lessthaniv
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Posts posted by lessthaniv
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So, out of pure side show interest, I did a quick look into this story. Googled for about 10 minutes.
So far, I've come up with the following associations to Carson Block in my very limited time.
Chanos
Greenberg
Hempton
Roddy Boyd
Andrew Left (stocklemon)
SAC Capital
I'd venture a guess and suggest "the enterprise" is back in action.
Sadly,
lessthaniv
EDIT: "Sanjeev, looks like the Tracey Coenen association is already established. She's been writing about China Media which was another company hit by Andrew Left and Carson Block...."
It's unbelievable to me that this coordinated group of racketeers is still in business.
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alertmeipp:
The shares were from the rights offering ... so if you're a long-term shareholder and see yourself as an owner, you'd think of it as a cash call that shouldn't affect your % position as long as you participate. Furthermore, EVERY existing shareholder got a free pass to participate (and average down PLUS increase their % ownership as applicable) before FFH did.
As to whether they needed to do it ... you've got an argument there ... but it was part of the package deal to get the new credit line and loan in place ... and I'd say it was prudent (and structured to favor the existing long-term shareholers), especially given a) the "forecast" for NBSK pricing was for it to go down after the increases thru Q3/10, and b) their near-death experience from Q4/08 onwards. You get the cash when you can ... ;-)
In 30 days there's no more debenture overhang, and if FBK starts buying back shares, then shareholders who participated in the rights offering could find an added buyer in FBK to pull some money out, while reducing the share count at the same time. Given the stock options that management now holds, I'd think motivations would align towards this. In any event a share buyback announcement would not involve a huge # of shares, as the average daily trading volume is on the order of 100K or so, so the $15M in EBITA they keep making per quarter could probably be split between share buybacks, loan/line-of-credit repayment, and even a nominal dividend.
Trust me, I understand the right offering concept and get that it's not dilut"ive" in theory. But it still feel stupid to sell shares to owners at 1 and buying back a few months later with owner's cash at $1.5. If we bot back the full offering amount, we are 20millions short. :'(
Not if it's worth $2.50 - $3. ;D
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Fibrek to redeem $25.87-million in debentures June 28
2011-05-26 10:19 ET - News Release
Ms. Patsie Ducharme reports
FIBREK ANNOUNCES REDEMPTION OF REMAINING 7% CONVERTIBLE UNSECURED SUBORDINATED DEBENTURES
Fibrek Inc. has exercised its right to redeem all of its outstanding 7-per-cent-convertible, unsecured, subordinated debentures maturing on Dec. 31, 2011. On June 28, 2011, Fibrek will redeem debentures in an aggregate principal amount of $25,875,000. On redemption, Fibrek will pay to the holders of redeemed debentures a redemption price equal to the principal amount of the debentures, plus accrued and unpaid interest up to but excluding the redemption date, for a total of $1,034.14 per $1,000 principal amount of debentures.
"The redemption of the remaining debentures is in line with our objectives of deleveraging our capital structure and further strengthening our balance sheet. This transaction will be funded partly through cash from operations and availability under our credit facility. Combined with the redemption completed last Feb. 28, the early redemption of the remaining debentures will result in a net interest-expense reduction of approximately $2-million for 2011, and will reduce our debt-to-total-capitalization ratio by approximately 4 per cent," stated Patsie Ducharme, vice-president and chief financial officer.
We seek Safe Harbor.
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Did I miss that Pabrai owns 14.6M shares of FBK? Is this old news?
http://www.newswire.ca/en/releases/archive/April2011/18/c5142.html
That's weird, they're talking about the rights subscription from last summer, but the PR was released today. I wonder if he still holds 11.2%
I can't figure out why this is only being reported now? Any thoughts or did Monish just figure out it was missed?
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http://www.vancouversun.com/business/Rising+prices+boon+workers+bought+mill/4559411/story.html
Rising prices a boon for workers who bought mill
Remarkable chain of events has led to increased demand
By Gordon Hamilton, Vancouver Sun April 5, 2011
It's a good time to own a pulp mill. Analysts say that pulp prices, which are near record levels, will remain that way until mid-2013.
It's a good time to own a pulp mill. Analysts say that pulp prices, which are near record levels, will remain that way until mid-2013.
Photograph by: Darren Stone, Postmedia Files, Vancouver Sun
Canada's pulp sector is in the middle of an unprecedented bull market that some analysts say could stretch into 2013.
"It's a great time to own a pulp mill," said David Elstone, analyst at Equity Research Associates. "Kraft pulp is on a bit of a tear right now."
Nowhere is pulp's remarkable rise more evident than at Nanaimo's Harmac-Pacific mill, where in 2008, 220 laidoff workers invested $25,000 each to become partners in buying the shuttered mill out of receivership. At the time it was viewed as an ill-advised attempt to save their jobs.
The mill is now running at capacity, employing 300 people, has a war-chest for when prices eventually fall, and the original worker-investors have seen their shares more than double in price, company president Levi Sampson said in an interview Monday.
Further, the company is considering paying a dividend to shareholders for the first time, he said.
The rally that saved mills such as Harmac-Pacific from being dismantled is unprecedented, said Elstone.
Pulp prices are expected to crash through the $1,000 US-atonne barrier this month, with the benchmark price for the product made at most Canadian mills, Northern Bleached Softwood Kraft (NBSK), hitting $1,010 US a tonne.
When the Nanaimo mill was resurrected in 2008, the benchmark price was $580 US a tonne.
Except for a brief pause in 2010, prices have continued up since coming off the bottom in 2009, said Elstone.
"We were looking at the prospects of a decline," he said of the 2010 dip. But pricing broke the historical norm by recovering quickly.
"Usually, when pulp prices crack, they go. They fall. But this time around, it's breaking the historical pattern and prices are heading back up."
A remarkable chain of events that in part, began in cotton fields of Pakistan and Australia, lies behind pulp's record run.
When freak storms in 2010 wiped out cotton crops in Pakistan and Australia, cotton prices took off. That pushed up demand for rayon, a cottonsubstitute that's manufactured from a specialty pulp product called dissolving sulphite pulp, which sells for twice the price of NBSK.
Most NBSK is used in manufacturing paper and tissue products. Rising demand for those products in Asia is supporting high pulp prices.
But demand for the Canadian commodity product received an additional boost when the Chinese began re-processing NBSK into dissolving sulphite pulp, Elstone said.
Chinese innovation is one of the factors behind current pulp prices, he said.
"It's actually very expensive to convert it to a dissolving pulp substitute, but because dissolving sulphite prices are so high, it makes economic sense to do it. This is helping to support NBSK markets."
Vancouver-based Mercer International, with NBSK mills at Castlegar in B.C. and in Germany, is considering converting one of its mills to dissolving sulphite pulp to cash in on the demand for the higher-priced product.
Port Alice's Nucel pulp mill, also bought out of bankruptcy, is the only mill in B.C. exclusively producing dissolving sulphite pulp.
Mill conversions will reduce the global supply of NBSK and RBC Capital Markets analyst Paul Quinn said in two research reports issued Monday that no major new supplies of NBSK are expected until the third quarter of 2012.
"We expect softwood pulp prices to remain near record levels until mid-2013," he said in reports on Mercer International and Canfor Pulp.
Quinn has raised his target prices for both companies, pegging Mercer at $17 a share, up from $15, and Canfor to $15, up from his previous target of $14. Mercer is trading on the Toronto exchange at $13.62, below Quinn's target, while Canfor Pulp is trading at $18.50 a share on the Toronto exchange, above Quinn's target price.
Quinn also said he expects Canfor Pulp, in which parent Canfor Corp. has a 50.2 per cent stake, to raise its dividend from $1.40 a share to $1.80.
Although he is bullish on pulp, he said he expects "a fair degree of pricing volatility," which should be factored into investment decisions.
"As a result we believe that investors require a yield north of 10 per cent."
ghamilton@vancouversun.com
© Copyright © The Vancouver Sun
Read more: http://www.vancouversun.com/business/Rising+prices+boon+workers+bought+mill/4559411/story.html#ixzz1If9PJt8V
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Canaccord has apparently rated FBK a buy with a target of $2.30.
Indeed they have. I'm just thumbing through a copy this morning. It appears the valuation is based on 4.9X 2011E Ebitda and supported by a DCF valuation.
I'll post up any interesting insights.
Sometimes I think these analysts read this board and base their valuation work on the conversations within.
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Getting $6.1M:
BMO raised their rating to outpreform with a new target of $1.90/share for FBK.
I can't get the full article but the following link will show the details. If anyone has access to the full article I would love to read it.
http://www.pulpandpaper.net/news2/newssearchppn.asp?VRes=No&VDetail=Yes&Today=&VForm=&CID=&Features=&Subject=[1]&SForm=&NPrv=&itemgroup=&StartDate=&EndDate=&Region=&SearchWords=&AID=64405&page=1&pagecnt=12
Sorry, it won't take the full link for some reason so just cut and paste the whole link into your browser.
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another insider purchase to add to the chain.
http://www.canadianinsider.com/coReport/allTransactions.php?ticker=fbk
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I'm on the record for having a distinct distaste for Whitney Tilson. Just like Minkow, Antar & Coehen hide behind a reformed criminal - good citizen veil, I believe Whitney Tilson hides behind a value investing veil. One only has to look at his behavior and the circles he runs in.
This is a great opinion piece from Patrick Byrne on these folks including Whitney Tilson.
<IV
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There are some interesting dynamics happening in the clothing industry at the moment. Cotton prices have spiked in 2010 and its causing clothing makers to look for substitutes. Many opinions suggests that this is a long term trend including Chad Wasilenkoff of Fortress Paper.
Monthly Cotton Prices (US cents per Pound)
http://www.indexmundi.com/commodities/?commodity=cotton&months=120
"Mar-2009","51.5"
"Apr-2009","56.78"
"May-2009","61.95"
"Jun-2009","61.39"
"Jul-2009","64.8"
"Aug-2009","64.26"
"Sep-2009","64.07"
"Oct-2009","66.82"
"Nov-2009","71.78"
"Dec-2009","76.78"
"Jan-2010","77.4"
"Feb-2010","80.04"
"Mar-2010","85.79"
"Apr-2010","88.09"
"May-2010","90.07"
"Jun-2010","91.68"
"Jul-2010","84.15"
"Aug-2010","90.35"
"Sep-2010","104.73"
"Oct-2010","126.55"
"Nov-2010","155.47"
"Dec-2010","168.22"
"Jan-2011","178.93"
"Feb-2011","213.18"
Rayon is a good substitute for cotton. It's main ingredient is dissolving pulp and because of the high price for cotton - dissolving pulp has also benefited. Fortress Paper is currently converting a mill to produce dissolving pulp, Tembec & Rayonier have both benefited too.
Now Mercer has just completed a feasibility study on the cost to convert to "swing mills". Ones that can produce either NBSK or DP. The idea is to be able to capitalize on the pricing of whatever output makes the most sense. Mercer suggests it's costs to convert the mills is likely $30M - $40M.
http://www.paperage.com/2011news/02_22_2011mercer_pulp_mills.html
One analyst discussed this on the last Fibrek conference call and I believe they said it was doable however they hadn't yet pursued it.
Comments?
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I wouldn't disagree about not waiting by the mailbox for a check but didn't the lawsuit include RICO allegations which if upheld would treble the damages to $18 billion? Just to add to your equation.
The Overstock suit had RICO charges, but I'm not sure about the Fairfax suit. Cheers!
Fairfax is indeed a RICO action too.
http://www.fairfax.ca/Assets/Downloads/Press/fpr2006-07-26.pdf
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Very interesting that he said that the U.S mills are not for sale.
I really like Sharper's idea. Sell off the Canadian plants to a willing consolidator. We're left with a recycling utility that creates product that will increasingly be used in a country where sustainability is finally being recognized by both producers and consumers. RBK is a differentiated product and we will own a large chunk of the US market for it.
My feelings exactly.
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"We're running this company in the shareholders' interest ... the U.S. mills are not for sale."
Now, in that context review SD's post a while back ....
Not to put ideas in managements head, but ….
- Selling St F is not the same as firing the people. It is the same plant, & the same people, they just work for somebody else. Everyone gets to stay in Quebec.
- We all get paid for the power deal, all the green projects, & the future production – today. And that future CF is discounted at the lowest possible rate (maximizing todays asset value).
- We’re left with 2 US plants, almost 50% of the RBK market, all the debt repaid (assumption), & a wad of leftover cash (assumption). We have strong incentive to change to a US coy, & elminate our Balance Sheet FX translation exposure.
- We very likely have a share consolidation, a rebranding, a graceful change in the institutional ownership, & probably a RBK related acquisition financed with LT Debt. The ‘new’ FBK becomes a utility company doing recycling, & pays dividends at a rate that one might expect of a utility.
Elegant, best use of capital & everyone gets what they want.
SD
;D
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Sanj,
Check this Patrick Byrne interview out. Very interesting comments Re: Overstock Lawsuit. I would guess it applies to Fairfax's case as well.
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http://www.canadianbusiness.com/markets/commodities/article.jsp?content=20110314_10009_10009
A rayon of light for forestry
With cotton prices at record levels, rayon is not just for Hawaiian shirts anymore.
By Michael McCullough
Squeezed by cotton prices at their highest level since the U.S. Civil War, clothing manufacturers are turning to a long–forgotten substitute: rayon. And that is causing a stir in Canada's long–suffering pulp–and–paper industry, which produces the feedstock for the fabric.
On Feb. 2, Chinese rayon producer Fulida Group Holdings bought the Neucel Specialty Cellulose mill in Port Alice, B.C., cementing the six–year resuscitation of a community once on death row. Meanwhile, Fortress Paper Ltd. is converting a money–losing mill in Thurso, Que., from producing northern hardwood bleached kraft to dissolving pulp, the bleached wood pulp of which rayon is made.
Rayon's run has similarly benefited Montreal–based Tembec, which has long served a market oriented toward end uses such as upholstery fabric, cigarette filters, television screens and paint. New demand from the rag trade has caused dissolving–pulp prices to rise 68% over the past year.
Cotton remains the king of fabrics, representing 40% of the world's textile market. But its price nearly doubled in 2010, capping a decade of flat crop yields and rising demand. Not only low–cost manufacturers but also high–end fashion houses such as Isaac Mizrahi have been blending rayon into their latest designs. While rayon's price has jumped, too, it sells for around US$2.35 a yard today, compared to US$4 for cotton.
Developed more than a century ago as a synthetic alternative to silk, rayon has suffered the stigma of too many Hawaiian shirts and gaudy 1980s fashions. However, most of the production is now blended with cotton, and rayon's lack of insulating properties make it practical in countries with hot climates that are the source of a lot of the new consumer demand.
Fortress has had success exploiting market niches such as banknotes and wallpaper, which earned founder and CEO Chad Wasilenkoff, a 38–year–old investment banker, the Pacific region Entrepreneur of the Year award from Ernst & Young last year. The company has created a new division, Fortress Specialty Cellulose, to capitalize on what Wasilenkoff believes is a long–term opportunity in rayon.
"We're betting on this as a multi–decade phenomenon," he says, predicting that after the current spike (spot prices have risen as high as US$2,600 a tonne) dissolving pulp will settle out at around $1,800. The rebuilt Thurso mill, producing 200,000 tonnes annually, will break even at $600, he says. Fortress bought the mill from Fraser Papers last year for $1.2 million and is investing $170 million turning it into a dissolving–pulp producer by the end of this year. Wasilenkoff estimates there are a dozen other pulp mills worldwide, including four or five in Canada, suitable for conversion to specialty cellulose, and Fortress expects to acquire more. "There needs to be another one and a half Thursos every year," he says, to meet global demand at current prices.
The Port Alice mill, built in 1917 to produce bleached pulp, was bought out of insolvency in 2004 by entrepreneur Richard Bassett who, with the help of private equity firm Wellspring Capital Management, restarted it as a dissolving–pulp producer in 2006. Coincidentally, the day after the Fulida announcement, the Forest Products Association of Canada issued a new study about the need to diversify products away from wood and paper in the new "Bio–Age." In the case of wearable wood fibre, though, it is mostly new money from outside the industry effecting that transition.
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Tuesdays 4 pm 8.3.2011 Δ prev. week in currency Δ beg. 2011 in currency
PIX US NBSK USD 979.36 +19.36 +12.25
PIX US Newsprint USD 626.92 0.00 +1.32
PIX US Newsprint 27.65lb USD 669.73 0.00 +0.43
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IV: The comparisom is that FBK's 36% IFRS based D/E ratio is higher than the 22% it was, but still a reasonable number, re Tembec's 36% GAAP based D/E. As Tembec also has plant that may incur similiar write-downs, it is highly likely that their IFRS D/E ratio is higher than their GAAP based D/E ratio as well.
FBK's IFRS D/E Ratio may still be one of the lowest in the industry, but its still at a higher absolute level than most folks were expecting. Can't buy as much when you're allready loaded down - so you either have to sell something, or issue more equity. Our bias, & expectation, is that St Feliceon is going.
SD
Agreed.
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Re IFRS, P29 of the Q4-2010 MD&A:
Assets will be written down on Jan 01/2011 by 139.7M because IFRS requires that you present value the assets future expected cash-flow to get to its recoverable value, today, & write-down to the lower of this amount, or book. It is essentially market value.
The right hand column of the page shows the Jan 01/2011 Balance Sheet under IFRS. Notable is that the equity is only 283.6M, or a BV of $2.18/share. At $1.45/share FBK is trading at 66% of BV.
The Debt/Equity Ratio is typically calculated as [(LTD - cash & equivalents)/Equity] x 100. On January 01, 2011 this will be 35.16% [(118.8-19.1)/283.6]x100 which is the same as Tembec (P32 of the Investor Presentation).
End of day, the Balance Sheet is conservatively valued, & any offer for plant at replacement value will generate a material gain.
SD
SD, you're comparing a company that just adjusted their accounting system to IFRS (Fibrek) to one that is still using Canadian GAAP (Tembec). The comparison of book values is meaningless without adjustments. Over time we can expect to see our comps migrate to IFRS too and then we'll have meaningful direct comparisons.
<IV
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RE: exchange rate sensitivities. They need only raise the realized price closer to the quoted market value by 20-30/tonne to offset any exchange rate increases. I for one figure the exchange rate is likely as high as its going to get. Alberta and Sask alone cannot drive up our dollar in perpetuity.
Alertmeipp, We are not really in much disagreement here. I always value your posts.
Al, this is exactly what I was expecting for the next quarter. They alluded to providing extra discounts in Q4:10 which have now been taken away in Q1:11.
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Re IFRS, P29 of the Q4-2010 MD&A:
Assets will be written down on Jan 01/2011 by 139.7M because IFRS requires that you present value the assets future expected cash-flow to get to its recoverable value, today, & write-down to the lower of this amount, or book. It is essentially market value.
The right hand column of the page shows the Jan 01/2011 Balance Sheet under IFRS. Notable is that the equity is only 283.6M, or a BV of $2.18/share. At $1.45/share FBK is trading at 66% of BV.
The Debt/Equity Ratio is typically calculated as [(LTD - cash & equivalents)/Equity] x 100. On January 01, 2011 this will be 35.16% [(118.8-19.1)/283.6]x100 which is the same as Tembec (P32 of the Investor Presentation).
End of day, the Balance Sheet is conservatively valued, & any offer for plant at replacement value will generate a material gain.
SD
It's also my understanding that under IFAS Methods you can revalue the assets at a later date and increase/decrease carrying value based on the revaluation, unlike Canadian GAAP.
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Anyone listened to the call?
Q1 cost will actually be back down to Q3.... why ppl are selling is beyond me.
Actually, Patsie suggested the cost per tonne will be less in Q1 than in Q3:10 because the reduction in wood chip costs didn't kick in until Q4:10.
I have to work through the numbers today but upon first glance it appears that the higher costs/tonne are attributed to a loss of production during the stoppage as well as higher than expected expenses. But, moving forward there downtime should be less.
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the actual release is too long to post but here is the highlights:
http://ca.finance.yahoo.com/news/FIBREK-REPORTS-RECORD-SALES-cnw-1712888253.html?x=0
(full link above)
Fibrek earns $7.78-million in 2010
Ticker Symbol: C:FBK
Fibrek earns $7.78-million in 2010
Fibrek Inc (C:FBK)
Shares Issued 130,075,556
Last Close 2/23/2011 $1.55
Wednesday February 23 2011 - News Release
Mr. Patsie Ducharme reports
FIBREK REPORTS RECORD SALES AND STRONG EBITDA FOR 2010
Fibrek Inc. is releasing results for the three months and year ended Dec. 31, 2010. All dollar amounts are in Canadian dollars unless otherwise stated.
Compared to 2009:
• Sales grew 43% to a record $556.5 million
• --EBITDA increased by $73.7 million from negative $11.9 million in 2009, EBITDA margin at 11.1%
• --Net earnings increased by $87.0 million from a net loss of $79.2 million in 2009
Compared to the fourth quarter of 2009:
• --Sales grew 14%
• --EBITDA increased $5.7 million, despite major maintenance and capital work performed at the Saint-Félicien and Fairmont mills
• --Net earnings were up $11.2 million
Highlights:
• --Conversion to corporate structure
• --Strong balance sheet following refinancing of long-term debt
• --Gain of $5.5 million on settlement of a claim with AbitibiBowater Inc.
• --New corporate strategy approved by board of directors
• --Preparation of the Saint-Félicien mill to transition from 14 to 10 days of scheduled shutdown, effective in 2011
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3) A majority of shares are held by value investors who want the stock to trade at $5 but apparently won't pay $1.65 for it.
I'm not bashing. I have about 15% in FBK. I just hope some people NOT on this board (and with names not starting with P-R-E) get excited about it before pulp prices make their inevitable turn.
This is one of those "for the record" comments. But Fairfax now owns more than 20% of FBK. They cannot add shares to their position without making a formal offer to all shareholders for the entire company under securities regulation. There are some rules that do allow a company to go above 20% without making the formal offer - one of those being shares acquired through a rights issue. Fairfax responded by backstopping the entire issue! I would suggest they've done everything their entittled to other than bidding for the entire business which isn't their M.O. to this point.
<IV
Block's Conduct Smells Fishy To Me!
in General Discussion
Posted
6 days on the board, huh? ;) What brings you here?