RFP trades @16.5$ or 6.5x EBITDA/EV, which is not even taking into account the pension deficit. With the pension it trades in excess of 10x EBITDA/EV. This for a business that needs a lot of Capex to keep operating. Clearly at current valuations, you need much much better results going forward to make this work.
TTM EBITDA had been quite poor due to the weather, I think for the current set of assets, a more normal run-rate would be around 350-400 without hiccups, which brings the valuation to around 4.5-5x. Historically its lowest had been @ 4x and also that's when mgmt was buying back stock, so that gives me some comfort. Pension is an issue, but I think if one can't entrust Prem to run the thing or one believes interest rate has further to drop, there are probably bigger problems to be had. If you read my post I have went through it at length. The way I see it is, run the pension for 2 more years and w/ 1% rise in rates the problem goes away entirely.
CapEx is certainly a problem. Think they are directing it to pulp and sawmills where the pricing & growth are present. Hopefully the ROIC there is a good 2-3 years out. I do buy the integrated model though.
After all, not a whole lot of catalyst and a mediocre business at best. But I think if wood prices soars, or management gets creative w/ the newsprint asset (ie MLP it like Perry suggests), there's a lot of value to be had. Massive FCF a few years out too.
On the MLP point, I think it's highly doable given the distress (low multiples), structure (top 5 controls 80% of US capacity), and RFP's nature (80%+ virgin fiber so it will qualify). They can probably explore this option a few years out once the NOLs are used, or meanwhile they could even get taken out for all of the above reasons.
