triedtestedand

Count me as well as nervous, but optimistic ... which may be symptomatic of some type of split-brain disorder. ;-) That said, there's potentially encouraging tidbits from the following two recent posts by one analyst: http://www.glgroup.com/News/Fibrias-1Q11-Reports-Shows-Impressive-Results-53829.html?cb=1 http://www.glgroup.com/News/China-Gains-On-The-US-But-Still-2-Paper-Producer-53811.html?cb=1 Canfor and West Fraser results looked good (from NBSK perspective), so we'll see in about 2 weeks what to make of Fibrek's results. I continue to hope they are at point to pay off the remaining 1/2 of the debentures this quarter, as that cleans up their capital structure nicely, and if nothing else, would remove an impediment for other firms to do some sniffing.

Hey all: I put a note into FBK ... a) They didn't get notice of Pabrai's investment until the release came out, so they're looking into it as well. b) They confirmed Q1 quarterly results will be posted May 19th timeframe, noting extra time has been allowed to prepare for switch to IFRS accounting. Regarding "b", I'd like to resurrect a line of questioning for Sharper and others with accounting savvy regarding IFRS: I'm presuming that for FBK, the biggest effect of transition to IFRS accounting will be a (significant) change in book value (downwards) relating to valuation of their fixed PP&E assets? If so, will this result in a big one-time loss as the headline for the quarter? If such a loss does materialize, does it translate into a shield against current/future taxes from profits on operations? Also, does IFRS get implemented by all companies at the same time, or do they get to choose transition timeframe? I'm thinking other companies will have similar issues, but that the early adopters of such transition may bear the brunt of most of the communication/optics issues of such. Thanks for any feedback. I'm not so much worried about this in the long-term for FBK, but near-term it could be a turn-off for some. (My own valuation of FBK is premised largely on FCF from operations, noting that FBK has very high quarterly depreciation tucked into results, which impacts net profit but hides the alchemy of turning fixed asset values into $$/less-debt).

Something doesn't add up here ... based on how I read the press release, Pabrai's holdings BEFORE the rights offering (where # shares outstanding grew from ~90M to ~130M) would have been 12,874,854 shares (i.e. 14,654,534 - 1,778,500), or ~14.3% of the outstanding amount, so it's not like his holdings % increased over the 10% reporting threshold as a result of the transaction ... in fact his % ownership decreased after the rights offering. Between Pabrai and FFH, they hold ~37% of the shares outstanding. Maybe Pabrai's holdings were highlighted in putting together the proxy for the AGM, which might imply that he increased beyond the 10% reporting threshold after March 25, 2010. That's the date referenced in last year's proxy. http://www.fibrek.com/static/en/PDF/infoFinanciere/NP/NP_2009.pdf Probably worth a note to FBK investor relations, no?

Latest weekly update from FOEX shows NbSK pricing continuing to firm up ... at least from a USD perspective ... although from an FBK perspective (largely?) offset from continuing strength of $CDN vs USD. www.foex.fi

IV/Sharper: Can you guys explain the IFRS changes discussed on page 30 of the MDA ... looking at a very large impairment of assets. Impairment of Assets IFRS requires a write down of assets if the recoverable amount (defined as the higher of the fair value less costs to sell and the value in use of a group of assets) is less than its carrying value. Value in use is determined using discounted estimated future cash flows. Current Canadian GAAP requires a write down to estimated fair value only if the undiscounted estimated future cash flows of a group of assets are less than its carrying value. Depending on the circumstances, this may lead to the recognition of impairment losses under IFRS that would not otherwise have been recognized under current Canadian GAAP. In addition, certain requirements within IAS 36 related to the factors used when estimating future cash flows for impairment testing may require changes to Fibrek’s accounting policies. While no impairment of assets existed at December 31, 2009 under current Canadian GAAP, Fibrek expects that retrospective application of changes in its accounting policy on adoption of IFRS will result in the recognition of an impairment of approximately $140.5 million at January 1, 2010. Recognition of the impairment is expected to result in a corresponding decrease in the carrying value of Fibrek’s capital assets as well as in equity.

Agreed. No more harping on lack of (comprehensive) website presence ... they even posted an investor presentation. ;-) Now we wait until wednesday to see how Q410/FY10 closed, and start to get sense of what Q1 holds. Results for Q1 will be impacted by strengthening of $CDN, but that should be offset if NBSK pricing pushes back up, and as volumes increase due to efficiencies gained from installation of new press during the Q4/10 mtnc cycle. Key metric for me remains EBITDA/cash from operations ... as balance sheet transforms from PPE valuation to cold, hard cash (and/or lack of debt). I wonder how long it will be until an announcement is made regarding repurchase of the remaining ~$25M in convertible debentures? The optimist in me hopes for announcement in early Q2 (or with Q1 results announcement), coincident with an announcement to initiate modest share buyback and/or dividend. Did anyone notice that ABH filed much improved operating results for Q4/10 ... http://www.montrealgazette.com/AbitibiBowater+shows+operating+profit/4321527/story.html Also, that ABH is FFH's second largest equity holding (after JNJ) ... http://www.gurufocus.com/news.php?id=123035 Things that make you go Hmmm ...

IV: Wow ... significant movement. 1YR out+ futures have all risen by almost 10% ... in one month ... Sharper -> you spotted this early. Here's today's weekly summary of pricing ... no changes: http://www.paperage.com/foex/pulp.html http://www.foex.fi/

MERC's results are out: http://www.reuters.com/article/2011/02/14/mercerinternational-idUSL3E7DE25E20110214

Regarding MERC: They are NYSE listed, and may be some significant short covering going on ... - they had 10% of shares shorted http://finance.yahoo.com/q/ks?s=MERC+Key+Statistics - there was activity reported from buyins.net http://www.tmcnet.com/usubmit/2011/02/08/5295848.htm Regarding NBSK: A WSJ article today that was rather bullish (Global Pulp: Softwood Price Outlook Firming ... by Lester Aldrich) http://online.wsj.com/article/BT-CO-20110208-712982.html

UCCMAL: I get Level II quotes within BMO Investorline account environment ... late last week there was a glut around ~$1.41/$1.42, but ask has since appeared to been lowered (across a relatively few # of orders). Latest is below ... there's about 340K shares available in the range stated (about $450K worth). Level ll Quote for FIBREK INC. (FBK: Toronto) Bid Ask Price Total Size # of Orders Price Total Size # of Orders $1.34 4 2 $1.35 39 2 $1.33 117 4 $1.36 869 6 $1.32 131 5 $1.37 1030 3 $1.31 36 3 $1.38 1506 4 $1.30 312 2 $1.39 98 2 $1.29 90 1 $1.40 136 3 $1.28 85 2 $1.41 60 1 $1.25 48 1 $1.42 56 2 $1.23 60 1 $1.44 30 1 $1.22 25 1 $1.45 60 1

Not everyone thinks so ... there's currently the biggest stack of sell orders pending (between 1.35 and 1.38) that I've seen in awhile ...

Uncommonprofits: Check out the book "Born to Run" ... it's more storybook than thesis, but a great read, and good for making conversation at a dinner party. I've got zero aspirations to do an ultramarathon - but the author does raise some good arguments in favour of the idea that we're made to run - making strong argument, with evidence from some tribe in Namibia I believe that still does this today - that humans (if approaching the hunt in the right manner, and as a group) can essentially "run" their prey to exhaustion, more by outlasting them than anything. http://www.amazon.ca/Born-Run-Hidden-Superathletes-Greatest/dp/0307266303 http://en.wikipedia.org/wiki/Christopher_McDougall#Born_to_Run Thanks for the link to Art Devany ... good arguments counter, probably meaning that the truth is somewhere in the middle ... Note that in his #1 reason he highlights that the first marathon runner, Phidippides, collapsed and died at the finish of his race ... and then goes on to also say that "Jack LaLanne, the only well-known guru to advocate body building, will outlive us all." ... of course the irony is that Jack died last week. Cheers

All: I hadn't poked around in this thread since the original conversation focused on the very large cup size now promoted at Starbucks ... there's another seguay opportunity by the way ;-) ... but was trolling some of the investment banter last night and noticed all the recent posts in this thread regarding sugar/nutrition/etc. ... I must say it only reaffirms a thought one of you posted that this board harbours a wealth of knowledge and curiosity. Thanks again Sanjeev! It was also a very timely and informative nutrition read as I've started a program to run a marathon in late May/early June (likely Grandma's, or possibly San Diego ... if anyone has any opinions, I'd be all ears). I'm looking to run sub-3 hours, and seeking to get my weight/BMI down to avoid extra baggage charges (i.e. time/energy) during the race. In the footsteps of Ericopoly, this has come about as was able to "de-institutionalize" myself last month (i.e. quit my job), and the break has afforded me the luxury of time to do the necessary training (and recovery in between!), while also keeping me away from the proverbial business lunch temptations. On that lunch note, a message to Sanjeev ... I'm Vancouver based, and have been ever meaning to track you down in person and take you for lunch (so we can see FFH stock spike again, ha!), but was always travelling ... I'll send a note to your personal email, as now that I have some space in my schedule, I'd be keen to take you for whatever sized lunch/coffee you see fit. Cheers

PS ... The following quote is also reassuring: ... "It is currently Fibrek's intention to repurchase the remaining Debentures before their December 31, 2011 maturity, assuming our financial position and prevailing market conditions are appropriate," stated Patsie Ducharme, Vice President and Chief Financial Officer ... Sounds like they want to continue to keep on hand some of the cash being generated from operations ... thus the 2 phase approach? Otherwise, why not just tap into the credit line to pay things off ... I presume there's some transaction cost/friction either way?

Well ... not the total sum ... but directionally what I think everyone here was looking for ... http://www.tradingmarkets.com/news/press-release/fbkzf_fbk_fibrek-announces-partial-redemption-of-7-convertible-unsecured-subordinated-debentures-1450571.html

ScorpionCapital: I'll take the bait ... a) I just wish the financial press would highlight more that these recent "new" rules/limits are just re-introductions of old rules that seemed to work well for the longest time without promoting overindebtedness. The Winnipeg Free Press article was one of the few I read today which noted (quite rightly) Scott Brison's observation of such. b) In terms of capitalism vs socialism ... actually you could argue that the feds are moving more towards capitalism, as "it will no longer insure lines of credit secured on homes as if they were mortgages, which should put pressure on banks to increase their standards when it comes to deciding who qualifies for such loans". Bank accountability ... who'd a thunk that would be a good idea

Steady as she goes, right thru into 2011 ... http://www.paperage.com/foex/pulp.html

Steady as she goes message is reiterated in latest summary from Dave Hillman: http://www.glgroup.com/News/Market-Pulp-Prices-To-Remain-Stable-51747.html

Hey ... check this out: http://business.financialpost.com/2010/11/22/domtar-to-boost-dividend-and-buyback-shares-analyst/ Sounds like a familiar story ... pay down debt ... be disciplined with pricing ... except FBK is rated a sell, and Domtar a strong buy ... ahh, the joys of being a contrarian.

Grenville: Check out www.sedi.ca Hey Sharper: Looks like Dundee Securities slapped a sell rating on FBK ... Is that a contrarian buy signal?? All: NBSK pricing down $2 in the past week ... www.paperage.com/foex/pulp.html ... but then again, the CDN$ is down 1.3 cents today as well

UCCMAL: If I was Mel Gibson, I wouldn't be hiring these guys to rehabilitate my image ... That said, to your points: - someone's buying a lower prices ... 500K shares traded friday, another 400K shares traded today ... with another 200K in bids around $1/share - FFH did a fair bit of the recap (~40% of it) themselves. - At the end of this quarter (or early next), they'll likely have enough $ to pay off the $50M debenture, at which point, from a big picture/simplistic balance sheet point of view: - accounts receivables will offset accounts payables - inventory will offset long term debt As such, what could be left in 90 days is a stated ~$500M asset (yes, that value is arguable), depreciating at a $40M/yr clip, but currently generating $80M+/yr in FCF, and with a accumulated deficit of ~$200M (arguable) to protect against taxes ... all for the exhorbitant price of <2x FCF. Downside remains as always (USD depreciation, pulp price deterioration), but that's the beauty of cigar butt investing.

FFHWatcher: My thesis is similar ... but premised that FFH (and other existing shareholders) would not look kindly on a further dilution (all long-term shareholders having ponied up $40M to shore up balance sheet already) so therefore would seek paying off debentures with cash only ... they're pretty close to the goal line now (both from time standpoint and cash/credit flexibility standpoint), so having a little more patience is key. >500K shares traded today ... somebody's soaking up the shares

A question for the board: FBK shows an accumulated deficit of 213M as of Sept30/10. It does not appear in any form on the balance sheet as a deferred tax asset (presumably because there's still question as to it's value, if any, as consequence of tax reassessment that is discussed in the financial statements?) If it did, what value might it have? (i.e. What is the corporate tax rate for FBK in Quebec?) If it was 30%, then wouldn't that potentially be a $60M hidden nugget? Thoughts?

I agree w FFHWatcher. It looks like they sold as much RBK as they produced, so change in inventory is likely all NBSK related. Like FFHWatcher also notes, they perhaps could have dumped it, but likely held back due to planned downtime and/or better discipline. The fact that they did this and they still come out of the quarter with almost $25M in cash was bonus in my mind.

Pluses: - strong (and strengthening) balance sheet - book value of $3.70 - long-term debt of $85M (reduced further $3M after Oct1) - total debt/capitalization ratio of 22.1% - cash and equivalents of $25M - consolidated quarterly EBITDA of $18M - accumulated deficit of $213M (i.e. long runway to paying taxes) - appeared to be disciplined with inventory/pricing (produced ~92K tonnes of NBSK, only sold ~74K tonnes) heading into Q4 downtime - go forward cost savings on wood chips ($10M/year) - higher efficiencies once new equipment deployed in Q4 (13K tonnes/year ... translates to $12M at current prices) Concerns: a) CDN $ vs USD $ ... reduced $2.5M against Q3 earnings b) RBK is essentially breakeven (high cost of wastepaper) c) potential pulp price softening ... although Chinese sales show increase in past # of weeks? Overall, quarterly net income was lower than I might have hoped, but offset by better cash and balance sheet mgmt than I would have hoped. They are ahead of where I thought they might be to have cash cushion built up to retire debentures in the new year (which is less than 60 days away ... so start your Christmas shopping, and remember to stock up on toilet paper), after which they will have lot greater flexibility and options.