than 13%, any excess cash bonds paid on shipments during the interim period will be refunded. If the final dumping margin is higher than 13%, any outstanding cash bonds will be fully applied towards the formal import duty on imports subsequent to the final determination, however no additional amount will be payable for imports during the interim period.

Upon the completion of the investigation and MOFCOM's final determination, an application may be made by the Canadian Government to the World Trade Organization (WTO) to review MOFCOM's determination. WTO cases typically have a duration of approximately two years, inclusive of appeal processes. Although Fortress Paper believes that it has strong arguments against the imposition of a dumping duty, there is no assurance that it will be successful in reversing MOFCOM's preliminary determination or in securing the Canadian Government's support in commencing a WTO review.

Selected Financial Information

The selected financial information presented herein is qualified in its entirety by, and should be read in conjunction with, our unaudited condensed consolidated interim financial statements as at and for the three and nine month periods ended September 30, 2013 and the related notes thereon and our Management's Discussion and Analysis filed on SEDAR.

Three Months Ended September 30, 2013

Selected Financial Information and Statistics

(thousands of dollars, except shipments, unaudited) Q3 2013 Q2 2013 Q3 2012

Sales from continuing operations 53,160 59,883 38,257

EBITDA from continuing operations(1) (7,290) (8,356) (14,876)

EBITDA(2)(3) (7,290) (4,934) (6,559)

Net loss from continuing operations (13,427) (20,851) (24,051)

Net (loss) income(3) (12,436) 134,125 (19,061)

Adjusted net loss from continuing operations(4) (15,573) (20,632) (23,239)

Paper shipments (tonnes)(5) 1,856 1,953 1,207

Pulp shipments (ADMT) 31,258 38,006 30,561

(1) See Net Loss to EBITDA Reconciliation for Continuing Operations.

(2) See Net (Loss) Income to EBITDA Reconciliation including Discontinued Operations.

(3) Including discontinued operations.

(4) See Net Loss to Adjusted Net Loss Reconciliation for Continuing Operations.

(5) From continuing operations.

Net Loss to Adjusted Net Loss Reconciliation for Continuing Operations:

(thousands of dollars, except per share amounts, unaudited) Q3 2013 Q2 2013 Q3 2012

Net loss (13,427) (20,851) (24,051)

Foreign exchange loss (gain) 739 (534) 812

(Gain) loss on sale of property, plant and equipment (4,135) 753 -

Legal provision 1,250 - -

Adjusted net loss (15,573) (20,632) (23,239)

Basic and diluted net loss per share (0.92) (1.43) (1.67)

Adjusted net loss per share, basic and diluted (1.07) (1.42) (1.61)

Net Loss to EBITDA Reconciliation for Continuing Operations:

(thousands of dollars, unaudited) Q3 2013 Q2 2013 Q3 2012

Net loss (13,427) (20,851) (24,051)

Income tax (611) 3,392 (3,390)

Foreign exchange loss (gain) 739 (534) 812

Net finance expense 4,021 3,944 4,227

Amortization 4,296 4,281 4,203

(Gain) loss on sale of property, plant and equipment (4,135) 753 -

Legal provision 1,250 - -

Dispute resolution accrual - - 1,346

Stock based compensation 577 659 1,977

EBITDA (7,290) (8,356) (14,876)

Net (Loss) Income to EBITDA Reconciliation Including Discontinued Operations:

(thousands of dollars, unaudited) Q3 2013 Q2 2013 Q3 2012

Net (loss) income (12,436) 134,125 (19,061)

Income tax (611) 3,951 (1,386)

Foreign exchange loss (gain) 739 (534) 834

Net finance expense 4,021 5,105 4,600

Amortization 4,296 4,281 5,131

Gain on disposal of business (991) (153,274) -

(Gain) loss on sale of property, plant and equipment (4,135) 753 -

Legal provision 1,250 - -

Dispute resolution accrual - - 1,346

Stock based compensation 577 659 1,977

EBITDA (7,290) (4,934) (6,559)

The Company

During the nine month period ended September 30, 2013, the Company operated internationally in three distinct business segments: the Dissolving Pulp Segment, the Security Paper Products Segment, and the Specialty Papers Segment. The Specialty Papers Segment was sold on April 30, 2013. Accordingly, references in this news release to "discontinued operations" refer to the Specialty Papers Segment. The Company operates its dissolving pulp business through the Fortress Specialty Cellulose mill located in Canada. The mill expanded into the renewable energy generation sector in October 2013. The Company is also seeking to expand its dissolving pulp capacity with the 2012 acquisition of the Fortress Global Cellulose mill located at Lebel-sur-Quévillon, Québec, Canada, which the Company is evaluating to convert into a dissolving pulp mill and re-start the cogeneration facility. The Company operates its security paper products business through the Landqart mill located in Switzerland, where it produces banknote, passport, visa and other brand protection and security papers, and at its high security production and research facility located in Canada, where it manufactures optically variable thin film material. The segmentation of the Company's manufacturing operations is based on a number of factors, including production, production processes, and economic characteristics.

Conference Call

A conference call to discuss the financial results for the third quarter 2013 will be held on November 13, 2013 at 9:00 a.m. (PST). To participate in the conference call, please dial one of the following numbers:

North America: 1-855-353-9183

Vancouver: 604-681-8564

Calgary and international: 403-532-5601

Edmonton: 780-429-5820

Toronto: 416-623-0333

Ottawa: 613-212-0171

Montreal: 514-687-4017

Participant pass code: 15086#

Conference Reference Number: 1053825#

A replay of the conference call will be available for 30 days. To access the replay, listeners may dial 1-855-201-2300 from North America or 403-255-0697 International. The conference reference number is 1053825# and the participant pass code to access the replay is 15086 #.

[lessthaniv]

Daryl Swetlishoff reports that channel checks suggest  Chinese DP prices have already risen US$65/mt since the tariff announcement.  Also, they expect the proposed 50% tariff on new entrants to the DP industry will likely scuttle several new projects in North America and Brazil totaling ~10-12% of global capacity. I'm not sure if LSQ gets exposed to that or not?

 

Guess is it...

 

It appears from the preliminary determination that the interim duty

applicable to unnamed Canadian dissolving pulp producers would apply to dissolving pulp produced by the FGC mill to

the extent such duty remains in effect at the time the FGC mill is producing dissolving pulp and exports it into China.

[obtuse_investor]

Numbers are in line with my expectation-- good to see Landqart producing a healthy EBITDA this quarter.

 

In spite of the NCIB, they didn't repurchase any stock or debentures! Does Chad have something else in mind that requires cash or does he believe that stock buyback at these rates would be a waste?

 

Although, they did retire a tiny amount ($1m) of debt from the Security business.

 

 

[no_free_lunch]

I have the opposite perspective obtuse.  Given that we don't really know if FTP is going to survive or not I would prefer they hold back on any repurchases and conserve cash. 

 

This is a tiny position for me but even with the recent sell-off I just can't see a reason to commit any more capital to this one.  Too many unknowns and a very real risk that they just burn through the cash.

[Liberty]

Numbers are in line with my expectation-- good to see Landqart producing a healthy EBITDA this quarter.

 

In spite of the NCIB, they didn't repurchase any stock or debentures! Does Chad have something else in mind that requires cash or does he believe that stock buyback at these rates would be a waste?

 

Although, they did retire a tiny amount ($1m) of debt from the Security business.

 

My feeling is they're still trying to see if something can work for LSQ or not, and in the meantime, they're holding on to all the cash they can. That's the main thing I can see for not at least buying back some debentures at 60-70 to reduce their interest expenses.

[obtuse_investor]

I have the opposite perspective obtuse.  Given that we don't really know if FTP is going to survive or not I would prefer they hold back on any repurchases and conserve cash. 

 

This is a tiny position for me but even with the recent sell-off I just can't see a reason to commit any more capital to this one.  Too many unknowns and a very real risk that they just burn through the cash.

 

I understand that perspective. I can understand that it feels horrible for folks who have ridden this stock down to these depths.

 

I don't want FTP to destroy their cash reserves buying back stock either, but some purchase of the debentures at large discount to par would be nice to see.

 

You are right that there is a major risk of them burning through the cash over time, but my thesis is that they wouldn't wait that long. The management is highly resourceful and I don't see them just sitting around.

 

This stock at 5/shr is selling at a significant discount to the private market value of just the paper security business. If you look at just the book value of the now profitable security business, it can be conservatively estimated to be $100M. And remember that this does not include the sizeable intangibles (trademarks, patents and customer relationships) that are off the balance sheet today. Being the sole provider of banknotes to the swiss government has got to be worth something more than a $0. If FTP were to sell off this business to a private buyer, it would easily fetch >150M, which is over twice today's market cap of the entire company. This is some serious margin of safety. This is why I started building a small position recently.

 

[triedtestedand]

Thoughts:

 

- Balance sheet

  - cash $33M lower ... but inventory $12M higher, and accounts payable $11M lower .

  - working capital at $141M (vs $155M)

- Landqart

    - operating income break-even now (if take out 1 time $1.3M legal provision from prior year ... which was for what?)

    - quarterly incremental product mix improvement ... $1M in better quarterly EBITDA on both slightly lower revenue (down 2%) and shipments (down 5%)

    - EBITDA now almost covers corporate costs

    - I must say that at this time last year ... if was hard to see stop to the hemoraging ... it's definitely no longer a drag, even with high swiss franc + overcapacity

    - If can squeeze another $1M in quarterly EBITDA improvement, would get to $2.5M/qrtr, $10M/yr ... which at 5.5x EBITDA (which Dresden sold for) would be $55M

    - If Swiss still targeting Durasafe launch for 2015, then 2014 will need to start producing substrate, so that will also help with product mix

- Elephant in the room (Thurso)

    - EBITDA/operating result same as Q2 (which had $2.6M in mtnc costs)

    - cogen sounds to be running fine now (if so, then $4M per quarter would cover interest expense)

    - $1.7M of fair market valuation allowances included in Q3 operating loss

    - 8.5K tonnes of DP inventory at quarter end (sold subsequent to quarter end)

    - produced 2.4K tonnes of NBHK inventory starting tests (which began the last 4 days of Sept)

    - cash costs per tonne better than Q2 (which was best so far), but less than expected (no firm #'s given)

- Other

  - SG&A at $12.2M seems real high compared to any prior period

  - reviewing NCIB debt/share repurchases in light of provisional tariff

 

I was hoping Thurso EBITDA loss would have been $3M less (hard to decipher with the NBHK testing, cogen testing, etc.) and question the SG&A, but otherwise no huge surprises. Presuming quality of NBHK is good, they need to get on with that for a quarter.

 

If buying anything back via the NCIB, I would prioritize targeting the 2016 debs with notional amounts of the equity. 

 

If Chad really is a contrarian investor, then it's hard to

 

[Liberty]

Does anyone know if there's an impact on cogen capacity/efficiency if they switch to NBHK? My understanding is that a big part of what they were burning will end up in the final product (lignin) with NBHK, so if they swing that way for a while and they run out of what they stockpiled, do they need to buy more to use as fuel? Or maybe there are sawmills in the area who would be glad to get rid of the stuff and it's not a problem, I'm not sure.

 

Either way, probably not a huge expense, and maybe they'll never go NBHK long enough for it to become a problem, but I'm curious if anyone knows about this would work.

[alertmeipp]

Does anyone know if there's an impact on cogen capacity/efficiency if they switch to NBHK? My understanding is that a big part of what they were burning will end up in the final product (lignin) with NBHK, so if they swing that way for a while and they run out of what they stockpiled, do they need to buy more to use as fuel? Or maybe there are sawmills in the area who would be glad to get rid of the stuff and it's not a problem, I'm not sure.

 

Either way, probably not a huge expense, and maybe they'll never go NBHK long enough for it to become a problem, but I'm curious if anyone knows about this would work.

 

I checked with IR on the same on a similar question, they said no impact on co-gen re: NBHK.

[Liberty]

Does anyone know if there's an impact on cogen capacity/efficiency if they switch to NBHK? My understanding is that a big part of what they were burning will end up in the final product (lignin) with NBHK, so if they swing that way for a while and they run out of what they stockpiled, do they need to buy more to use as fuel? Or maybe there are sawmills in the area who would be glad to get rid of the stuff and it's not a problem, I'm not sure.

 

Either way, probably not a huge expense, and maybe they'll never go NBHK long enough for it to become a problem, but I'm curious if anyone knows about this would work.

 

I checked with IR on the same on a similar question, they said no impact on co-gen re: NBHK.

 

Good, thank you!

[alertmeipp]

Does anyone know if there's an impact on cogen capacity/efficiency if they switch to NBHK? My understanding is that a big part of what they were burning will end up in the final product (lignin) with NBHK, so if they swing that way for a while and they run out of what they stockpiled, do they need to buy more to use as fuel? Or maybe there are sawmills in the area who would be glad to get rid of the stuff and it's not a problem, I'm not sure.

 

Either way, probably not a huge expense, and maybe they'll never go NBHK long enough for it to become a problem, but I'm curious if anyone knows about this would work.

 

I checked with IR on the same on a similar question, they said no impact on co-gen re: NBHK.

 

Good, thank you!

 

To be exact, IR said there "SHOULD" be no impact.

 

Hopefully, we get a relief rally tomorrow if Chad do a good job at the CC.

[no_free_lunch]

Obtuse,

 

I view it as more binary.  If the goal is to return cash to shareholders then yes, certainly buy as many shares as possible before closing the DP business and selling the security business.  Then return the remaining cash to the remaining shareholders.  The problem is, if that was the goal they would have done it already, they would have done it after the tarriffs were announced.  I think management is more "ambitious" than that, which is the problem.  I am not sure they won't plow through all of the cash trying to fix the DP business.  I just don't see them giving up on that any time soon.  There is just too much upside if prices turn. 

[Liberty]

 

To be exact, IR said there "SHOULD" be no impact.

 

Hopefully, we get a relief rally tomorrow if Chad do a good job at the CC.

 

I don't expect the stock to move up before January. Too many people just waiting for any uptick to sell and get a tax loss for the year. But I'm happy to be proven wrong...

 

But starting next year, without that pressure, with Landquart breaking even or making some money, the cogen, and thurso closer to full ramp up, even with the tariffs (which hopefully drive DP prices up by more than 13%), things should get more interesting.

 

But now we also have to keep an eye on NBHK prices (and remember they have capacity for 250k tons of that, not 200k tons like DP). Hopefully that holds. Ah, the joys of being levered to commodity prices  :P

 

I wish they had gotten that subsidy to switch to natural gas at thurso. Anything to bring costs down...

[alertmeipp]

I guess with the volume so low on this one it can be either way.

[obtuse_investor]

Obtuse,

 

I view it as more binary.  If the goal is to return cash to shareholders then yes, certainly buy as many shares as possible before closing the DP business and selling the security business.  Then return the remaining cash to the remaining shareholders.  The problem is, if that was the goal they would have done it already, they would have done it after the tarriffs were announced.  I think management is more "ambitious" than that, which is the problem.  I am not sure they won't plow through all of the cash trying to fix the DP business.  I just don't see them giving up on that any time soon.  There is just too much upside if prices turn.

 

I fear that you may be right! I hope you are wrong. :o)

 

Let us see how it unfolds. That is all we really can do at this point.

[Liberty]

Hopefully, we get a relief rally tomorrow if Chad do a good job at the CC.

 

It looks like you might have been right, at least so far.