DGAP-News: FORTRESS PAPER CLOSES ACQUISITION TO ENTER THE SPECIALTY CELLULOSE AND BIO-ENERGY SECTORS AND THE ASSOCIATED FINANCING
(firmenpresse) - Fortress Paper Ltd. / Acquisition/Corporate Action
03.05.2010 10:50
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For immediate release
FORTRESS PAPER CLOSES ACQUISITION TO ENTER THE SPECIALTY CELLULOSE AND
BIO-ENERGY SECTORS AND THE ASSOCIATED FINANCING
VANCOUVER, British Columbia, April 30, 2010 - Fortress Paper Ltd.
('Fortress Paper' or the 'Corporation'), a leading producer of security and
specialty papers, is pleased to announce the successful completion of its
acquisition of the assets of a northern bleached hardwood kraft ('NBHK')
manufacturing facility located in Thurso, Quebec (the 'Thurso Mill') from
Fraser Papers Inc. ('Fraser') for net proceeds of approximately $1.2
million. With this successful acquisition, Fortress Paper will commence
the conversion of the Thurso Mill 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).
Chad Wasilenkoff, CEO of Fortress Paper, states, 'We are pleased to
announce the transaction has closed. We intend to move aggressively to ramp
up operations at the Thurso Mill and anticipate production of NBHK to
commence in mid June of this year during the interim period while we
immediately begin the conversion of the Thurso Mill into a dissolving pulp
operation. We are finalizing the terms of employment with several key
individuals with extensive experience in dissolving pulp conversions and
should be able to provide more details on this matter in the coming weeks.
This acquisition will diversify our specialty product mix and we believe
will provide a significant financial contribution to Fortress' growth
aspirations.'
The acquisition of the Thurso Mill has been 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.
Concurrent with the completion of the acquisition the Company has finalized
$102.4 million project financing with Investissement Québec ('IQ') and a
$15 million convertible debenture (the 'Debenture') with Solidarity Fund
QFL. Additionally, included in the assets being purchased is approximately
$9.9 million in credits (black liquor credits) granted under the Canadian
government's Pulp and Paper Green Transformation Program.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.
New collective agreements have been negotiated with all three unions which
will be in effect until 2016. The defined benefit pension plan which
existed under the previous collective agreements has been replaced with a
defined contribution pension plan, eliminating the risk of future unfunded
pension liabilities. Under these new agreements, Fortress will not be
assuming any of the previous pension liabilities. Management is confident
that these agreements will ensure a positive partnership with the union and
a stable, efficient cost structure through the transition into dissolving
pulp.
Further Details:
Fortress Paper has completed a loan agreement whereby Investissement Québec
has agreed to provide up to $102.4 million to Fortress Specialty to support
the proposed business plan in respect of the Thurso Mill. The loan is
secured by the capital assets of Fortress Specialty and has 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.
Fortress Paper has also issued a $15 million convertible debenture (the
'Debenture') to Solidarity Fund QFL. The convertible debt matures in five
yearswith an interest rate of 7% per annum. The Debenture is convertible,
in whole or in part, at the option of Solidarity Fund QFL into common
shares of Fortress Paper at any time after closing of the debenture at a
conversion price equal to $20.00.
The Solidarity Fund QFL is a development capital company that channels the
savings of Québec residents into investments in all sectors of the economy
to help create and maintain jobs and to further Québec's economic growth.
The Fund is a partner, either directly or through its network members, in
approximately 2,000 companies.
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 an approximately 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.
About Fortress Paper
Fortress Paper is a leading international producer of security and other
specialty papers. Fortress Paper operates three mills, the Landqart Mill
located in Switzerland, the Dresden Mill located in Germany and the
Fortress Specialty Cellulose Mill located in Canada. 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. Fortress Paper's pulp business currently includes NBHK
with plans to convert this capacity into dissolving pulp production.
Fortress Paper plans to build a biomass based cogeneration plant at the
Thurso Mill.
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 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; 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; 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 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.
03.05.2010 10:50 Ad hoc announcement, Financial News and Media Release distributed by DGAP. Medienarchiv atwww.dgap-medientreff.deandwww.dgap.de---------------------------------------------------------------------------
Datum: 03.05.2010 - 10:50 Uhr
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