FBK

[FFHWatcher]

Also exercised most of my rights today, however I hold some FBK in my TFSA and since it is maxed out I would have to transfer those rights out which would take several days and since tomorrow is the last day, I guess I'll let them go. I probably have enough in FBK already. As Uccmal says - here goes nothing!

 

I really feel that the rights offering has artifically lowered the price on FBK and after a couple of weeks I would hope to see at least some increase in share price. The biggest problem that I see is in what goes on with the markets and economy on a global scale. My optomistic side says that we are on the tail end of a correction and hopefully it should level out soon and reverse itself by mid September. Then again, I have been wrong before.

 

I ran into the same issue with my TFSA but then I started doing the math.  10,000 rights in TFSA @ 0.005 cents is...nothing.  If you want to buy 10k shares @ $1.01 just buy the rights on the open market for...nothing and exercise them in your regular account or just buy them for 2 cents more on the open market and spend the extra $200.  Either way, not worth transferring and deregistering $$ from TFSA and doing all the friggin' paperwork involved.  If you buy the rights, you are immediately able to notify your broker that you want to exercise them.  You do not need to wait until they settle.  The cut off date for my broker (ScotiaItrade) is July 12 (today) on their paperwork but over the phone they said they have until the close on July 13th.

[cwericb]

Yes FFHWatcher, that's exactly the same conclusion I came to. It really comes down to - do I want more FBK? Saving two cents a share really doesn't come into it. However, contrary to some past experiences, I do think that the price has been depressed by the offering so I felt that this was as good a time to pick up some more.  I think....

[UhuruPeak]

http://www.paperage.com/foex/pulp.html

 

$US still going up, euro price still going down

[ERICOPOLY]

FYI, you can still receive and exercise FBK rights in the U.S. if you can demonstrate that you are an "accredited investor". It is based on your family income and/or liquid assets.

 

Cardboard

 

 

I was just about to fax in the Fibrek forms (where I state my accredited investor status) for the rights offering to my broker, when they notified me that if I exercise the rights then the shares will be mailed to me in certificate form!

 

That would be a hassle -- I don't want physical certificates.  The broker said they can't hold these certificates for me -- it was Interactive Brokers.

 

If any of you US investors out there exercised your rights, keep an eye on the mail!

 

I wound up buying shares in open market instead, and selling the rights I hold at Interactive Brokers.  Then I went to my Fidelity account (my other account) and tried to sell the rights I have there, but they claim the cutoff for selling them was yesterday -- they don't think they would get the trade settled in time if I sold them today.  That's a strike against Fidelity.

 

 

 

 

 

 

 

[Grenville]

FYI, you can still receive and exercise FBK rights in the U.S. if you can demonstrate that you are an "accredited investor". It is based on your family income and/or liquid assets.

 

Cardboard

 

 

I was just about to fax in the Fibrek forms (where I state my accredited investor status) for the rights offering to my broker, when they notified me that if I exercise the rights then the shares will be mailed to me in certificate form!

 

That would be a hassle -- I don't want physical certificates.  The broker said they can't hold these certificates for me -- it was Interactive Brokers.

 

If any of you US investors out there exercised your rights, keep an eye on the mail!

 

I wound up buying shares in open market instead, and selling the rights I hold at Interactive Brokers.  Then I went to my Fidelity account (my other account) and tried to sell the rights I have there, but they claim the cutoff for selling them was yesterday -- they don't think they would get the trade settled in time if I sold them today.  That's a strike against Fidelity.

 

Thanks for the color on the two brokers. I got a bit of a run around at Scottrade. First they said I would not get the rights, because I was an "Ineligible Holder". Then I faxed over the prospectus and the US form letter from computershare. Then they told me that they weren't a CDS participant. They could do it if I set up an account with some company they do business with. Essentially, incomplete information and a big run around. In the end, scottrade is a discount broker not built for foreign securities.

 

I am going to open a Interactive Brokers account. The whole rights offering experience was important for me. A lot of details that will be useful to know down the road! I don't hold much FBK, so the loss on not selling the rights sucks, but is bearable.

[Myth465]

Same situation but with TOS. First I couldnt participate, then I showed them the prospectus and form, and wanted them to sell the rights, then I was told I didnt have the rights and there was nothing they could do. I dont have enough capital to worry about it or justify the switch to IB, but definitely something to keep in mind.

[tyska]

Quite the volume of shares moving today. Over half a million so far, considering it was 10-15 thousand not that long ago. Maybe a lot buying that can't exercise, will be interesting to see how many FFH  pick up.

[tyska]

Am I the only one that is slightly amazed that there was 5 or 6 times the average volume and virtually no movement in price either way? I can't recall ever seeing that with any stock that I have followed before, but maybe it happens more than I know.

[nodnub]

Am I the only one that is slightly amazed that there was 5 or 6 times the average volume and virtually no movement in price either way? I can't recall ever seeing that with any stock that I have followed before, but maybe it happens more than I know.

 

Rights arbitrage is still on. Wait till the end of the week and I think you'll start to see some movement, one way or another.

[ERICOPOLY]

Quite the volume of shares moving today. Over half a million so far, considering it was 10-15 thousand not that long ago. Maybe a lot buying that can't exercise, will be interesting to see how many FFH  pick up.

 

I bought 50,000 today.  So that solves the mystery of who bought the first 10% of your half million  :)

 

 

[woodstove]

Maybe more like when the number of rights not taken up is posted, and calc can be done about dilution ... ie not just end of week.

But just guessing on my part.  This has been very educational to watch!

[FFHWatcher]

Quite the volume of shares moving today. Over half a million so far, considering it was 10-15 thousand not that long ago. Maybe a lot buying that can't exercise, will be interesting to see how many FFH  pick up.

 

I bought 50,000 today.  So that solves the mystery of who bought the first 10% of your half million  :)

 

 

 

Why buy 50,000 rights when you can buy the shares at $1.01 or $1.02 or $1.03 in the open market?  In the past their hasn't been the volume or that price but today there was.  Perhaps the $1.01 trade isn't guaranteed to occur but the $1.01 price is guaranteed if you buy the rights (I bought more rights the other day too)?  But you had to pay something for the rights, so that would make the $1.02 reasonable.  At $1.05 or more, the rights make a lot more sense to go through the process but below that, I have come to the conclusion that if I want more shares, I might as well just buy the common shares.  If you want a larger volume than the rights seem to be the way to go without moving the market.

 

The next 2-3 earnings reports should be interesting to see how the market starts to value Fibrek as a going concern and not a lifeless company that earns just enough to pay their employees leaving nothing for shareholders.  In hindsight, that certainly explains why executive management and board members own virtually no shares of FBK.  For the life of me, I can't see how the CEO of a company that earns almost $500k per year, gets $40k/yr in a housing allowance, $17k/yr taxable benefit for a car, plus stock grants and pension benefits hasn't used $50k or $100k of his own money to buy stock.  His house and car are paid for so his disposable monthly income should be generous.  Everyone is different and has unique circumstances but the same goes for each and every board member.  Those all go in the negative column when adding things up for FBK.

 

I am voting to cease talking about the Rights Offering as of midnight tonight and then starting a new thread, still under Fairfax, about future earnings, valuation, etc. regarding FBK.

 

Question : Was it only the people on this Board that independently pushed the price of SFK/FBK above the $1.25 to the $1.99 level?  It certainly feels that way sometimes.

[Myth465]

I read that as he bought the shares and accounted for 10% of the volume. I hope alot of the rights arent exercised, and FFH owns a big chunk like 30% after. I think they will get all the rights from US based employees. I dont think mine will be sold based on conversations with my broker.

 

----

 

I never knock management for not owning shares. We are talking about a company that was 1 or 2 bad quarters from bankruptcy. Management always has a gravy chain but they are fairly attached to the outcome of the business. Pushing all in with your life savings / other investment could turn out to be a stupid move. Look at AIG, Freddy, Fannie, GM, Enron, BP, and many other names.

 

If they bought 50k the first thing I think people would say is that is immaterial.

[Cardboard]

"I never knock management for not owning shares."

 

Myth, I think that you should. As Peter Lynch said in different words: there are many reasons why insiders are selling, but only one when they are buying. I would also like to add that there is a vast difference between organizations with an owner mentality vs those that don't. People act very differently when their own money is on the line and surprisingly it works as well for average individuals in very large companies.

 

An example close to us, look back at ATSG. Was it dire at some point or what? A big difference that I see between ATSG and FBK is that Joe Hete owned a ton of shares and kept on buying. And he never diluted. Never! Especially not when he saw the company emerging from its troubles. Issuing shares for him was the last thing to do, an act of desperation. He would fight and find creative solutions before doing that. The result is an upside run from the bottom at ATSG that has been nothing short of amazing.

 

Before the offering, I was able to imagine $5 as a potential target for FBK. Post offering, I think that it would be wildly optimistic since it represents $200 million more in market cap ($650 million vs $450 million). The upside from here still looks attractive, but it competes with KSP, SSW and possibly other stocks that you are looking at.

 

Cardboard

[ERICOPOLY]

Quite the volume of shares moving today. Over half a million so far, considering it was 10-15 thousand not that long ago. Maybe a lot buying that can't exercise, will be interesting to see how many FFH  pick up.

 

I bought 50,000 today.  So that solves the mystery of who bought the first 10% of your half million  :)

 

 

 

Why buy 50,000 rights when you can buy the shares at $1.01 or $1.02 or $1.03 in the open market? 

 

 

I bought the shares, not the right.  I sold 50,000 rights before buying the shares.

 

As a US investor, I was faced with taking physical delivery of the share certificates if I exercised my rights.  I have no desire to keep them in physical form -- will I hide them under the mattress?  Do I need to put them in a safe at the bank?  I felt like I'd rather just fork over a few hundred dollars more for the shares and save myself the inconvenience.

 

Previously I bought SFK at 20 cents and 40 cents,  then more at $1.  Now we're back to $1 again and I bought more yesterday.... enough to offset the rights that I didn't exercise.

[Myth465]

"I never knock management for not owning shares."

 

Myth, I think that you should. As Peter Lynch said in different words: there are many reasons why insiders are selling, but only one when they are buying. I would also like to add that there is a vast difference between organizations with an owner mentality vs those that don't. People act very differently when their own money is on the line and surprisingly it works as well for average individuals in very large companies.

 

An example close to us, look back at ATSG. Was it dire at some point or what? A big difference that I see between ATSG and FBK is that Joe Hete owned a ton of shares and kept on buying. And he never diluted. Never! Especially not when he saw the company emerging from its troubles. Issuing shares for him was the last thing to do, an act of desperation. He would fight and find creative solutions before doing that. The result is an upside run from the bottom at ATSG that has been nothing short of amazing.

 

Before the offering, I was able to imagine $5 as a potential target for FBK. Post offering, I think that it would be wildly optimistic since it represents $200 million more in market cap ($650 million vs $450 million). The upside from here still looks attractive, but it competes with KSP, SSW and possibly other stocks that you are looking at.

 

Cardboard

 

Cardboard these are good points and definitely important. You are right Hete wouldnt sell shares because he was an owner and didnt want to be diluted, and these guys likely just want to ensure that they dont go bankrupt during the next potential downturn.

 

FBK and KSP will always be workout situations due to Managements lack of ownership and actions. What I meant though is that low insider ownership will not prevent me from buying a stock. It may make the stock more of a value trade then an investment but I will still look and sniff around. I wouldnt buy my company stock and can understand why the insiders sell quite a bit. They already have plenty of skin in the game via employment.

 

You are right, they would probably allocate capital a hell of a lot better if it was their company.

[cwericb]

It has been quite a while, but "thefrenchguy" has posted again on Stockhouse.  We have quoted him in the past and since I believe his father works at the St-Félicien mill he may have some insight not generaly available.  He says.........

 

"I do agree with your evaluation of 1.50 $, but there is still concern to be fixed:

They have to come with an agreement with workers at St-Félicien mill, they are without contrat for 1 year now.

They meet the union the July 22. Apparently, workers are ready to strike.

 

Also, they have to find a new way to buy wood chips and leave Abitibi-bowater (too expensive once supply agreement will be over)

 

I also heard that even if the price of NBSK is 1020 $/ton, they are not selling at this price.  They offer 100 $ rebate per ton to best customer.Also, transportation is expensive. I heard the net profit is just 120 $/ton these days.

 

For sure, the share price, rights price and this offering is very dissapointing, I will not exersice my rights Tomorrow... I put everything on Bombardier with the Farnboro show next week and Cseries orders to come...

 

 

 

 

 

 

[alertmeipp]

Few things:

1) they are not getting discount from Abitibi-bowater contract anymore. It's market price.

2) If only $100 to best customers, it's an improvement percent-wise, I think they were doing 10%-15% on average last Q.

3) Even assume the net profit were $120/ton, Saint-Félicien Mill produces 1000 tonnes / pay, so 120k per day profit, a quarter = 10millions. about 7.6 cents per quarter from NSBK. That's P/E of 3-4. Not too bad.

 

anyways, judging from his previous posts, I seriously doubt this guy.

 

 

Thoughts?

[tyska]

Few things:

1) they are not getting discount from Abitibi-bowater contract anymore. It's market price.

2) If only $100 to best customers, it's an improvement percent-wise, I think they were doing 10%-15% on average last Q.

3) Even assume the net profit were $120/ton, Saint-Félicien Mill produces 1000 tonnes / pay, so 120k per day profit, a quarter = 10millions. about 7.6 cents per quarter from NSBK. That's P/E of 3-4. Not too bad.

 

anyways, judging from his previous posts, I seriously doubt this guy.

 

 

Thoughts?

 

My thoughts are that all stockhouse boards are a cesspool of trolls. Never came across anything but garbage when I used to go there. Not worth a sane persons time.

[alertmeipp]

He got this right tho: "For sure, the share price, rights price and this offering is very dissapointing".

 

PPS slides from about 1.6 to 1.01 currently since the right offering. Very disappointing.

 

Btw, seems like I got my additional subscriptions from IB (listed but not tradeable yet).

[Granitepost]

I thought the release date for the Q2 earnings was July 15, but I see no information about any release having been made on that date.  The FBK web site appears to be under construction and is basically not functional.  In addition, I do not see any recent indication on this board that others were expecting an earnings release so I may have been mistaken.  Cheers.

[alertmeipp]

Down more now.

 

 

LONGUEUIL, QC, July 16

 

    <<

    -------------------------------------------------------------------------

    TSX: FBK                                                www.fibrek.com

    -------------------------------------------------------------------------

 

    HIGHLIGHTS:

 

    - A comprehensive refinancing of approximately $190 million supported by

      committed financial partners

    - A strong and sustainable balance sheet with a reduced debt and lower

      interest expenses

    - A debt-to-total capitalization ratio which is reduced from 32% to 23%

      and is amongst the lowest in the industry

    >>

 

LONGUEUIL, QC, July 16 /CNW Telbec/ - Fibrek Inc. (TSX: FBK) today announced that it has successfully completed its previously announced refinancing transactions comprised of:

 

    <<

    - a 5-year secured term loan with a subsidiary of the Société générale de

      financement du Québec (SGF), for an amount of $78 million bearing

      interest at a rate of 8.25% per year;

    - a $75 million three-year asset-based secured revolving credit facility

      with GE Canada Finance Holding Company; and

    - a $40 million (gross proceeds) rights offering pursuant to which Fibrek

      issued an aggregate of 39,602,848 common shares, of which:

      (1) 28,057,068 were issued upon the exercise of the basic subscription

      privilege, (2) 2,996,274 were issued pursuant to the additional

      subscription privilege; and (3) 8,549,506 were issued under a standby

      purchase agreement with Fairfax Financial Holdings Limited. Following

      completion of the rights offering, Fairfax now owns approximately

      25.85% of the issued and outstanding common shares of Fibrek.

    >>

 

"We are very pleased to have successfully completed this comprehensive refinancing which is a cornerstone to our future growth and success. We are also very proud to have concluded these transactions despite extremely difficult economic conditions. We are privileged to count on the support of such financial partners which further confirms the strength of our business model. Fibrek is well positioned to benefit from a recovering economy with a reduced debt, superior liquidities and the ability to better pursue its business objectives and seize appropriate investment opportunities as they arise," indicated Pierre Gabriel Côté, President and Chief Executive Officer of Fibrek Inc.

 

"This refinancing has allowed Fibrek to repay its existing revolving credit facility maturing on October 30, 2010 and its existing term loan maturing on October 30, 2012. As a result of this refinancing, the company has improved its debt-to-total capitalization ratio to 23%, has reduced its interest expenses and has extended its debt maturity profile. As evidenced by Standard & Poor's Ratings Services' recent upgrade of our corporate credit rating to B-, this puts Fibrek in a stronger financial position to face any future volatility in our business," concluded Patsie Ducharme, Vice President and Chief Financial Officer of Fibrek Inc.

[Cardboard]

"...bearing interest at a rate of 8.25% per year"

 

It is a little higher than what I hoped for, but not bad vs company size, cyclicality. Fairfax is also taking on more than twice as many shares as they would have had without the backstop.

 

What is truly amazing in this market is the resilience of the share price of CFX.UN. This one refuses to go down even in this market while every other pulp producer: FBK, TMB, UFS and MERC are heading down.

 

What is so special about CFX.UN? It is a low cost producer, but I would say that the current price reflects that. It pays a large dividend, but are investors not worried that its earnings may decline like for the other ones and that it may get cut if pulp prices decline? That thing was at $2 not that long ago.

 

Cardboard

[alertmeipp]

Cardboard, the new one is fixed, the old one is Libor+. So, it should be better long term.

nothing we can do except to wait for the 2Q result in August. Just let the numbers do the talk.

[SharperDingaan]

 

Did anyone notice what this press release is actually saying ?

 

May 19, 2010 Information Circular, p16. FFH held 17.443M shares, or 19.37% of the 90.473M shares o/s.

The rights issue produced 39.604M new shares (40M/1.01). Total new shares are 130.077M (90.473+39.604). If FFH holds 25.85% they now have 33.625M shares, an extra 16.182M shares. They got 3.742M via the rights issue backstop (8.549M rights/2.2845 rights), & must have bought 12.44M out of the market. 7.635M of these shares was to replace the subscription they gave up. Of the 7.635M shares available for oversubscription, 2.996M (39.3%) got taken up by other than FFH (assume all institutional)

 

In short: FFH increased its position by 34% ((25.85/19.37)-1), & the 'other' collective institutional  holders increased their position as well. And all of this ahead of a Q2 earnings release due out in roughly 3-4 weeks (mid august).

 

SD