Author Topic: FGE.to - Fortress Paper (formerly FTP.to)  (Read 678493 times)

alertmeipp

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Re: FTP.to - Fortress Paper
« Reply #2610 on: November 05, 2017, 06:38:25 PM »
I am ok with Landquart being a drag..
my main concern is loonies... most of its cost benefits seems to come down to loonie depreciated a lot in last couple years coz of low oil and gas price.


alertmeipp

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Re: FTP.to - Fortress Paper
« Reply #2611 on: November 10, 2017, 04:28:36 PM »
Any thoughts on this quarter?
Expected to be weak ?

Seems 2018 will be the turn around year?

KJP

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Re: FTP.to - Fortress Paper
« Reply #2612 on: December 21, 2017, 04:43:39 AM »
Landqart has been sold for CAD 28 million.

Cigarbutt

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Re: FTP.to - Fortress Paper
« Reply #2613 on: December 21, 2017, 06:10:22 AM »
Interesting.
I had held FTP years ago when the main businesses were wall paper manufacturing and money printing (security papers products).
Missed the roller coaster ride and the dissolving paper adventure after.
Ironic that they made more money (higher proceeds) when they entered into a leaseback transaction in April 2016 for the Landqart mill (+/- 59 million CDN).

sculpin

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Re: FTP.to - Fortress Paper
« Reply #2614 on: December 21, 2017, 09:16:29 AM »
Landqart has been sold for CAD 28 million.

Very disappointing value for this asset. At least they will now have enough cash in the parent company to fully repay the 2019 debentures. And now that it is a single asset Company, would be much easier to sell this to an industry or strategic buyer.
« Last Edit: December 21, 2017, 09:40:45 AM by sculpin »

sculpin

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Re: FTP.to - Fortress Paper
« Reply #2615 on: December 22, 2017, 05:27:31 AM »

Sale of Security Paper Segment results in Dissolving Pulp pure play

FTP-TSX
Daryl Swetlishoff CFA | 604.659.8246 | daryl.swetlishoff@raymondjames.ca Bryan Fast CFA (Associate) | 604.659.8262 | bryan.fast@raymondjames.ca Forest Products | Pulp & Paper

Outperform 2
C$6.00 target price ↑

Cashing in on Security Paper Segment

Recommendation

Following the announced sale of the Security Paper segment, Fortress Paper is now a pure play dissolving pulp (DP) producer, with capital to deploy on strategic acquisitions or initiatives. We would expect news over the coming quarters regarding deployment of this capital which could be a potential catalyst for the stock. In addition we look for operational consistency at the company’s FSC mill in Quebec as driving share price performance. With DP pricing an area of strength lately, we note that Fortress remains highly levered to changes in the commodity with a US$25/mt move in the price resulting in a $1.00/sh impact to our theoretical target price.

Analysis

 Sale of Security Paper Segment results in Dissolving Pulp pure play –

Fortress Paper
announced the sale of their security paper segment division to the Swiss National Bank and Orell Fussli Holding (the purchasers). The purchase price paid was CHF21.5 mln (~C$28 mln), and effectively exits Fortress completely from the security paper segment. We highlight that the company had previously entered into a sale leaseback for the land and buildings of the security paper business in Jun-16 for C$59 mln. The transaction results in a multiple of 3.7x LTM EBITDA, and 5-6x 2018 EBITDA (following the cancellation of 30% of the order book for 2018 highlighted below).

 Cancelling of contracts at Landqart – As the company highlighted on Nov-17, Fortress received notice from a large customer of the security paper segment, that they would be cancelling their orders for 4Q17 and 2018. These orders accounted for ~16% and 30% of the order book for Landqart for 2017 and 2018 respectively. We expect this resulted in talks with the Swiss National Bank to sell the security paper segment, as to not interrupt the normal course of business for the country’s currency distribution.

 Increasing Dissolving Pulp forecast – Dissolving Pulp (DP) prices have remained relatively stable over the last few months averaging ~$915/mt in 4Q17 to date, with the most recent quote in the US$930/mt range. Recent industry commentary has suggested that ~500k mt of dissolving pulp supply switched to paper pulp following the recent rally in pulp prices. We expect this to a supportive development for DP pricing, as such we are increasing our 2018 forecast by US$25 to US$950/mt. Coupled with the sale of the security paper segment, we are increasing our target by $1.50/sh to $6.00/sh.

Valuation

Our $6.00/sh target is based on an unchanged 6.25x 2018 EV/EBITDA, which is the midpoint of the 5-year trading range of 5.25-7.25x.

KJP

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Re: FTP.to - Fortress Paper
« Reply #2616 on: December 22, 2017, 06:21:59 AM »
Do they actually have excess capital?  As of Q3, they had $34 million in cash.  The Landqart sale should free up about $5 million in restricted cash.  So, assuming no taxes on the Landqart sale, they now have about $67 million (34+28+5) in cash.

They've got $13-14 million in annual term debt amortization, plus $62 million of convertible debentures due in  December 2019.  So, that's about $90 million in debt coming due in the next 24 months.

Needless to say, the Thurso can have production issues at any time, so should be run with adequate liquidity.  Given all that, do they really have excess capital?

I know they should be rolling in money if DP prices and USD/CAD stay where they are and they actually get their costs down to CAD$850/ton, but I'd like to see that actually happen first.

sculpin

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Re: FTP.to - Fortress Paper
« Reply #2617 on: December 22, 2017, 06:38:13 AM »
Do they actually have excess capital?  As of Q3, they had $34 million in cash.  The Landqart sale should free up about $5 million in restricted cash.  So, assuming no taxes on the Landqart sale, they now have about $67 million (34+28+5) in cash.

They've got $13-14 million in annual term debt amortization, plus $62 million of convertible debentures due in  December 2019.  So, that's about $90 million in debt coming due in the next 24 months.

Needless to say, the Thurso can have production issues at any time, so should be run with adequate liquidity.  Given all that, do they really have excess capital?

I know they should be rolling in money if DP prices and USD/CAD stay where they are and they actually get their costs down to CAD$850/ton, but I'd like to see that actually happen first.

Yeah I was surprised at RJ's comment on that. I personally don't think they have excess capital as the cash is there to offset the debenture maturity of $62 million in 2019. The other loans are at the subsidiary level (Thurso) and I would expect cash flow there to pay any interest & principal payments.


roundball100

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Re: FTP.to - Fortress Paper
« Reply #2618 on: December 29, 2017, 06:07:42 PM »
Any ideas why they would enter a $5 million credit agreement at LIBOR plus 5.75 %?

https://finance.yahoo.com/news/fortress-paper-announces-us-5-231800079.html

-Roundball

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Re: FTP.to - Fortress Paper
« Reply #2619 on: December 30, 2017, 07:30:11 AM »
On the rate, I don't think that they have much flexibility. They have leverage, no profitability and already assets tied to other loans.

The amount is really low, relatively speaking, but it is in USD and a revolver. So this looks like a line of credit in USD to facilitate purchase of supplies or equipment for the plant.

Cardboard