Fortress Paper




The rationalization of activities and investment in the two mills had the effect of converting the annual losses to profits in recent years. Having studied how Chad Wasilenkoff proceeds, it is likely that it profits continue to increase while risk will be reduced over the years. New technologies have been developed and pattented in recent years for paper currency. In addition, the paper 2-layer tapestry pattented made by Fortress Paper Mill increased its sales by 10-20% per annum in a market that is declining by 1-2% per year. This new type of paper replaces the traditional tapestry paper. The market for tapestries for the current year has suffered a sharp decline with the global economic crisis, but return to normal should be easily acheived in the next 3 years. The mill is still profitable and returns about 2million per year.

Converting paper machine PM1 to security papier in Dresden will increase the capacity of producing security paper (most profitable product for which fortress cannot currently supply for demand) from 2500 tons to 10000 tons (400% upgrade).

Current profits are at 1.23 per share for the trailing twelve month (last 4 quarters) (excluding cellulose group gains from cellulose operations for the last 2 months of 2.9M). An estimated profit at 1.40 or more for fiscal year 2011 and the following is most likely because the available capacity for “banknotes” is increased by 2 500 tonnes to 10,000 tonnes (400%) with conversion of paper machine # 1 (PM1) in January 2011. With a capacity increase of 400% in the security section, it is realistic to double the profit per share over 3 years. This gives a potential profit per share $ 2.80.

As of December 2010, Fortress bought a plant from the gouvernment of Canada to produce security paper for that country.  We do not have numbers to share now, but profit will probably increase and a new contract signed.


Thurso mill was bought at a ridiculous price (1.2M) and currently have a book value of 42M.  An extraordinary gain on Q2-2010 was recorded to adjust that value.  I particulary like the idea of having “negative goodwill” on acquisition of a business!  Anyhow, by substracting startup costs of Thurso Mill, a net profit of 2.9M have been recorded on 1.25 month of operation!  This raises the per sare profit of at least 20¢ for Q2.  Standard pulp price have drop since Q2, but margin is still interesting and profits will be generated consistently until conversion in June 2011.  Production capacity for cellulose will turn around 200k tons per year but current signed contracts are already at 170k!  Production is sold before building the plant!   I really like this idea!

Current viscose pulp price (cellulose) ranges from 1200$/ton to 1700$/ton.  Production costs have been estimated at 600$/ton.  Doing the math is simple, Fortress will get a net profit of 600$ to 1100$ by ton!  These are incredeble margins.  Moreover, the pulp production leaves 30% of side-products.  Theses will be converted to other bi-products in the future.  So long-term profit by ton will even rise!


To ensure acceptable debt, Fortress issued shares and convertable debentures (already converted as of now).  This has a dillution effect of about 10 to 15%.  Moreover, credit lines were opened pour Thurso mill conversion and they will easily conver the costs.  Fortress was able to buy used boilers for a fraction of new boiler prices.  They saved around 40M$ in this transaction.

Massive capital investments were done to actualise and upgrades capacity in all plants in the last years, but Fortress reduced debt by 60% before Thurso acquisition!



Quick facts from Fortress Paper

Landqart Mill – Landqart, Switzerland

We are a manufacturer of wood-free, uncoated paper and regard ourselves as being in a position of responsibility towards our co-workers and our environment. But we are also an important economic factor in our region. Therefore, being conscious of this, we also uphold and care for other values. We are future-oriented and proactively tackle the challenges of new requirements, whereby we give priority to honest, pragmatic solutions.. The practical expertise and technical know-how of our co-workers, on the one hand, and the customer-friendly orientation of our sales and marketing, on the other, give us confidence in being able to master the demands of the future.

Our paper, as a rule, is at home within a small segment of the market, where, with our product range, tailored to the wishes of a relatively small circle of clients, we offer added value to our customers and thereby ensure for ourselves a sound means of existence.

Our wide spectrum of paper manufacturing methods and processing possibilities permits us to implement practically every requirement desired by our customers. The comparatively small capacity of our plant offers our customers the possibility to procure from us tailor-made products in relatively small lot sizes

Products and Services

During the company’s more than 100-year-old history, Landqart AG has developed special competence in the manufacturing of fine grade, uncoated, wood-free paper, a competence which today manifests itself in three main areas of activity. In each case, it is a matter of high performance services for selected niche markets in which Landqart AG has made a name for itself as a traditional, highly customer-oriented supplier.

On the one hand, we supply the market for so-called security paper – i.e. types of paper possessing the characteristics necessary for increased security. In this field, we cover the entire range from simple ticket card to high-security paper for bank notes made of 100% re-cycled textile material with portrait watermarks.

On the other hand, we also cover the graphics market, supplying high-quality paper for printing, such as brilliant white opalin and paper for creative artwork such as our range of drawing paper. These types of fine paper and other paper for specialised, technical applications, such as, for example, involving siliconisation or filtration, are supplied under the generic category of special paper.

It is in the nature of our business that we posses a wide range of possibilities for refinement and further processing after the actual production of the paper itself. Of these two finishing and refining processes we offer two processes also as converting services and/or services for third parties.


The beginnings were founded upon the art of paper making on the Mühlbach (millstream) in Igis. Later the area was called the Landquart factories. The exact date when the art of paper making was actually born in this region cannot be determined. What is known, however, is the date when the Landquart paper factories, from which the landqart® enterprise of today ater developed, were first founded. That was in 1872. The stormy time after the initial founding was followed by a depressed demand during the period of the two world wars. Subsequently, came the technology boost in the Europe of the sixties and seventies, which went hand in hand with the first strategic corporate decisions, i.e. to enable the company to onfront the world market more efficiently. Thus, the paper factories experienced a merger with the paper factories on the river Sihl and they participated in a joint venture with the then largest supplier of security paper. It was a transformation from a manufacturer of graphic paper to a reputed supplier of security paper. What remained was the finest art of paper making. Other core competencies were added: security characteristics, global sales in highly sensitive segments, project business operations. Today though paper manufacturing is still the core business of landqart®, the company is re-orienting to also become the supplier of security solutions and is a global player both in the market for high security paper as well as in the growing market for trade mark protection. Meanwhile, after 130 years, the second age of new enterprise has begun. A development the outcome of which remains to be seen.

Dresden Papier GmbH


Dresden Papier GmbH with its mill at Heidenau looks back on a long papermaking tradition in Saxony. A dedicated and highly qualified staff as well as significant investments into new products and the expansion of production capacity and infrastructure is the basis for high-quality products and satisfied customers at home and abroad.

Wallpaper base has been manufactured since decades on the duplex paper machine. In consistency with the technological trend Dresden Paper manufactures since years non-woven wallpaper base is recognized as the highest quality in the market.

It is Dresden Papier’s philosophy to face the demands of our customers in the wallcovering industry.

Thanks to our wide range of products, our Technical Customer Service and our Research and Development Department we are able to deal with customer’s individual challenges, offer tailor-made solutions or assist in cooperation with our customer a market placement.

Dresden Papier holds a Quality Management System in accordance with ISO 9001:2000 and some specific products grades are FSC-certified.


Non-woven wallpaper base, uncoated

Non-woven wallpaper base, coated


The company is located on the Elbe river in Saxony nearDresden, the State capital.

Papermaking started in Heidenau in 1888. The production has always been focused on high-quality printing papers. Today, a staff of 100 people – most of them employed in the continuous production process – produce non-woven base for the wallcovering industry.

On the twin-wire fourdrinier machine duplex non-woven wallpaper base in grammages between 65 and 150 gsm are manufactured. The products are based on virgin pulp such as bleached chemical pulp, CTMP and mechanical pulp as well as on synthetic fibre. The machines, systems and process equipment are all adjusted to making special printing grades. The paper machine – which is permanently kept to the highst technical standard – is equipped with various aggregates for surface refinement to meet the high quality requirements in modern printing and coating processes of our non-woven’s. The mill obtained the quality certification under ISO 9001:2000 in December 2003, passed the FSC-Audit (SGS-COC-0127) successfully in May 1998, and is able to supply FSC-certified products on request. Our products fulfil all requirements of the RAL-quality standard GZ 479.

A modern natural-gas-fired power plant was erected in 1993. lt generates the required amounts of steam and covers the electrical demand of the mill by a gas turbine with excess energy being fed into the public system.

End of 1999 a two-stage biological effluent treatment plant has been completed.

Disclosure : Author has a position in FTP.

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One comment on “Fortress Paper
  1. […] in. Some just passed by. Three of the elite stocks that came under my attention and stayed in are Fortress Paper, Gencor Industries and Jewett-Cameron. The last one of them released its fiscal year 2011 annual […]

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