SharperDingaan

Look at Iceland in the first 2 quarters after they refused to repay ;) Once the headlines are over .... SD

The current 0.12 Euro/share cost must make this one of the best secured penny stocks in history! SD

Keep in mind that we're value investors looking at a busted mo-mo darling, & one of our biggest weaknesses is buying too early. It is highly likely that declining market share & marketing miss-steps - driving headline news, is going to trump the value metrics for at least the next 6 months or so. Hard to believe that we not see at least one additional manic 1/3 sell off by late summer. There's no rush. SD

Keep in mind that Soros was born in the 1930’s depression. He saw first-hand the impact on family, he saw that in Europe the depression only really ended with Germany re-arming, & he knows what it is to have to run - & have to leave almost everything behind. He knows his topic; the audience – not so much. All the kings horses, men & women believe that the crises can be ... managed .... with enough time & money. Wide-scale sub-prime collapse in the US, wholesale austerity contraction in Europe, repeated material bank bail-outs, multiple sovereign debt collapses, youth unemployment at 20-25%+, etc. Market players need only minor reform, & what has happened far away (Arab Spring) could not possibly happen here. Back then the market players were Carnegie, Van De Bilt, Mellon, etc - & what happened far away ..... was an assassination in Serbia. Been there, done that, twice. Repress high unemployment for an extended period & you get regime change. Often disruptive (Egypt, Libya, Syria), & the new really no different than the old. But when you rely on their exports (oil), & large portions of their population are guest &/or illegal workers in your country – those causes become your causes, & spread like wild fire if you have similar conditions. And European history has repeatedly shown that when disruption is wide spread, bad things happen. Post WWII we’ve had the UN, the IMF, & the Euro to hold the place together .... & all of them are evidencing signs of not being up to today’s demands. The US & Canada are not islands, but they are far enough away that most of the damage will be ‘over there’ versus ‘here’. As in WWII you may lose men, money, & materials in large numbers – but your productive capacity remains intact (it isn’t bombed every night). How you use that capacity changes dramatically, but the fact that you were able to adapt your use, is what pulls you out of the depression. Adaption to industrial & social disruption is what the US & Canada is very good at. With euro GNP contracting, unemployment/hopelessness can only worsen & the possibility of wide-spread & higher % Icelandic style debt repudiation can only increase. Iran closing the Strait of Homuz & sending oil to $150/barrel+ may be enough to tip it over the edge .... & finally make the crises unmanageable. The specifics may have been different in Soros’s early days, but the overall look & feel may well be largely the same. Given that most trust their gut over their head, it is nice to see that he’s speaking up. SD

Thanks for the complement!. The usual process with this kind of loss of confidence is that you try to put the company 'in play', & get an outside bid for the company as a whole, &/or parts of - that you can sell into. If nothing comes forth you then try to replace management &/or asset strip to fund periodic returns of capital; usually a fractious process that requires the voting control of majority ownership - & which would likely occur if the ABH bid were unsuccessful, & Steelhead sold its FBK stake to FFH. The reality is that FBK's senior management will be replaced, & they know it. That said, it is in ALL our mutual interests for management to get the power deals signed, & to get a sale at the highest possible price – following which management either goes with the mills &/or receive generous packages. If management cannot get a sale, the change of control premiums do not kick in, & the magnitude of the packages is materially reduced. The better management 'fights the ship' the more marketable they will be in their next life, & they have done very well to date. It is accepted that the big $ come with risk, but selling the company is the fairest way of dealing with it. SD

FFHWatcher: We'll decline the bet! but we will make a donation to the foundation - the only condition being that the transaction has to close before the FFH dinner. Triedtested: Funnily enough we all play speed chess, & simultaneous games, as an ongoing training tool. Goes along with walking around & adding up random number plates for highest score (not so simple in arabic), & card counting at Canasta. SD

Assume: (1) All the additional shares tendered were from Steelhead. 11.1% at an average cost of $1.05/share (15.17M) (2) An all-stock ABH tender at 3.25 (3) The Steelhead interest is the RBK plants 130.1Mx3.25=422.8M ABH equity issue, of which Steelhead gets 46.93M (11.1%). RBK mills are valued at around 124.8M [(20.8+0)x6]. Steelhead swaps its ABH stock & pays 77.87M for the mills. Total cost to Steelhead is 93M (15.17+77.87) – for mills with a ‘true’ value of around 222.2M (166.2+56)? A sceptic might argue ..... If the majority of the additional shares ARE Steelheads, there is no intention that ABH actually wins the bid. (1) The lock-up group just wants out at the best price possible; otherwise they would be buying & putting the tender > the 66 2/3% threshold. (2)Steelhead is indifferent as the incremental gain on their FBK position is a hedge against the market price for the RBK mills that they would offer to buy from the winning bidder (3) An all equity winning bid at higher multiples, a built in asset sale, & willing sellers, is worth a lot to both FBK’s shareholders & a highly leveraged bidder. ... another reason to be pleased. SD

Back of the envelope - value per share is around 3.94+? NBSK EBITDA (1): 21.7Mx6=130.2 RBK EBIDTA (2): 20.8Mx8=166.2 RBK EBIDTA saving (3)7Mx8=56.0 Power Generation (4): 16Mx10=160.0 Value/share: (130.2+166.2+56+160)/130.1 shares = 3.94 289M sales =367,500@787/ton. 7.5% net EBITDA = 21.7M. Ave EBITDA multiple (2) 277M sales = 377,300@735/ton. 7.5% net EBITDA = 20.8M. Higher EBITDA multiple for base loading & new product (3) P14 Directors Circular. 7M/yr saving x RBK EBITDA multiple. (4) P12 Directors Circular-could be 22M/yr (16+6). Higher EBITDA multiple for price & volume certainty. ... a ‘serious discussion’ at anything even close to this will please anyone SD

Purely speculation ... but with the vote over - perhaps the lock-up shares are now free? He may also be expecting a value maximizer to come to fruition (before the new deadline) which will remove the need for the poison pill. SD

This bid is about the best thing that could have happened for FBK shareholders - & kudos to ABH/FFH for putting it out there. Ignoring the price issue, from the business POV it has done what was really required. It is clear that there is material friction between management & the major shareholders, & that the friction has become destructive. There is only room for one vision, & owners/managers have to be on the same page with respect to execution. Vertical integration to feed St Feliceon makes a lot of sense. Did buying additional tissue production elsewhere, for the right price, make MORE sense? – none of us really knows. We do know that it was value accretive, but it is difficult to see how it could have been done without significantly increasing either the financial &/or operating leverage of FBK. Prior to the bid, FBK was entering an extended period of extreme return for the risk incurred. Financial leverage at record lows, base loading & new product rapidly dropping the operating leverage, & surplus CF & material share float available at a price well below IV. The scuttlebutt would have it that the effect of buying additional tissue production, would have been the material & polar opposite of this. From Day 1, FBK was not intended to be an empire. The mills were to be asset stripped on an ongoing basis with the material bulk of operating CF going back to trust holders. Depreciation less cap-ex to buy additional mills only if/when financial capacity & business opportunity presented itself. Repeal of the income trust legislation orphaned FBK; it was not sold off immediately as the market didn’t favour it. It was nursed through its near BK because the otherwise losses were punitive. It was retained through the last up-cycle because its Sharpe ratio was rapidly increasing for no additional capital investment. There have been material financial & operating improvements ...... but it remains an orphaned asset. There are now serious value-maximizing discussions, which we did not have before, & we have the best possible value maximizing means of resolving management/shareholder dissonance on FBK’s future direction. Our long-held view is that FBK should either be left “as-is” (baring a fibre acquisition), merged into another larger entity at market rate, or dissolved - depending upon whichever is most profitable. If it goes the “as-is” option, merger &/or dissolution is just deferred to a later date. Most would prefer a quick & clean resolution versus a drawn-out & messy affair .... & if it came with a minor discount, so be it (we don’t have to accept the offer). As in any auction there are times when it makes most sense to throw out your best bid, & this is one of them. A pre-emptive all stock bid in the $2.75-$3.25 range would very likely get it done, & done quickly. SD

Keep in mind that most here do not disagree with the combination - it is the price that is the problem. Also, while the share count may be relatively small - it is more how many are voting against, & who they are. SD

210K spread over various accounts. SD

Alertmeipp: We're taking the same position. That said we're also looking for a update from FBK - before Friday - stating what our advisors believe the company is worth, & where they are at in the value realization process. The TD assessment that it is worth more than is currently offered, is not adequate. SD

We find that when all the choices are outliers, the return over 1 yr is really the wrong metric. Best we can do is decide the intended length of the holding period, guess the exit price, determine the IRR, then rank the choices from highest to lowest. Small errors can really change the ranking. The better metric is whatever you’re using for your MOS. Set the metric for the portfolio at some min/max number, & let it be. If the net-net doesn’t work out, at least it still worked for the portfolio overall. SD

st96, Quebec: We googled fibrek in the early evening of Friday looking for management announcements & came on the article by luck. Believe the publication was The Daily, & at the time we could see the entire article & use the translate function on it. We didn't post as we were expecting to read a FBK press release on the subject. We googled again on Saterday but could only get partial access to the article. We understood that there was a contract signing for the 33MW on Friday, but if we misread we sincerely apologize to all board members. SD

Don't have access to the full article, but it goes on to describe what was signed. Basically, it is as FBK said it would be. http://translate.google.ca/translate?hl=en&sl=fr&u=http://www.cyberpresse.ca/le-quotidien/actualites/201201/13/01-4485689-gilles-potvin-assiste-a-la-rencontre.php&ei=m8sRT83dFKP20gHr7ZzEAw&sa=X&oi=translate&ct=result&resnum=2&ved=0CD8Q7gEwAQ&prev=/search%3Fq%3Dfibrek%26hl%3Den%26sa%3DX%26biw%3D1024%26bih%3D640%26tbs%3Dqdr:d%26prmd%3Dimvns Also a flavour as to the Quebec view as to whether this is an inside bid or not. If ABH plays fair there shouldn't be a problem. http://translate.googleusercontent.com/translate_c?hl=en&prev=/search%3Fq%3Dfibrek%26hl%3Den%26sa%3DX%26biw%3D1024%26bih%3D640%26tbs%3Dqdr:d%26prmd%3Dimvns&rurl=translate.google.ca&sl=fr&u=http://www.cyberpresse.ca/le-quotidien/actualites/201201/13/01-4485459-fibrek-cherche-a-gagner-du-temps.php%3Futm_categorieinterne%3Dtrafficdrivers%26utm_contenuinterne%3Dcyberpresse_B4_en-manchette_322_section_POS3&usg=ALkJrhjE6IZjfFs0BtQvn340GylTQYmLAg SD

We gather the PPA was signed yesterday http://www.cyberpresse.ca/le-quotidien/actualites/201201/13/01-4485689-gilles-potvin-assiste-a-la-rencontre.php Assume around 60M EBITDA x 6/130M, with no asset sales, SD

Cardboard, Munger: Thanks for the heads up. I hold a FCSI designation so I don't expect any issues with registering, but perhaps its also getting time to either dissolve or revert the partnership back to its original intent. My few partners each contributed > 200K, & would be considered more sophisticated investors. To ensure that we understood the risks, all GP & LP agreements were witnessed by their own legal. Estate planning was added after the fact to deal with the death/divorce issue. The common & pref share structure was a corporate overlay to facilitate wealth attribution, evidence LP agreement with the IP, & enable the payment of different returns consistent with the nature of the GP-LP arrangement - not elegant, but serves the function. Great structure for the original purpose, but any material growth obviously causes issues. My interest is owner-management of a single venture/company project - much more modest, hands-on stuff. The serious money is a way different ballgame, & frankly I would rather work for others doing it, than do it myself. Basically money as servant, not the master. SD

For our Cdn GP-LP partnership I am the GP. The LPs are either family members or close family friends, & the partnership exists to make/manage investments on the TSX. Setup & agreements were reviewed & prepared by Cdn legal. The partnership has operated for 9 years & we’ve never been challenged. What counts is overall context, & how it is evidenced. • Memoranda of Understanding (MOU): Outlines the intended nuts & bolts as to how the partnership will operate, how the GP & LPs earn their money, what are eligible partnership expenses, liquidity arrangements, etc. The GP does not get paid a management fee for services provided, as it gives the appearance that the GP is acting as an agent/employee of the partnership. • Preferred share agreements. Objective evidence that LPs gave up control of their funds in return for specified dividends &/or participation. Redemption/liquidity provisions evidence there is no intent to trade. • Detailed Investment Policy & strategy. Evidences there is no intent to give LP’s investment advice. • Nature of the quarterly reporting. Lead off with pref share div coverage, LP partnership transactions (if any), investment strategy versus actual variance analysis, & add copies of broker statements & the current financials. Speak only to historic results, & not a TSX benchmark. • Some kind of formal strategy review & publication process. You are not allowed to use the MOU as an alternative solicitation; it is only to evidence how the proposed partnership will operate. However there is some wiggle room, as in the early stages - it is a draft document only. Discretion. For many the stumbling block is the different business model, & getting rid of the marketing ‘apparatus’. It is because of the marketing, that we have the investment regulation. Obviously our docs are confidential, so we will not release them – but direction should be clear. The best of luck to you. SD

“ where is the exemption found allowing the general partner to get paid for providing investment management services to the limited partnership without having to comply to federal or provincial laws for investment management” There isn’t one, because it isn’t necessary - the GP is not providing investment management services, & is not getting paid for the provision of any services. If you go the common & pref share route - the GP’s reward is 100% of the market return on the pooled funds - less any incidental costs & agreed upon pref share dividends & participation - & it could be negative in a down year. Add in the unlimited liability the GP has & the tests for comp clearly fail. As there is no comp, there is no services contract, & the investment management laws don’t apply. (1) Pref shareholders did not give you their money to manage for them, they gave it to you for the stated objective of the partnership; invest it to do ...... (2) The GP is not advising the LP’s in any way or form. Example: If the investment were an apartment block; the GP would build surplus net CF from leasing up a declining pool of vacant units, & would use the CF + annual depreciation to replace windows/insulation/H&E. Just before the partnership expires the GP would sell the apartment block for a gain (rent rolls & higher CF capitalized at a lower discount rate), LP’s would get their funds back + any agreed upon participation, & the GP would keep the rest. The only difference is that the apartment block is now an investment policy + cash of X. SD

Eddie, for most folks, you will need .... (1) An investment policy outlining what the GP can invest in, max/min weightings to specific asset classes, concentration limits, maximum D/E etc. Look to the OSFI Prudent Person guidelines for the basics. (2) LP agreements outlining the terms of the LP investment. Return, sale/purchase, sinking fund terms, no say in decisions, expulsion conditions, provisions for renewal, etc. (3) You will need a corporate account at your local brokerage in the name of the partnership. Per the KYC & AML regulations, a copy of pretty much all your documentation will be filed with the brokerage. (4) There are no deposits/redemptions as you are not a fund. All investment transactions (initial deposit, trades, int/divs, etc) are recorded on the monthly statement, by the broker, the same as any other account. If the partnership buys the prefs the monthly statement shows a debit for the amount of cash returned to the LP. (5) If you're GP, you're also enough of an accountant to be able to do the monthly financials. Accpac software & the monthly statement to support the transactions. Reclaim HST on a bi-annual basis - if you bother with it at all. (6) Year-end tax documentation is supplied by the brokerage. Hire an accountant at year-end to audit the books & review your tax filing. $600-$1200 on a bad day. (7) GP is not paid, but the partnership usually reimburses for incidentals (telephone, partnership meetings, etc.) You should be very clear as to what you are NOT. You are NOT a MM firm, you are NOT marketing to clients, you are NOT paying commission for AUM, there is NO office &/or support staff, NO 'apparatus'. Your business model is not to grow AUM for the fees, by marketing past performance & hiring PM's in the upper quartiles to achieve it. The partnership model fires the 'apparatus' & keeps the PM. Partners get rich based on how well the GP (PM) invests their capital, & not on how well the 'apparatus' collects AUM. End of the day the GP (PM) has $X for a period of Y years, the GP (PM) can invest it how he/she wants within the investment policy parameters, there is minimal admin burden, & the GP (PM) can run the whole thing from his/her laptop - off the side of their desk. SD

Munger we can't speak to BC or Quebec, other than Quebec will be under french law & all the registration documents will be in french. You would want both legal & tax advice, but the below (for Ontario) will get you started: (1) Copy the Ontario Limited Partnerships Act http://www.e-laws.gov.on.ca/html/statutes/english/elaws_statutes_90l16_e.htm (2) Go to the Ontario Forms http://www.forms.ssb.gov.on.ca/mbs/ssb/forms/ssbforms.nsf/FormDetail?OpenForm&ACT=RDR&TAB=PROFILE&ENV=WWE&NO=007-07191 (3) Fill out Declaration 3 http://www.forms.ssb.gov.on.ca/mbs/ssb/forms/ssbforms.nsf/GetFileAttach/007-07191~1/$File/07191E.pdf (4) Register http://www.newbusinessnow.com/LAW/partnership.htm The GP has unlimited liability, but the GP's risk can essentially be mitigated by making the GP a limited liability corporation controlled by the GP. Key to remember though is that you are not a mutual fund soliciting $ (& therefore attracting the securities restrictions); you are just a few partners pooling your funds on a venture in the nature of trade - for a limited period of time. May we wish you the best. SD

Racemize: Keep in mind that when you start out it's pretty much ONLY family & friends money - because that is all that is available to you. Once you are independent - it is others with similar interests & experiences, who just want to have fun doing whatever the venture does. We would suggest though, that at least one of those others be of the opposit sex - as the thinking really is different. SD

Keep in mind that you tailor a partnership to suit your purpose, so each will be different.... We’re structured in a partnership using a Canadian GP with 100% common equity, & family member LP’s holding 100% prefs. The prefs have a par of 100, pay a non-cumulative 6%, & are subject to sinking fund repurchase at 110% of PAR if the partnership realizes a return > 20% in any given year. LP’s may sell their prefs to each other at 90% of PAR, or the partnership as a whole, but have no say in what the GP does. We also have a UK partnership with a UK GP, under a broadly similar approach – so can look North American, or European, as circumstance requires. As in any partnership, LP’s rely on the judgement of the GP. If the partnership BK’s they get nothing - if it does well they get their money back as rapidly as practical (& based on realized return); but in the meantime they get 6%. The GP gets to build meaningful capital, & concentrate equity funds on a single endeavour. Our partnership was originally created to facilitate the funding of a material & meaningful start-up equity stake in a micro-brewery. A way of leveraging a modest equity stake at up to 8:1 if needs be, & spreading some of the risk. Although we ultimately chose not to pursue the start-up, we have kept the partnership, used it to invest as we see fit, & refined it a little through estate planning. There may still be a brewery at some point ...... but not until the GP actually retires! We used an initial capitalization in the low 7 digits at 40% common equity, & 60% prefs, with a sinking fund lasting 20 yrs. You will need a minimum 10-20% common equity capitalization to cover unforeseen sudden liquidity demands amongst your pref holders. The partnership could be more tax efficient, but it has minimal overhead as the GP is not paid. After 9 years, today’s outstanding pref position is < 50% of what it was, equity is up materially, & LP’s are pressing to issue more prefs. LP partnership liquidity essentially cures itself. Lot of hassle to initially set-up, but day-to-day operation is very straight forward. An accountant to annually audit the books. The quarterly financials & tax filings, you can probably do yourself. Obviously not for everybody, & very dowdy, but also just as effective as being a partial owner of one of the many AUM firms. SD

At this point there's 2 weeks to go to bid expiry, & comes next friday after close (assumption) we should start seeing some hard numbers on the alternatives. Our preference is stock over cash, as long as we're paid for it. Merc, Domtar, ABH are essentially all the same to us .... we don't have to marry them, & can always sell into the secondary market. Let the games begin! SD