FFHWatcher

Broxy, any response to this? Actually in the example quoted, if his current aging (cash flow) is negative (his current age is generating negative age going forward).. he is dead... and mistaken about the state of his current net age... it is, for GAPP purposes, zero not 30. It is a liability insofar as it will continue to generate negative age flow (years since zero net age) He needs to vote again... but that is problematic given the state of his current negative age flow. RIP PS. The likelihood of his generating age going forward (future age flow) is nil. This is the reason dead people are not considered an investable age asset. Now, when you say dead people are not considered an investable asset, are you referring to Elvis Presley and Michael Jackson? And so it continues... (just for fun)

My current Net Age is 40. Some people think this is a very straight forward calculation, such as taking the difference between the current year and the year you were born. Unfortunately, it is not that simple as I currently do not generate any income, just expenses. Therefore, to properly calculate my Net Age I must adhere to GAAP principles and subtract this future liability to determine my (GAAP) current Net Age. Of course, my GAAP Current Net Age is not equal to the number of years I have been on this planet because the total number of years that I have been on this planet is ignoring my future liabilities, that I may or may not have. For example, if I were to die today, my obituary would read that I died at the ripe old age of 40. The reason why my obituary would read that way is because the future hasn't happened and no one cares how old I MIGHT have become. The simply wanted to know how old I was on the day I died. Let's get back to the calculation of my GAAP Current Net Age. Assuming I used to earn $100k per year and each $10,000 has a Net Present Value (NPV) of 1 year ($100,000 / $10,000 = 10 years) than I am really only 30, not 40. (unless of course, I was supposed to add the 10 years and not subtract it?) Therefore, I voted that I was 30 ??? because if I voted that I was 40, I would only be deceiving myself as it mis-states my true current Net Age (according to GAAP) as I have no current income. :)

Brox; We are not hung up on whether Personal Real Estate qualifies as an asset on an individual's personal Net Worth Statement/Calculation. We are all in agreement that it DOES count and only one person is arguing against it. Let's agree to disagree and move on. Perhaps the Personal Net Worth calculation sucks and it tells us nothing about an individuals true wealth. I think more people would agree with you on that one, I might too. That doesn't mean you arbitrarily change the definition just because it sucks, you feel it is the most meaningless measure of wealth and it can be very deceptive. How about you just stop using the term and call your calculation something different, because as I mentioned earlier, the term Net Worth is already taken and it includes Personal Real Estate. Let's call your definition "GAAP Personal Net Worth" or GAAPPNW for short :)

However, it's an asset because you don't ever *need* to maintain exactly the same "quality of life" in exactly the same location. That is a choice as to how you allocate your assets. I absolutely agree. However, I've never known many people to downgrade their quality of life in order to make a 'better' investment. Perhaps in extenuating circumstances. There may be the cases where an individual is strong-minded enough to downgrade current lifestyle to make an investment that will benefit in the future but I believe that to be the exception rather than the norm. You don't own the things - the things own you. Sounds like you are talking about Net Investable Assets. Your house would be excluded from that calculation. This thread is talking about Net Worth which includes all of your assets, including your home. With the friend of mine that I referred to earlier, when he sells his house, pockets the $8M, will his Net Worth Increase by $8M on that day? His Net Investable Assets will increase by $8M but not his Net Worth. To answer the other question as to where he will live...People who own $8M houses, don't only own one or two. Question: If the US Treasury issues debt at 0% and my friend puts his $8M cash into those treasuries, does his Net Worth go down to $0 the moment he buys those treasuries, just because they don't pay any income and because they will never grow in value? Sounds crazy, right? If Berkshire has $10B cash sitting on their balance she at 0% interest, do they not count it as an asset? It doesn't pay any interest and is not growing in value. Broxburnboy - with all due respect, you can't arbitrarily create or alter definitions for words. I can see that you are trying to make your definitions more specific to investing but Net Worth is not really about investing and generating cash flow nor does it have anything to do with how much it will be worth in the future. A persons Net Worth certainly can and should be used to do that but Net Worth is a very simple calculation (not complex, like you are suggesting) to put a number on adding up everything that you own, realistically estimating what you could liquidate it for (I have never seen taxes excluded although that is arguable and to be conservative, could be subtracted) and then subtract all debts owing at that moment in time. If you cashed out, put all the proceeds in the bank, paid off all debt, lived in your parents basement, how much money would you have in the bank. That number is Net Worth. You are referring to something else and you should not be using the term Net Worth, as it is already taken.

There is a reason that equity in personal real estate is not considered part of net worth.... because if the price is carried on your balance sheet at "market" value..the value is notional.... not realized. The day the home is sold (after deducting all carrying costs and ALL PIT payments) at a profit, the cash so generated can be added to your net worth. You may be surprised to notice that very few homes in very few markets actually end up with a profit. This is because personal homes are a liability... they generate monthly expenses and impair your monthly cash flow (which is the real measure of wealth, not notional net worth). One million dollars notionally stuck in a personal home generates huge monthly expenses. One million dollars invested at 12% generates ~ 10,000/ month. Let's assume that scenario B pays 2000.00/month for rental expenses. Who will be wealthier in a year? in a decade? Who will be a "victim" of the sudden mass realization that notional home equity is illusory. Broxburnboy, what the crap are you talking about? 1/ To understand Net Worth, you have to understand that it has absolutely nothing to do with the past or the future. It has to do with right now, just like a balance sheet. It is essentially the number you get if you were to liquidate everything you own today and pay off all your debts, today. 2/ There is a reason equity in your home IS considered part of a persons net worth. It has value, it is realizable and you can sell it. Home sell everyday. If you don't want to count it for yourself, that is ok with me. My understanding is that the rest of the world counts their home as part of their net worth. 2/ Why wouldn't I carry the value of my home on my personal balance sheet at market value or some sort of net realizable value if I sold it today? I had a client once (he was an accountant) and he carried the value of his Worldcom stock at what he paid for it (not sure how much, $25/share.?) on his personal balance sheet. Market value was about $0.10/share and then $.0. I suppose the $0.10 was notional, so best to ignore it so perhaps his net worth should have be $100,000 and not $0? A good friend of mine is selling his house and it is on the market for $8.25M. He paid $425k. Just a notional gain? Probably should or shouldn't include the $8M on his personal balance sheet? Why would the interest he paid on his mortgage (he probably never had one) or the taxes he paid go into an asset - liability equation? Let's say he paid $500k in property taxes on his house over the past 20 years, why would he subtract that from his net worth on a net worth statement? He does owe it, he has paid it in the past. You would, of course, subtract past expenses from a net profit calculation...sure. He walks away with $8M in the bank...why would he subtract his interest and taxes from that number to see what he is worth today? He is worth $8M if that is all he has and it is cash sitting in the bank after he sells his house, not $425k and not $8M subtract all the taxes and interest he has paid. 3/ Monthly expenses have nothing to do with a net worth calculation. They are in the past. Future monthly expenses are in the future. I have to eat everyday for the rest of my life but I am not going to subtract the present value of my future food cost in my current Net Worth calculation, nor would I subtract my past food costs in my Net Worth calculation. 4/ Similarly, let's assume I had $1,000,000 in a stock and that was everything that I owned with no debt. If that stock paid a 6% dividend for the past 10 years and it is likely going to pay a 6% dividend going forward, my Net Worth is still $1,000,000. The $60,000 dividend in the past and in the future is ignored. Who ever will be wealthier in a year has nothing to do with a Net Worth calculation. Assets - liabilities = net worth

If you're married, you will likely be counting 50% or less of everything someday...plus some sort of monthly payment. lol On a more serious note, net worth is fairly straightforward. It is your portion of total assets minus your portion of total liabilities. If you own a house with your spouse but each have your own investment portfolio,pensions, etc., that is not considered part of matrimonial assets than you would only include amounts that are rightfully yours. Assuming a domestic contract/pre-nup. $500,000 house - Owned 50/50. ($100,000) mortgage - 50/50 $250,000 investment portfolio - His $300,000 investment portfolio - hers ($100,000) margin/investment loan - His His Net Worth House $500,000 / 2 = $250,000 Mortgage ($100,000) / 2 = ($50,000) Investment Portfolio = $250,000 Margin Loan = ($100,000) His Net Worth = $350,000

Pulp Market seems to use a metric ton, AKA : tonne. A tonne is equivalent to 1000kg (2200 lbs). A ton is 2000 lbs. A tonne is approx. 10% larger than a ton.

Management team has been very busy working on getting the new website up and running. Perhaps, once they finish off the website project, they can negotiate paying the Cdn employees in US Currency :-) That would hedge some risk. I have a hard time giving employees significantly better compensation and benefits when the company was on the brink 12-18 months ago, when owners are looking at an 80% loss to capital, when they are not the low cost producer and when many companies in their industry (such as Norkraft) are simply gone/mothballed. Hopefully they can settle on something fair to all parties. About Norkraft The Norkraft Domtar pulp mill in Lebel-Sur-Quevillon (QC). Stopped since November 2005 for a lock out, the Domtar mill permanently closed its door December 18 2008. The pulp mill and the sawmill, also closed, where responsible for 70% of the job in this mono industrial town of 3000 citizens located 600km north of Montreal. Below is an old newspaper clipping. ... (I inserted some comments in brackets that compare Fibrek's Saint-Félicien NBSK to Domtar's Norkraft - pretty similar numbers for comparison purposes understanding that in the late 90's Domtar spent $245M just modernizing the Norkraft plant...and they still couldn't make it a viable business. In some respects the $245M investment by Domtar highlights the potential underlying value to Fibrek's Saint-Félicien Mill, as they are similar but it also emphasizes how cyclical the entire industry is, Feast or Famine by the looks of things). LEBEL-SUR-QUEVILLON, QUEBEC--(BUSINESS WIRE)--Sept. 9, 1997--DOMTAR(ME, TSE, NYSE DTC ) It was a time for celebration today at the Norkraft Quevillon Inc. pulp mill, in which Domtar Inc. holds a majority interest. A major $245-million modernization program, initiated in 1994 and financed with Domtar working capital, has been successfully completed, just in time for the mill's 30th anniversary celebrations. The mill is located in Lebel-sur- Quevillon, Quebec, some 150 kilometres north of Val-d'Or. The modernization project, carried out by a consortium involving the firms Babcock & Wilcox, B.G. Checo and H.A. Simons, included the following components : - a new recovery boiler which, in addition to meeting stringent air emission standards, will boost mill capacity from 740 to 815 metric tonnes per day, providing annual capacity of 280,000 metric tonnes (note from FFHWatcher - Fibrek's Cdn Saint-Félicien's Mill has an annual capacity of around 360,000 tonnes, and in 2010 they are running pretty close to 100%) - a 45-megawatt turbo-generator that converts steam generated by manufacturing processes into electric power (note from FFHWater : Fibrek's new deal is to produce 42.5 megawatt); - a secondary-effluent treatment system completed in September 1995; and, - new sludge and pulp washers as well as improvements to the digester. "The modernization project at Norkraft's Lebel-sur-Quevillon mill reflects Domtar's commitment to its employees, namely that it would invest in the mill to make it competitive on a North American scale," said Raymond Royer, Domtar's President and Chief Executive Officer. "This has been achieved. Now, it is up to us to work together as a team to deliver the desired results. "And there's even more good news," added Mr. Royer. "In addition to the employees having made a financial investment in the project, a work reorganization agreement has been signed earlier this year that significantly increases job flexibility. So doing, mill employees have clearly confirmed their desire to be stakeholders in the mill's success. I sincerely thank them for their contribution, of which they can be extremely proud." Normand Lecours, Senior Vice-President of Domtar's Kraft Pulp and Forest Products Division and President of Norkraft, noted that the start-up, given the size of the project, has proceeded as expected and that the division is beginning to reap some rewards. "The recovery boiler is working almost at its planned production level, and the installation of a co-generation plant will help substantially reduce energy costs while minimizing our vulnerability to costly power failures. "Today, we are celebrating not the end but the beginning of a new phase at the Norkraft mill. I encourage all employees to redouble their efforts to ensure that we achieve, or even surpass, the objectives set out when the project was announced," concluded Mr. Lecours. The Norkraft mill in Lebel-sur-Quevillon is 90 percent owned by Domtar Inc. and 10 percent by mill employees. Domtar is a major North American manufacturer of fine papers, packaging, pulp and forest products that fosters sustainable development through the rigorous application of its integrated forest management policy. A leading manufacturer and marketer of printing and writing papers, Domtar is also a significant Canadian producer of containerboard and corrugated containers and a major Eastern Canadian lumber producer.

If they pay off the debenture, how do you get debt at $150M? Here is my math/thinking. Mid July 2010 Balance Sheet $78M (new) Term Loan $10M - (new) ABL Revolver $75M available credit limit (use is based on inventory and receivables) $51.75M - Conv. Debenture $75M new term loan + $38M rights offering = $113M in cash proceeds June 30, 2010 balance on old term loan = $114M They cancel out assuming $1M used from cash balance, leaving old revolver vs. new revolver Old revolver was $35M at June 30, 2010. As disclosed in MD&A (pg. 16), current ABL revolver balance = $10M and old revolver was discharged. If $10M from new ABL revolver was used to pay off old revolver, than $25M of cash was used in that transaction. Cash position was $42.5M at June 30th, 2010 subtract $25M (for some reason, I had $20M shown here instead of $25M on initial post?) to repay old revolver - 1M needed to discharge old term loan = $16.5M (adjusted down from $21.5 due to adjustment of $20M to $25M) cash as of July 16, 2010. Another quarter is behind us in another week. Last quarter they generated $20M in operating cash flow. NBSK prices were similar or better in this quarter and currency was similar, perhaps we can expect $10-20M in operating cash flow (I haven't done any work on this, just a guess based on minimal changes aside from totally re-doing their debt and issuing a bunch of shares!!).

Here is how I understand it...and a few opinions 1/ The new conversion price is $4.32/share. Due to the fact that Fibrek issued warrants at less than 95% of the current market value to existing shareholders, an adjustment to the conversion price was required. Conversion price went from $4.80 to $4.32. Therefore, if the holders of the debentures converted their holdings to shares, for each $1,000 debenture, they would receive 231.4815 shares ($1,000/4.32 = 231.4815). What holder of the debentures would convert and end up paying $4.32/share when the current market value is about $1.00? 2/ Fibrek could redeem the debentures before Dec. 31, 2010 if the shares of Fibrek are trading at 125% of the conversion price. $4.32 x 125% = $5.40, therefore Fibrek would have to trade above $5.40 by Dec. 31, 2010 in order for Fibrek to redeem the Deb. Therefore, there is a 99.9% chance that nothing will be done on the Debentures before Dec. 31, 2010, if I am understanding the document correctly. Also, Debentures are currently trading at almost $100 or par. I see that the documents show $1000 issue price but, as far as I can see, they trade based on $100 being par, not $1,000. 3/ Debentures issued were about $51M @ 7% and due Dec. 31, 2011. After Dec. 31, 2010 and up to maturity on Dec. 31, 2011, Fibrek can redeem the Debenture at the principle amount plus any accrued and unpaid interest. Fibrek has the option of paying for the redemption of the convertibles (as per the original prospectus) in cash or a combination of cash and shares or just shares. If shares are used, the holders of the converts would receive a share price of 95% of the current price on the TSX (they would receive a 5% discount). For example, if there are $51M worth of debentures outstanding and the closing share price of Fibrek was $1.00, then Fibrek would issue 53.7M shares ($51M / [1.05 x 95%]) 4/ Previous debt holders had covenants with significant restrictions on Fibrek repaying the Debentures. The new term loan and ABL revolver both have restrictions on Fibrek repaying the debentures in cash that involve meeting certain EBITDA to debt ratios and certain borrowing availability requirements. Those criteria are detailed in the the indenture. The above is my understanding of the Convertible Debenture documents on Sedar.com Why all the concern with the Debentures and the potential dilution or the potential opportunity? 1/ The share price of FBK is no where near the convertible price, so dilution isn't going to come from holders converting. 2/ Huge dilution may come about if Fibrek does not meet the EBITDA : Debt criteria and the borrowing availability requirements, assuming they have the cash available to redeem the debentures. My best guess is, unless Fibrek is super flush with cash (ie. has >$75M in cash) and meet all the criteria in which they can pay cash, then they will more likely pay off the debentures with the maximum amount of cash possible with the remainder (if any) in shares, while meeting all the criteria required and listed in the term loan and ABL revolver. The moving number, aside from the cash, will be the share price. If the cash continues to improve, then the share price will likely also continue to improve, which leads me to think that Fibrek will put off the repayment of the Debenture until maturity, or a time sooner than that if they are able to generate enough free cash. If share price pops to $2. or more, perhaps management will feel that issuing some shares will not be as detrimental in diluting other shareholders (ie. 40M shares were diluted at $1.01, so diluting at $2. sounds about half as bad or twice as good?). Fibrek could also go the refinancing route in 2011, but I am sure the Term Loan (SGF) and the ABL Revolver have restrictions on that. It could end up that Fibrek uses $26M from cash and adds $25M to their SGF Term Loan via re-negotiation? That would keep things pretty simple. In either likely scenario, I don't see anything happening in 2010. 50M share dilution is the absolute least preferred option. 100% Refinancing is the 2nd least preferring option 50% refinancing and 50% share dilution is 3rd least preferred 50% cash and 50% shares (assuming >$1.50) is 4th least preferred 100% cash is most preferred option (mid to end of 2011) assuming they are cash flush and have full access to $75M ($0 balance) on ABL Revolver. Any other opinions, suggestions, factual inaccuracies or omissions to the above post?

Sounds like Credit Suisse is expecting pulp supplies to tighten up, expects China demand to return due to low inventories, and has increased their NBSK expectation for 2010 and 2011. http://www.ibtimes.com/articles/65447/20100924/credit-suisse-kimberly-clark-downgrade-neutral-price-target-earnings-estimates-valuation-huggies-dia.htm CS downgraded Kimberly Clark for the following reason...(CK is an NBSK user) "Primarily to reflect the $20-to-$35 per metric ton increases to our US northern-bleached softwood kraft (NBSK) forecasts (to $957 for 2010 and $970 for 2011), we are reducing our EPS estimates for Kimberly-Clark. While a weaker dollar could help Kimberly-Clark's performance, we believe higher pension costs could at least offset positive currency moves, especially in 2011," said C. Dillon, an analyst at Credit Suisse. Earlier, Credit Suisse' global paper/packaging team raised its global market softwood pulp price forecast to reflect recent spot price increases in China and the less-severe price correction seen in other regions, Credit Suisse said in a report to clients. In addition, the analyst demonstrated that global pulp markets would tighten substantially should China's pulp demand return to the long-term growth trend seen before 2009's spike. The analyst believes demand in China will soon rebound amid low inventories, muting the price correction.

Call them. I called them earlier this week and left a message for Patsie on her vm. Companies need to know that shareholders are constantly analyzing them. Telephone has more of an impact than an email, IMO. I have also found a document that was posted to SEDAR last month. It could explain Fibrek's Website situation, somewhat. It is their Disclosure and Insider Trading Document. It was updated on Aug. 4, 2010 and posted to SEDAR. Below, I have copied the section on Electronic Communications. They lay out, what looks like a great foundation for electronic communications. I wonder when they will implement it? 7. ELECTRONIC COMMUNICATIONS The use of electronic communications to disseminate investor information is subject to Canadian securities laws and the Exchange’s Policy Statement on Timely Disclosure. Accordingly, the rules previously outlined under this policy also apply to electronic communications. Although Fibrek management considers the Internet to be an effective tool to broadly disseminate investor information, it is also of the view that poorly managed electronic communication could lead to violations of Canadian securities laws. Fibrek therefore considers it important to establish guidelines regarding the use of electronic communications. 7.1 Fibrek website Quality of information posted on the website Fibrek’s website must not contain any misleading information. Material information is misleading if it is incomplete, incorrect or omits a fact so as to make another statement misleading. In this regard, the Vice President Change Management and Supply Chain will be responsible for ensuring that: (i) Fibrek’s website contains all material information communicated to security holders through traditional media; (ii) the information is dated when posted on the Fibrek website; (iii) the information is accurate in all material respects and, if not, that it is corrected; (iv) the information complies with Canadian securities laws; (v) Fibrek’s website is updated regularly; and (vi) obsolete information is stored on the Fibrek website, as provided below. Website content Investor pages In order to clearly identify investor information, Fibrek will make a clear distinction between pages containing investor information and those containing other types of information, including promotional information. Primary information All of Fibrek’s timely disclosure documents must be posted in full on the investor pages of Fibrek’s website. These documents include the following: (i) annual reports; (ii) annual information forms; (iii) annual and interim financial statements; (iv) press releases (favourable or not); (v) material change reports; (vi) dividend declarations; (vii) notices of issuer bid; (viii) management proxy circulars; and (ix) any other communication with security holders. Rather than posting the above documents on its website, Fibrek can alternatively create a link to the SEDAR website in order to give internet users access to the documents. No material information may be posted on Fibrek’s website (and no link may be created to provide access to such information) unless the information has previously been disseminated in the manner described in paragraph 3.2 above. However, once it has been disseminated, material information must be posted on Fibrek’s website as soon as possible. Supplemental information Fibrek will also make all non-material information provided to analysts and institutional investors available to all investors by posting it on its website (or, where appropriate, by creating a link to enable internet users to access the information), unless the volume or the format of such information makes posting it on the website impossible or complicated. Supplemental information includes the following: (i) fact sheets or fact books; (ii) slides of investor presentations; (iii) transcripts of management investor relations speeches; (iv) all other materials distributed at investor presentations. Under no circumstances may Fibrek’s website contain analyst reports or any other information from a third party regarding Fibrek’s business (in this regard, please see paragraph 4.3 above). Contact person Fibrek’s website will include an e-mail link for investors to contact a Fibrek representative directly. Fibrek’s authorized spokespersons will be responsible for responding to investor requests and ensuring that no selective disclosure of material information occurs (in this regard, please see paragraphs 4.1 and 4.3 above). Archiving system Fibrek’s website will include an archiving system to store obsolete information and to which investors will have access. The retention period for obsolete documents will vary based on the type of information. Therefore: (i) press releases, material change reports, dividend declarations and notices of issuer bid will remain available in the archiving system for a period of one year as of their date of publication; (ii) annual and interim financial statements will remain available in the archiving system for a period of five years and two years, respectively; and (iii) annual reports, annual information forms and management proxy circulars will remain available for a period of five years. Exclusion of liability A legal liability exclusion clause with respect to the accuracy, timeliness and comprehensive nature of the information posted on the website will appear at all times on Fibrek’s website. Links to third party websites To ensure that Fibrek is not held responsible for the accuracy, timeliness and/or comprehensive nature of information contained on a third party website, all links from Fibrek’s website to a third party website must include a notice that advises readers that they are leaving the Fibrek website and that Fibrek is not responsible for the content of the other site. Fibrek’s website may not contain a link providing access to analyst reports or the analysts’ websites (in this regard, please see paragraph 4.3 above). 7.2 Chat rooms, discussion forums and electronic mail In order to avoid selective disclosure of material information, Fibrek employees are prohibited from participating in chat rooms7 or in discussion forums8 regarding Fibrek or its securities. If an employee discovers a chat room or a discussion forum involving Fibrek or its securities when surfing the Internet, the employee must immediately notify Fibrek management so that it may take appropriate measures, if necessary. The work-related e-mail address provided to Fibrek employees belongs to Fibrek and, as a result, all correspondence received and sent by an employee via e-mail is considered to be part of Fibrek correspondence. Fibrek employees should exercise considerable caution when using e-mail to send and receive confidential information that is not protected by an appropriate encrypting technique and they must be aware of the risks involved.

Perhaps they need to know from shareholders that it is ok to spend $10k getting a website up and running. My 13 year old would do it for $100 and have it ready for the weekend. ;)

I don't follow this company closely, but it was my understanding that the $42.5m of cash is before the rights offering. The new loan and facility are for $153m which more than covers the old loan and facility (roughly $143.5m). So, wouldn't you add the $40m from the rights offering to the $42.5? That gets you to $82.5m of cash or $0.63 per share plus whatever they have earned since the end of Q2. That seems reasonable. Probably close to 90 m cash as of today. I expect they are not using the revolving credit lines as much as expected which of course will add more to cash flow directly. So as of yesterday you could have bought this company at 20%. I am sure of one thing. FFH's adjusted cost base is about 3.50 per share, so dont expect them to let this go below $6.00 to someone else. My major concern is that FFH will try to take it out but they could have done it anytime in the past year for cheaper so they wont likely now. So that leaves a dividend. I would guess about 0.02/quarter to start. These guys are playing it safe so it will be awhile. In the MD&A FBK said they used the proceeds from the Rights Offering to repay debt, not to augment cash (pg. 18). ABL revolver has $10M outstanding out of a total available of $75M, as of July 16, 2010 (pg. 17). Looks like new $78M Term Loan + $38M from Rights offering = $116M was used to repay the Old Term Facility that was due in 2012. Used cash and $10M from New ABL Revolver to repay the old Revolver due 2010 Post June 30, 2010 - Debts $78M Term Loan Due 2015 (Old Term Loan was $114M - down $36M) $51.7M Debentures Due Dec. 31, 2011 (same) $10M out of $75M on ABL Revolving Credit Line (Old Revolver was around $35M - down $25M) $6M PSIF Interest Free Gov't Loan (was $4.5M - up $1.5M) Debt is down significantly (approx. $60M) and I suspect that cash is also down (a lot?), to pay off Old Revolver (as new ABL Revolver only has $10M on it). Did I miss anything? I also reviewed the board of directors and I can't see any Fairfax Financial representation. At last check, I recall FBK's cash position at something closer to $42M at at the end of June. Subsequent to the end of June, their (ABL) Revolver declined by $25M to a balance of $10M. It is my assumption that FBK used $25M of their $42M to pay down the Revolver. $42M - $25M = $17M. All cash from financing's and share issuance was used to repay debt. At mid July, I had their cash position something close to $17M plus whatever their operating cash flow might have generated, which I would assume that it would be used to pay down the remainder of the $10M revolver. At the end of Sept., I am expecting/hoping to see ABL Revolver closer to $0. (not sure on timing of Capex, but it has been mostly ignored for 1-2 years) with a decent cash position due to current operating profits due to continued firm NBSK pricing.

?? $3.00 annual distribution on a $13.83 stock/trust? Crazy (aka:envy as I don't own it). Why not keep it lower and pay out a one time amount? Likely tax implications. Also, keep in mind that Canfor had a 1 penny distribution for much of 2009!! What a difference a year makes. This must have positive implications for Fibrek's next quarterly report, I would hope. FBK's value must be almost 'swelling' compared to the very low valuation that they currently trade at. Fingers crossed that management has been able to hold all the moving parts together. NBSK pricing has held up well. I am having a hard time trusting mgmt when they can't even get a website up and running in 6 months. Shouldn't it take 6 days at the most, maybe even 6 hours? FYI - Distribution History for Canfor Distribution History - http://www.canforpulp.com/investors/distributions/distributions.asp Canfor Pulp Income Fund pays monthly distributions around the 15th of the month to unitholders of record at the close of business on the last business day of the preceding month. Since inception, the Fund has paid monthly distributions as follows: > Date of distribution, then amount, then supplement amt, then total amt, then date payable (sorry for formatting) January 29, 2010 - $0.08 February 15, 2010 February 26, 2010 $0.12 $0.12 March 15, 2010 March 31, 2010 $0.12 - $0.12 April 15, 2010 April 30, 2010 $0.12 - $0.12 May 14, 2010 May 31, 2010 $0.20 - $0.20 June 15, 2010 June 30, 2010 $0.20 - $0.20 July 15, 2010 July 30, 2010 $0.22 - $0.22 August 1 (, 2010 August 31, 2010 $0.22 - $0.22 September 15, 2010 September 20, 2010 $0.25 - $0.25 October 15, 2010 January 30, 2009 $0.04 - $0.04 February 13, 2009 February 27, 2009 $0.01 - $0.01 March 13, 2009 March 31, 2009 $0.01 - $0.01 April 15, 2009 April 30, 2009 $0.01 - $0.01 May 15, 2009 May 31, 2009 $0.01 - $0.01 June 15, 2009 June 30, 2009 $0.01 - $0.01 July 15, 2009 July 31, 2009 $0.01 - $0.01 August 14, 2009 August 31, 2009 $0.01 - $0.01 September 15, 2009 September 30, 2009 $0.01 - $0.01 October 15, 2009 October 31, 2009 $0.01 - $0.01 November 13, 2009 November 30, 2009 $0.05 - $0.05 December 15, 2009 December 31, 2009 $0.08 - $0.08 January 15, 2010 January 31, 2008 $0.12 - $0.12 February 15, 2008 February 29, 2008 $0.12 - $0.12 March 14, 2008 March 31, 2008 $0.12 - $0.12 April 15, 2008 April 30, 2008 $0.12 - $0.12 May 15, 2008 May 30, 2008 $0.12 - $0.12 June 13, 2008 June 30, 2008 $0.12 - $0.12 July 15, 2008 July 31, 2008 $0.12 - $0.12 August 15, 2008 August 29, 2008 $0.12 - $0.12 September 15, 2008 September 30, 2008 $0.12 - $0.12 October 15, 2008 October 31, 2008 $0.12 - $0.12 November 14, 2008 November 28, 2008 $0.12 - $0.12 December 15, 2008 December 31, 2008 $0.04 - $0.04 January 15, 2009 January 31, 2007 $0.14 - $0.14 February 15, 2007 February 28, 2007 $0.14 - $0.14 March 15, 2007 March 30, 2007 $0.14 - $0.14 April 13, 2007 April 30, 2007 $0.14 - $0.14 May 15, 2007 May 31, 2007 $0.18 - $0.18 June 15, 2007 June 29, 2007 $0.18 - $0.18 July 13, 2007 July 31, 2007 $0.18 - $0.18 August 15, 2007 August 31, 2007 $0.18 - $0.18 September 14, 2007 September 28, 2007 $0.18 - $0.18 October 15, 2007 October 31, 2007 $0.14 - $0.14 November 15, 2007 November 30, 2007 $0.12 - $0.12 December 14, 2007 December 31, 2007 $0.12 - $0.12 January 15, 2008 July 31, 2006 $0.12 - $0.12 August 15, 2006 August 31, 2006 $0.12 - $0.12 September 15, 2006 September 30, 2006 $0.12 $0.08 $0.20 October 13, 2006 October 30, 2006 $0.12 $0.08 $0.20 November 15, 2006 November 30, 2006 $0.12 $0.12 $0.24 December 15, 2006 December 29, 2006 $0.14 $0.22 $0.36 January 15, 2007

In speaking for myself, 80-90% of the value from this gathering is the special FFH related guest speakers and 10-20% is from getting together and interacting with like-minded individuals. The evening would be completely different if there were no guest speakers. Where it is and how much it costs isn't that important. Guest speakers are the key. Just my 2 cents.

I don't follow this company closely, but it was my understanding that the $42.5m of cash is before the rights offering. The new loan and facility are for $153m which more than covers the old loan and facility (roughly $143.5m). So, wouldn't you add the $40m from the rights offering to the $42.5? That gets you to $82.5m of cash or $0.63 per share plus whatever they have earned since the end of Q2. That seems reasonable. Probably close to 90 m cash as of today. I expect they are not using the revolving credit lines as much as expected which of course will add more to cash flow directly. So as of yesterday you could have bought this company at 20%. I am sure of one thing. FFH's adjusted cost base is about 3.50 per share, so dont expect them to let this go below $6.00 to someone else. My major concern is that FFH will try to take it out but they could have done it anytime in the past year for cheaper so they wont likely now. So that leaves a dividend. I would guess about 0.02/quarter to start. These guys are playing it safe so it will be awhile. In the MD&A FBK said they used the proceeds from the Rights Offering to repay debt, not to augment cash (pg. 18). ABL revolver has $10M outstanding out of a total available of $75M, as of July 16, 2010 (pg. 17). Looks like new $78M Term Loan + $38M from Rights offering = $116M was used to repay the Old Term Facility that was due in 2012. Used cash and $10M from New ABL Revolver to repay the old Revolver due 2010 Post June 30, 2010 - Debts $78M Term Loan Due 2015 (Old Term Loan was $114M - down $36M) $51.7M Debentures Due Dec. 31, 2011 (same) $10M out of $75M on ABL Revolving Credit Line (Old Revolver was around $35M - down $25M) $6M PSIF Interest Free Gov't Loan (was $4.5M - up $1.5M) Debt is down significantly (approx. $60M) and I suspect that cash is also down (a lot?), to pay off Old Revolver (as new ABL Revolver only has $10M on it). Did I miss anything? I also reviewed the board of directors and I can't see any Fairfax Financial representation.

Are you suggesting FFH owns the convertibles or did I misunderstand the end of your post?

I thought the volume, or lack of volume yesterday was somewhat interesting. 228k shares 35k shares in the first few minutes (maybe consolidated orders) at $1.09 and then for the remainder of the day a bunch of 1000 shares and 5000 shares orders that quickly trended down to $1.01/1.02 before noon. It looks like only one order over 10,000 shares was placed after 10:30am. So my thought is two fold; 1/ the sellers are very small, probably short term holders, that may have bought before the quarterly report hoping for more, and 2/ even with the low volume small orders selling, there still weren't enough buyers (big or small) to support the falling price. It seems most shareholders or potential shareholders are sitting on their hands and waiting for this to play out. If a potential investor does come along that wants a decent chunk of shares, they may have to be very patient or move the price significantly. Likewise going the other way, if a larger investor of > a few hundred thousand shares wants out, a lot of pressure would occur to the downside.

I wholeheartedly agree. Personally, if their cash flow and projected cash flow seems very good, why not institute a dividend? If that were to occur, shares would eventually (likely) trade off of the yield, if the market felt it was sustainable, manageable and could grow. A strategic plan from management would be nice to see. If you were the CEO or a board member who owned virtually no shares, what is the motivation to enhance shareholder value? Very few people act like a shareholder or act in shareholders best interests (especially board members) when they simply are not shareholders or don't represent a major shareholder. I would be curious to learn how CEO's of company's feel about the 'owners' when there are no controlling shareholders. In my opinion, Fairfax needs to get a board seat or two ASAP, especially given the circumstances around the rights offering. I will do some more homework on the board members in the near future.

Taking advantage of improved market conditions, the producer of pulp Fibrek (T. FBK) has returned to profit in the second quarter. For the period ended June 30, the Quebec-based company recorded a net profit of $ 9.7 million (eight cents per share), while during the same quarter last year, she suffered a net loss of 33.9 million (37 cents per share). Revenues have nearly doubled from 82.1 to 154,800,000. These good results are mainly due to pulp prices on the market as well as sales volumes and production, all of which were larger than a year ago, said President and CEO of Fibrek, Pierre Gabriel Côté, in a statement released Wednesday after the close of financial markets. He said a program to reduce costs had also contributed to higher profits. The total volume of sales increased to 193,040 tonnes in the second quarter. RBK pulp sales totaled 103,205 tonnes and NBSK, 89,835 tons. A year ago, the total sales volume reached 129,831 tons. Fibrek stressed that market indicators began to show signs of downward pressure on pulp prices. A reduction in the price of 30 dollars per tonne on NBSK was announced by most producers, to come into force on 1 August. The Chilean pulp mills have restarted their production and some Canadian plants also provide a cover for their production. The action of Fibrek closed at $ 1.06 Wednesday, down 0.9% at the Toronto Stock Exchange.

After the market close today, Wednesday Aug. 4th, 2010. http://www.newswire.ca/en/releases/archive/July2010/21/c5774.html

Hard to believe... Perhaps this is managements attempt to keep SG&A down? Look for a gross margin that is 0.001% higher due to money saved on website. Kidding aside, this should be an interesting week to see how they are progressing. I will keep my expectations low for a few more quarters.

If it is a favorable operating environment and FBK has improved their finances by restructuring their debt, cutting interest expense and the NBSK has increased in the past year and continues to improve or at least hold steady, why are you frustrated? If you are frustrated because it is a large holding and it isn't going up, I understand that, but I think that is mainly out of control of mgmt, especially in the short term. The largest trade per day is about 50,000 shares or $50,000. The remaining trades are quite small. The people selling are not significant investors. How significant is this decline if all the sellers are small? Larger investors/more sophisticated investors could/would have selected the rights offering to buy shares. FBK is a large holding for me and I am fully invested. I too am frustrated but I am questioning why I/we are frustrated. I believe I am only frustrated due to the share price decline. I can't pinpoint anything else that I am frustrated with. Are you letting this get to you emotionally? We are getting towards bankruptcy pricing here. A possibility a year ago but now?

How much of everyone's frustration is almost entirely share price related? Are we changing how we think about the company just because $100k/per day of shares change hands at a lower price than we feel is justified? What percentage of the shares outstanding have traded since the share price was at $1.50? I don't think anything has fundamentally deteriorated, only improved, based on the refinancing and NBSK pricing. Price of NBSK is up $40/tonne since the SP was at $1.50 (mid May - 2 months ago). Less than 6M shares out of 90M shares outstanding (pre-dilution shares o/s) have traded below $1.50. I hear all the points but they were all there 2 months ago, 3 months ago, 4 months ago, etc. Why is the company worth less today than on May 15th or April 15th?