DGAP-News: FORTRESS PAPER ANNOUNCES AN ACQUISITION TO ENTER THE SPECIALTY CELLULOSE AND BIO-ENERGY SECTORS
(firmenpresse) - Fortress Paper Ltd. / Miscellaneous
19.03.2010 15:21
Dissemination of a Corporate News, transmitted by
DGAP - a company of EquityStory AG.
The issuer / publisher is solely responsible for the content of this announcement.
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FORTRESS PAPER ANNOUNCES AN ACQUISITION TO ENTER THE SPECIALTY CELLULOSE
AND BIO-ENERGY SECTORS
VANCOUVER, British Columbia, March 18, 2010 - Fortress Paper Ltd.
('Fortress Paper' or the 'Corporation'), a leading producer of security and
specialty papers, in a major strategic move today announces the signing of
an asset purchase agreement ('APA') to acquire the assets of a northern
bleached hardwood kraft ('NBHK') manufacturing facility located in Thurso,
Quebec (the 'Thurso Mill') from Fraser Papers Inc. ('Fraser') with the
intention to convert this operation into a world class, low cost, specialty
cellulose (dissolving pulp) operation. Concurrently, Fortress Paper
intends to build a biomass-based cogeneration plant at the Thurso Mill
which will produce green electricity resulting in material net energy
savings (income).
Upon closing of the acquisition of the Thurso Mill, which will be completed
through its wholly-owned subsidiary Fortress Specialty Cellulose Inc.
('Fortress Specialty'), the Corporation intends to incur capital
expenditures of approximately $153 million to convert the non-operating
NBHK mill into a high quality specialty cellulose mill and to construct a
new cogeneration facility. In connection with the proposed capital
expenditures, Fortress Paper is pleased to announce that it has
pre-arranged specific financing initiatives to fund the conversion and
cogeneration projects.
The specialty cellulose mill is planned to have an annual production
capacity of more than 200,000 air dried metric tonnes and is expected to be
completed in mid-2011. In entering into the specialty cellulose sector,
Fortress Specialty will focus on producing dissolving grade cellulose for
the textile industry, primarily targeting viscose fibre (rayon) products
which have shown strong growth of approximately 10% in China and 7%
worldwide over the past five years. Rayon is a technically evolved and
versatile fibre with many advantages, particularly in the warmer and higher
growth regions of the world.
Fortress Paper also plans to construct a 25 megawatt cogeneration facility
to service a net 18.8 megawatt power supply agreement over a 15 year term.
The location of the cogeneration facility provides it with access to
on-site generation of biomass and an extensive local network of chip and
other biomass suppliers. The cogeneration facility is expected to be
supplying electricity in the fourth quarter of 2012.
Chad Wasilenkoff, CEO of Fortress Paper, states, 'We are very pleased to
announce this new acquisition which we believe will add significant
shareholder value in the years to come. Both the Board of Directors and
management of Fortress Paper feel that this new opportunity warrants the
diversification of the Corporation into other specialty sectors as it has
the potential to materially enhance shareholder value. Once the conversion
and cogeneration projects are complete, we will be entering a new product
segment which offers long-term growth prospects and attractive margins.
During the interim period, we will capitalize on the current strength of
the NBHK pulp market. We feel it is important to emphasize that this is not
an acquisition to enter into the pulp industry, but rather the opportunity
to acquire assets that are ideally suited to be converted into a
bio-refinery and produce high value-added products. We intend to
strategically enter this sector at a time when demand exceeds current
capacity. We believe this trend will continue over the next several years
given the limited announced new capacity.'
Pursuant to the terms of the APA, Fortress Paper will pay Fraser $3 million
in cash at closing, subject to certain adjustments. The closing of the APA
is subject to various conditions, including (i) as a result of Fraser and
its subsidiaries having filed for creditor protection under the Companies'
Creditors Arrangement Act (the 'CCAA') in Canada, the approval of the
transaction by the Ontario Superior Court of Justice (Commercial List) in
connection therewith, (ii) Fortress Specialty entering into renewed
collective agreements with all unionized employees of the Thurso Mill, and
(iii) the Corporation and Fortress Specialty securing financing as
necessary to implement their proposed business plan at the Thurso Mill.
Fortress is optimistic that it will be able to finalize mutually
satisfactory renewed collective agreements with the three unions imminently
and looks forward to building a mutually beneficial relationship with the
community of Thurso. The closing of the acquisition is anticipated to occur
on or about April 30, 2010.
Investissement Québec ('IQ') has committed, by way of an agreement in
principle, to grant Fortress Specialty a loan in the amount of up to $102.4
million to support Fortress Paper's proposed business plan in respect of
the Thurso Mill. The loan will be secured by the capital assets of Fortress
Specialty and will have a term of 10 years. Interest will be calculated at
a fixed rate of 5.0% per annum for the first five years, followed by a rate
based on the cost of IQ's funds plus 2.0% for the remaining five years, up
to a maximum of 5.5% per annum. The loan is subject to receiving the
requisite approval of theGovernment of Québec and is subject to completion
of definitive documentation.
Fortress Paper has also signed a conditional commitment letter with a
Québec financial institution providing for the subscription of an unsecured
convertible debenture of Fortress Paper (the 'Debenture') in the principal
amount of $15 million maturing in five years with an interest rate of 7%
per annum. The Debenture will be convertible, in whole or in part, at the
option of the Québec financial institution into common shares of Fortress
Paper at any time after closing of the debenture at a conversion price
equal to the lesser of 145% of the trading price of the common shares on
the Toronto Stock Exchange (the 'TSX') and $20.00.
The Debenture will be redeemable, in whole or in part, at the option of
Fortress Paper, from the second anniversary date of its issuance at par
plus all accrued and unpaid interest, provided that the volume weighted
average trading price of the common shares of Fortress Paper on the TSX is
not less than 125% of the conversion price. The Debenture financing is
subject to various conditions, including approval by the decision-making
authorities of the Québec financial institution, satisfactory due
diligence, the concurrent completion of the IQ financing, the closing of
the APA, receipt of TSX approval for the issuance by Fortress Paper of the
Debenture and the completion of definitive documentation.
Included in the assets being purchased from Fraser is approximately $9.9
million in credits (black liquor credits) granted under the Canadian
government's Pulp and Paper Green Transformation Program (the 'GTP'). The
GTP aims to improve the environmental performance of Canada's pulp and
paper industry by funding approved capital projects with environmental
benefits. Fortress Paper also intends to apply for approximately $15.2
million in federal credits under the Green Infrastructure Fund program of
the Minister of Transport, Infrastructure&Communities relating to the
planned cogeneration project.
As no definitive agreements have been entered into with respect to the
financing initiatives described above, there can be no assurance at this
time that the financing in connection with the Thurso Mill will be
completed on terms acceptable to Fortress Paper or at all.
For more information on the Fortress Specialty Cellulose project you can
access the Fortress Specialty Cellulose PowerPoint Presentation by going
directly to the link at www.fortress.presenternet.com
A prerecorded voice presentation is available to accompany the PowerPoint
and can be accessed at:
Prerecorded Presentation dial-in number 1-877-353-9587 or from overseas
403-699-1055 and follow the prompts. When prompted, enter the 6 digit
conference reference number 274464 followed by the number sign (#). The
recording will be available for 7 days.
Future replays of the PowerPoint Presentation can be accessed by a link on
the front page of our website at www.fortresspaper.com and alternatively at
www.fortress.presenternet.com
About Fortress Paper
Fortress Paper is a leading international producer of security and other
specialty papers. Fortress Paper operates two paper mills, the Landqart
Mill located in Switzerland and the Dresden Mill located in Germany.
Fortress Paper's security papers include banknote, passport and visa papers
and its specialty papers include non-woven wallpaper base products, and
graphic and technical papers. As an extension of its security papers
business, the Landqart Mill has been actively developing and marketing
innovative paper-based security products.
For more information, please contact:
Chadwick Wasilenkoff
Fortress Paper Ltd.
604-904-
2328
info(at)fortresspaper.com
www.fortresspaper.com
This news release contains certain forward-looking statements that reflect
the current views and/or expectations of Fortress Paper with respect to its
performance, business and future events, including statements relating to
the Corporation's completion of the APA and the outcome of its financing
initiatives; its intention to convert the Thurso Mill into a specialty
cellulose (dissolving pulp) operation; its plans to build a biomass based
cogeneration plant and the financial results and production capacity
expected therefrom; its ability to complete the necessary financing to make
planned capital expenditures; the expected effects of the acquisition of
the Thurso Mill on the business of the Corporation; the state of the market
in the specialty cellulose and green bio-energy sectors; and its intended
application for federal tax credits. Forward-looking statements are based
on the then-current expectations, beliefs, assumptions, estimates and
forecasts about the business and the industry and markets in which the
Corporation operates, including assumptions relating to the Corporation's
ability to complete the APA; its ability to complete the necessary
financing to successfully implement its business plan in respect of the
Thurso Mill; the success and profitability of the specialty cellulose
operation and cogeneration plant; the expected effects of the acquisition
of the Thurso Mill on the business of the Corporation; the state of the
market in the specialty cellulose and green bio-energy sectors; and the
Corporation's ability to obtain certain federal tax credits.
Forward-looking statements are not guarantees of future performance and
involve risks, uncertainties and assumptions which are difficult to
predict. Investors are cautioned that all forward-looking statements
involve risks and uncertainties including, without limitation, that the
Corporation will not complete the APA; will not obtain the necessary
financing to complete its business plan in respect of the Thurso Mill; will
be unable to implement its business plan in respect of the Thurso Mill as
planned or at all; that the specialty cellulose operation and cogeneration
plant will not be successful or profitable and will not meet anticipated
production capacities; that the Corporation will not obtain the federal tax
credits; and those risks relating to changes in the market, potential
downturns in economic conditions, fluctuations in the price and supply of
raw materials, foreign exchange fluctuations, labour relations, regulatory
requirements, reputation, competition, dependence on major customers, and
other risk factors listed from time to time in the Corporation's public
filings. These risks, as well as others, could cause actual results and
events to vary significantly. Accordingly, readers should not place undue
reliance on forward-looking statements and information, which are qualified
in their entirety by this cautionary statement. Fortress Paper does not
undertake any obligations to release publicly any revisions for updating
any voluntary forward-looking statements, except as required by applicable
securities law.
Not for distribution to United States newswire services or for
dissemination in the United States.
19.03.2010 15:21 Ad hoc announcement, Financial News and Media Release distributed by DGAP. Medienarchiv atwww.dgap-medientreff.deandwww.dgap.de---------------------------------------------------------------------------
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