Author Topic: FGE.to - Fortress Paper (formerly FTP.to)  (Read 762064 times)

Cardboard

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Re: FGE.to - Fortress Paper (formerly FTP.to)
« Reply #2710 on: May 03, 2019, 05:46:16 AM »
So what is the purpose of your posting? Ever being told to get lost?

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finetrader

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Re: FGE.to - Fortress Paper (formerly FTP.to)
« Reply #2711 on: May 03, 2019, 06:11:34 AM »
Investing in the common will be  a Homerun or a Zero at this point.

Hard to assess the odds for each scenario.

But if chances are 50/50, and that Homerun scenario will at least triple you money. Then it probably worth the shot.

For the record , I am in. Using The House money I brought in investing in the Debentures. My average price is way higher than today's price though.

This is also a play on climate changes. e.i.  severe drought in India or China

Everywhere we hear about blue gold (water) scarcity. Cotton production requires a lot of water and there is a strong correlation between Cotton and Viscose Price.

« Last Edit: May 03, 2019, 06:25:07 AM by finetrader »
Live to invest, invest to live

bizaro86

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Re: FGE.to - Fortress Paper (formerly FTP.to)
« Reply #2712 on: August 23, 2019, 07:10:41 PM »
They've announced a plan to investigate a restructuring or strategic options.

Cigarbutt

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Re: FGE.to - Fortress Paper (formerly FTP.to)
« Reply #2713 on: August 23, 2019, 08:29:59 PM »
They've announced a plan to investigate a restructuring or strategic options.
I've looked at the debentures this week re: risk and reward.
The decline in dissolving pulp prices has been brutal, enduring and quite unexpected (vs expected demand-supply mismatch). A rebound is possible but who will invest in more capacity in this trade environment where China is the main player?
I come to the conclusion that a simple recap is not enough and, at the very least, new capital is needed at a very high cost.
After coming to a conclusion, I noticed that Mr. W. has been unloading equity and decided to pass.

What am I missing going forward?

bizaro86

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Re: FGE.to - Fortress Paper (formerly FTP.to)
« Reply #2714 on: August 24, 2019, 07:19:24 AM »
They've announced a plan to investigate a restructuring or strategic options.
I've looked at the debentures this week re: risk and reward.
The decline in dissolving pulp prices has been brutal, enduring and quite unexpected (vs expected demand-supply mismatch). A rebound is possible but who will invest in more capacity in this trade environment where China is the main player?
I come to the conclusion that a simple recap is not enough and, at the very least, new capital is needed at a very high cost.
After coming to a conclusion, I noticed that Mr. W. has been unloading equity and decided to pass.

What am I missing going forward?

Probably nothing :)

The financial position is terrible here. I bought a few debs at $6 as a speculation. The only thing that I think is possible to save them is IQ putting in a bit more money. They already agreed to subordinate and extend their existing financing.

Even if they take terribly expensive senior money if they stay afloat and convert the debs I should be able to get more than $0.06 after a conversion by selling shares.

SharperDingaan

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Re: FGE.to - Fortress Paper (formerly FTP.to)
« Reply #2715 on: August 24, 2019, 09:11:39 AM »
They've announced a plan to investigate a restructuring or strategic options.
I've looked at the debentures this week re: risk and reward.
The decline in dissolving pulp prices has been brutal, enduring and quite unexpected (vs expected demand-supply mismatch). A rebound is possible but who will invest in more capacity in this trade environment where China is the main player?
I come to the conclusion that a simple recap is not enough and, at the very least, new capital is needed at a very high cost.
After coming to a conclusion, I noticed that Mr. W. has been unloading equity and decided to pass.

What am I missing going forward?

Probably nothing :)

The financial position is terrible here. I bought a few debs at $6 as a speculation. The only thing that I think is possible to save them is IQ putting in a bit more money. They already agreed to subordinate and extend their existing financing.

Even if they take terribly expensive senior money if they stay afloat and convert the debs I should be able to get more than $0.06 after a conversion by selling shares.

Fortress is going to have to roll this convertible as they don't have the means to pay it off.
They will be negotiating from weakness, and most would expect them to get taken to the cleaners. Hard to see how the bondholders do NOT get a very fat bonus of 'new' convertibles for agreeing to lower the coupon rate; and a new convertible rate that will give them at least 35-40% of the company upon dilution.

Ultimately you're hoping to pick these up for <50 cents in the dollar, and a high cash yield, as PMs are forced to sell.
Then an eventual takeout at 125% of PAR by a new buyer for FTP.
But in the interim, a lot of pain.

We did very well on FTP the last time this happened .....
But would we do it again? No.

If you like high risk, maybe there's a place for you.
But otherwise, a distressed pref is just not worth the angst.

SD



bizaro86

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Re: FGE.to - Fortress Paper (formerly FTP.to)
« Reply #2716 on: August 24, 2019, 01:08:56 PM »
They've announced a plan to investigate a restructuring or strategic options.
I've looked at the debentures this week re: risk and reward.
The decline in dissolving pulp prices has been brutal, enduring and quite unexpected (vs expected demand-supply mismatch). A rebound is possible but who will invest in more capacity in this trade environment where China is the main player?
I come to the conclusion that a simple recap is not enough and, at the very least, new capital is needed at a very high cost.
After coming to a conclusion, I noticed that Mr. W. has been unloading equity and decided to pass.

What am I missing going forward?

Probably nothing :)

The financial position is terrible here. I bought a few debs at $6 as a speculation. The only thing that I think is possible to save them is IQ putting in a bit more money. They already agreed to subordinate and extend their existing financing.

Even if they take terribly expensive senior money if they stay afloat and convert the debs I should be able to get more than $0.06 after a conversion by selling shares.

Fortress is going to have to roll this convertible as they don't have the means to pay it off.
They will be negotiating from weakness, and most would expect them to get taken to the cleaners. Hard to see how the bondholders do NOT get a very fat bonus of 'new' convertibles for agreeing to lower the coupon rate; and a new convertible rate that will give them at least 35-40% of the company upon dilution.

Ultimately you're hoping to pick these up for <50 cents in the dollar, and a high cash yield, as PMs are forced to sell.
Then an eventual takeout at 125% of PAR by a new buyer for FTP.
But in the interim, a lot of pain.

We did very well on FTP the last time this happened .....
But would we do it again? No.

If you like high risk, maybe there's a place for you.
But otherwise, a distressed pref is just not worth the angst.

SD

I think you've missed some of the action here. They already did roll them, so the expiry is a long way out now. But their position is now so poor I doubt they will continue paying the interest. These are trading at 6 cents on the dollar, well below $0.50...

I bought a few here, and the case I'm hoping for is that they convert them to equity at the market price (as the indenture permits) and I can sell the equity for ~20% of face value.

sculpin

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Re: FGE.to - Fortress Paper (formerly FTP.to)
« Reply #2717 on: August 24, 2019, 01:26:54 PM »
Current EV for FGE is ...

IQ loan $118mm
IAM loan $35mm
Converts $62 @ $0.07 = $4.3mm
Equity 15mm @ $0.14 = $2.1mm

Total EV = $160mm

Production capability is 190,000 tonnes

EV/production = $842/tonne

Sappi is increasing its capacity in South Africa at a cost of $2,940 tonne.
Lenzing is thinking of building a new DP mill in Brazil at a cost of $2,889/tonne. FID by end of 2019.

Would it be worth either of these 2 or any other strategic/private equity to offer $1,200/tonne for FGE. Less than half the cost of new build or expansion.  They would also get the assets of the Advanced Bio Products. All depends on how long one assumes DP will be depressed, current mill reliability and whether the current Board of Directors and the their new advisors are relatively competent in resolving this crisis.

At a $1,200/tonne valuation there would be left $75mm roughly for CVD's & equity or 100% on the FGE.DB and maybe $0.80 for the common.

sculpin

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Re: FGE.to - Fortress Paper (formerly FTP.to)
« Reply #2718 on: August 24, 2019, 01:27:38 PM »
FGE bioenergy

Potential value in the FGE cogen bioenergy plant could be much greater than the $35mm IAM loan secured against it.

Have an old FTP powerpoint from 2015 describing it as being worth $120mm. Also have some correspondence with a director few years ago that said...

Their deal with Hydo Quebec is not only very good but I learned is is not replicatable which makes a conversion very very attractive to a party that has cash and/or downstream viscose assets.
 
24 Megawatt cogeneration power facility: they buy industrial power and sell back to the grid for 3x the price.
 
Could be a good test of its value as Raymond James has a valuation of Conifex's cogen bioenergy plant at 8 times ebitda for a value of $112mm on a recent research report & CFF is in the process of selling its BC assets. I would think FGE's could be worth more as Qc doesn't have same current shortage of biomass aval as BC right now. However would need to know the details of the PPA with Hydro Quebec. FGE bio energy did about $21 mm in revenue recently.

Could be a good asset to sell to the likes of Boralex or Innergex. Right now the asset has a debt on it of about $35mm with IAM but could be substantial value above this on a standalone sale assuming this is allowed or practical? Or does this energy plant make the entire mill more attractive to a Sappi, Lenzing, etc???

Rayonier just sold their Matane pulp mill to Sappi for $175 million US...

https://www.pulpandpapercanada.com/rayonier-to-sell-matane-que-pulp-mill-to-sappi-1100001826/

SharperDingaan

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Re: FGE.to - Fortress Paper (formerly FTP.to)
« Reply #2719 on: August 24, 2019, 03:13:44 PM »
What a shit show these days...

We wish you luck, but the smartest thing right now would be to just shut it down and liquidate. At the current loss rate, they will BK by year-end at the latest - maybe even earlier. While there might be buyers for some of the assets; any offers are going to be at well below market price, and its a buyers market. Hard to see how the coming losses and write-downs come in at less than the current 86M of combined equity (21) and debenture (65) capital.

SD