Fortress Paper – Plan Nord is a deal

Can you beleive what a deal Chad signed today? Let’s resume :
– He purchased the assets only (the buildings, equipment and other ancillary property) for 7.5M payable in 5 years from Domtar.
– Quebec Ministere du Developpement
economique, de l’Innovation et de l’Exportation will acquire the land and will provide FTP with full and unconditional ownership and access rights to the LSQ Mill assets! This prevents any envrionnemental problem from the previous land owner. An incredible deal!
– The plant already have a 30 megawatt cogeneration plant that can be started that will generate (based on Thurso estimates) around 1.5M per MW in cost reduction or 45M (remember they purchased the plant for 7.5 payable in 5 years).
– The expansion plan to convert LSQ from a regular pulp plant to a Viscose plant is expected at 222M but Quebec’s will also finance this plan up to 132.4M at 5% interest rate.
– The plant will produce at full capacity (2014+) up to 250 000 ADMT of viscose. With a 600$ margin (again based on average Thurso expected margin) this new acquisition may add up to 150M profit per year before financing charges for a 7.5M acquisition and a 222M renovation or 1.5Year full return of invested capital !!!

Disclosure : Author is long FTP.

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2 comments on “Fortress Paper – Plan Nord is a deal
  1. Karl says:

    What about the Q4 2011 sales drop? As well, do you know when the Q1 2012 should be released?

    Thanks Dom 😉

    • Dominic Nadeau says:

      Q4 was better than experted actually. The plant was shut down for DP conversion so it explains the drop in revenue. The Q1 will be the test ‘show me the money’. I expect it end of April or beginning of May.

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