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

[alertmeipp]

Some speculation by a SH post about a Tembec merger:

 

y390: this tembec combination was first suggested by Paul Quinn (forestry analyst) and then later on it was evoked by Chad himself during an interview. Interestingly, when Chad talked about it tembec was around a yearly low of 1.75 and thereafter started a march toward a high of 3.50... He nailed the bottom! Anyway, tembec settled around 2.50 with a market cap of 250m. Tembec has been focusing on specialty pulp which has fairly high and stable price with good margin, and power cogen. They have major capex going on to expand, some of it awaiting funding. Dissolving pulp such as Ftp produces is the first step toward specialty. Tembec needs cash to complete their expansions and cogen projects. Ftp happens to have good size cash on hand. Ftp needs cash flow to service debt and wait for the market turn. Tembec has cashflows. Ftp is right in tembec backyard. Ftp has a few former tembeckers aboard. Tembec could eventually turn LSQ into a specialty pulp mill. By adding ftp the become more of a pulp powerhouse and get two lucrative cogen sites and have a both ftp mills to eventually convert into "higher and better use" as demand grows. Combining both co would bring savings too in SG&A. Chad could retire and let experienced operators realize the value surfacing of what he has assembled thus far with all that wind in the face. Tembec has no monies to buy ftp but I guess that's what merger of equals are made for. The newco would have all the potential to benefit from the various pulps growth, the abundant resource in qc, the favorable hydro rates, with the financial strength to go thru adjustment period such as now.

 

This tax-loss selling brings out once again an incredible opportunity.

 

Incidently, m. Wasilenkoff will be around this week end in thurso, maybe a good time to meet m. Lopez ;-)

 

http://www.lapresse.ca/le-droit/economie/201311/08/01-4708861-le-grand-patron-de-fortress-a-thurso.php

 

I don't see how TMB can afford to pay up. If Chad sell out now cheap, it would potentially be like selling us out at the bottom of the DP cycle.

 

 

[Liberty]

I don't see how TMB can afford to pay up. If Chad sell out now cheap, it would potentially be like selling us out at the bottom of the DP cycle.

 

It would only make sense if it was a merger of equals and both companies were trading similarly cheaply in the stock market, IMO. Then they could ride the cycle back up together as a stronger combined entity. But I haven't studied TEMBEC much, so I can't speak on their valuation. Doubt it makes sense, but maybe this could happen in the future if both companies are trading at similar relative valuations.

[OptsyEagle]

I don't see how TMB can afford to pay up. If Chad sell out now cheap, it would potentially be like selling us out at the bottom of the DP cycle.

 

It would only make sense if it was a merger of equals and both companies were trading similarly cheaply in the stock market,

 

Except for a few bucks saved on corporate expenses, I would have a hard time understanding the synergies of a merger like this.  My guess is that Tembec would want to pocket a gain since, in it's mind, it would be providing much needed expertise.  We also have the politics of who would run the company and is Tembec still  PO'd from Fortress luring away Yvon Pelletier.  I can't see Chad walking away unless he can pocket $50 million or so, and I am sure that is not going to happen.

[Liberty]

Except for a few bucks saved on corporate expenses, I would have a hard time understanding the synergies of a merger like this.  My guess is that Tembec would want to pocket a gain since, in it's mind, it would be providing much needed expertise.  We also have the politics of who would run the company and is Tembec still  PO'd from Fortress luring away Yvon Pelletier.  I can't see Chad walking away unless he can pocket $50 million or so, and I am sure that is not going to happen.

 

Agreed. I'm definitely not agitating for that outcome, just sharing what I saw.

 

If Tembec had stronger cash flows, a merger might help internally finance LSQ, and the specialty DP expertise could be valuable if it helped go into that market much more quickly than otherwise (but I don't know if it would help that much?).

 

Apart from that and some SGA savings, I don't see much benefit. And if it meant Chad left, it would severely hurt the thesis IMO.

[Steady77]

Another $5.4 million of non-core land sold at Landqart during Q3.  Chad has expressed an interest in selling this mill.  I guess they are preparing for the sale and maximizing the value by selling off the excess land that is not required for the business.

[obtuse_investor]

Another $5.4 million of non-core land sold at Landqart during Q3.  Chad has expressed an interest in selling this mill.  I guess they are preparing for the sale and maximizing the value by selling off the excess land that is not required for the business.

 

Notice that those assets were sold at a very large premium to the book value of those assets...  This is further validated by looking at the fire insurance on the buildings and equipment mentioned in the IPO prospectus.

[turar]

Design of a new Kazakhstani 20,000 tenge banknote:

 

[Liberty]

Design of a new Kazakhstani 20,000 tenge banknote:

 

Is that bird a transparent window (which would mean durasafe)? It's kind of hard to tell depending on what was undernearth the note.

 

In any case, nice money! I like the graphic design and symbolism.

[turar]

No idea Liberty, I think this is a leaked image, or something like that.

[Liberty]

No idea Liberty, I think this is a leaked image, or something like that.

 

It seems to be Durasafe. With Google Images I traced the image back to this eBay auction:

 

http://www.ebay.com/itm/HYBRID-Test-Note-Specimen-Bluebird-Landqart-Kazakhstan-Printing-Factory-/200915622366

 

It is over and the image has been removed, but the description remains:

 

This auction is for a beautiful HYBRID Testnote produced in cooperation between Landqart, Kazakhstan Printing factory and Oberthur (France). Landqart produced the DURASAFE banknote substrate on which the note is printed. It shows many different types of windows on the note. The print is produced by Kazahstan Printing works. There is also a OVI security feature (the bird) on top of the front. The note contains many many different security features. Please check out the pictures. Highly rare !

[Steady77]

Another $5.4 million of non-core land sold at Landqart during Q3.  Chad has expressed an interest in selling this mill.  I guess they are preparing for the sale and maximizing the value by selling off the excess land that is not required for the business.

 

Notice that those assets were sold at a very large premium to the book value of those assets...  This is further validated by looking at the fire insurance on the buildings and equipment mentioned in the IPO prospectus.

 

I wonder how much more non-core land (if any) is available for sale at the Landqart mill.  A hidden asset for sure.

 

 

[Steady77]

The hearing on the MOFCOM anti-dumping investigation into pulp opened today.

 

http://www.ccfgroup.com/newscenter/newsview.php?Class_ID=600000&Info_ID=20131115107

 

 

 

 

[alertmeipp]

Re: tax loss selling

 

I was looking at last year's trading. Pretty much bottomed at around mid Nov and up 60-70% by Jan. A repeat of last year will be nice.

 

Was there any news happen during that timeframe to cause the runup?

 

 

[triedtestedand]

Prince Albert (now owned by Paper Excellence, which is a competitor to Domtar) is in similar situation as LSQ.  See article below:

 

http://www.panow.com/node/407215

 

They are looking at fluff pulp as an option ... as - like LSQ - they have been blocked by Domtar from producing NBSK. 

 

Wonder if same is an option for LSQ?

 

Possibly interesting dynamics here, because Domtar has gotten into products (adult diapers, etc.) that use fluff pulp in a big way ... is there a way for Chad to can try and use any Paper Excellence/Domtar competitive elements to relative advantage, and pry Domtar back to table at LSQ in some manner ... either for NBSK, or for fluff pulp?

 

 

[OptsyEagle]

What I would like to know is how can a company that is NOT producing dissolving pulp yet, be guilty of dumping to the point where they should be required to pay a duty of 50%?

 

Why does Canada still buy anything, without a duty on it, from China, would be next question?

 

 

[alertmeipp]

Some insider sale, the transaction date is a day before Q release.. didn't know that they can sell right before release??  Very small amount but the timing is fishy.

 

http://canadianinsider.com/node/7?menu_tickersearch=ftp

 

[alertmeipp]

Some insider sale, the transaction date is a day before Q release.. didn't know that they can sell right before release??  Very small amount but the timing is fishy.

 

http://canadianinsider.com/node/7?menu_tickersearch=ftp

 

Okay, looks like it's execution of rights and they sell some shares to cover their cost. Maybe it's a pre-planned thing.

[obtuse_investor]

Some insider sale, the transaction date is a day before Q release.. didn't know that they can sell right before release??  Very small amount but the timing is fishy.

 

http://canadianinsider.com/node/7?menu_tickersearch=ftp

 

Okay, looks like it's execution of rights and they sell some shares to cover their cost. Maybe it's a pre-planned thing.

 

It was a flurry of rights exercising activity... see attached screenshot from their full report.

 

[lessthaniv]

Lenzig being affected by low cotton prices:

 

http://www.bloomberg.com/news/2013-11-14/lenzing-falls-to-three-year-low-in-vienna-as-profit-forecast-cut.html

 

China is sitting on a mountain of cotton stock and wants to unload it:

 

http://online.wsj.com/news/articles/SB10001424052702304391204579177322368742800

 

China about to dump excess supply? (May be hard to do as quality seems very poor)

 

http://www.bloomberg.com/news/2013-11-05/cotton-slumping-as-glut-expands-record-china-hoard-commodities.html

 

 

It all makes a guy wonder about the motivation for the tariff? The short term effect of the tariff is to raise DP prices at a time when cotton prices are low. This makes DP less competitive as a substitute and ripens domestic demand for cotton. And, it's the Chinese who are trying to unload the stockpiles .... no?

[Liberty]

http://www.montrealgazette.com/business/Fortress+Paper+negotiations+with+China+duty+says/9181449/story.html

[triedtestedand]

<IV:

 

Per Lenzig, VSF selling below China domestic (and imported - via tariff -) price for cotton (traditionally has been sold at a premium) since the spring, and still below the slightly lower (18000RMB) price target rumoured for any more sales of China reserves ... so you'd think it would promote substitution towards VSF/DP.

 

Offsetting that ... at same time, imports of spun cotton/yarn into China have exploded in past year (to get around the tariff on imported cotton).

 

Good reason towards the recent plenum's statement to move towards market forces ...

[Liberty]

The glass half full way to look at it is that they haven't done buybacks in the past few months, so they have all their ammo left for these ridiculous prices.

 

I just hope they aren't still constantly blacked out and prevented from buying because of non-public deals they're working on and such...

[alertmeipp]

they can hire a broker to help the ncib, then they will not be blocked by insider info I think. if they are serious about it, i got a feeling they are in crsis mode last few weeks

 

 

 

 

 

[alertmeipp]

love the volume, need to fresh out the nonbelievers i guess. i will send mine when DP is trading significantly above cost.

[Liberty]

love the volume, need to fresh out the nonbelievers i guess. i will send mine when DP is trading significantly above cost.

 

It's the debenture volume that interests me most. Since the last CC, there's been many days where over 100k have traded for each. That's quite a bit higher than the long-term average, from what I've seen. Hopefully a lot of those are buybacks.