New FBK

[Hoodlum]

I picked up some MERC today for the first time.  It seems a better value than FBK right now.

[Alekbaylee]

Canfor Pulp Products reverses loss, posts Q1 profit of $40.6 million

 

http://ca.finance.yahoo.com/news/Canfor-Pulp-Products-reverses-capress-3748919103.html?x=0

 

Hopefully FBK is on the same track...

[cwericb]

LONGUEUIL, QC, May 4 /CNW Telbec/ - Fibrek (TSX: FBK) will release its 2011 first quarter results after market hours on Wednesday, May 18, 2011. President and Chief Executive Officer, Pierre Gabriel Côté, and Patsie Ducharme, Vice President and Chief Financial Officer, will host a conference call on Thursday, May 19, 2011 at 8:30 a.m. (Eastern Time) to discuss financial results.

[Cardboard]

"http://finance.fortune.cnn.com/2011/05/04/silver-canary-in-the-commodity-coalmine/"

 

Although, pulp has not skyrocketed like silver, it is hard to argue that it isn't part of the same commodity trend and this is starting to get me worried.

 

Fibrek is the last "major" position that I hold in my portfolio where profits are directly related to a commodity. The main interest was the repayment of debt over time and improvements in their business accruing to intrinsic value per share. However, these guys remain a high cost producer despite the improvements and time will not be on their side if pulp corrects rapidly. I have had similar fears last Summer/Fall and the way to go was to sit tight. Don't know if it is right this time.

 

A potential restructuring or asset sale remains, but so far there has been no indication.

 

It feels like cutting in half or fully might be the way to go following the stock's appreciation. On top of that, they may well screw up again with the coming quarterly announcement. What do you guys think?

 

Cardboard

[finetrader]

For FBK, other than the obvious NBSK pulp price, I look at cotton price specifically to gauge the commodity trend.

 

[Alekbaylee]

For FBK, other than the obvious NBSK pulp price, I look at cotton price specifically to gauge the commodity trend.

 

There was an interesting comment this week regarding this trend...

 

BHK pulp China – Market pulp shipments to China were up by nearly 100% in March and by 35.5% over the first quarter, according to PPPC statistics. Chinese import statistics showed slightly lower increase in March but the cumulative gain was very similar. Import statistics show the big difference between BSKP and BHKP. Over the quarter, BSKP imports were up by 53% but BHKP by only 7.5%. This is partly explained by the much talked BSKP purchases by the viscose fibre producers for textile end-use. In April, the price hike in BSKP has pulled BHKP with it, even if the supply/demand balance still appears less tight for hardwood grades. BCTMP import increase of over 50% and the large increase of domestic BHKP production have played a role in this development. The PIX BHKP China index continued to move up, this time by just 98 cents, or by 0.13%, and closed at 766.81 USD/ton. Yuan strengthened last week marginally, or by 0.05% against USD. The conversion of the USD value into Yuan meant an increase of just 4.08 RMB, or by 0.08%, to 4977.35 RMB/ton.

 

http://www.foex.fi/

 

 

I don't know where FBK is heading, but can't help to think about one comment Prem made at his last Ivey School lecture : (not verbatim) you know when a Co keeps going down something always happen... either they're gonna be bought out or... anyways something always happen...

 

So we'll see...

 

 

 

 

[Uccmal]

 

It feels like cutting in half or fully might be the way to go following the stock's appreciation. On top of that, they may well screw up again with the coming quarterly announcement. What do you guys think?

 

Cardboard

 

Really have no idea - maybe pulp is a supply/demand thing.  IMO the commodity bubble if that is what is happening is fueled mostly by QE.  It is definitely commodity specific - energy has not really participated for example - oil still hasn't reached prior highs and gas has done nothing.  Shipping is rock bottom.  Setting that aside for now.

 

FBK and the others that are still alive in the industry I see as survivors of a long term consolidation.  The new plant in Tasmania is going to cost in order of 2 B and equal somewhat more capacity than fbk total.  So fbk plants be at least say $6.00 per share replacement.  The pulp supply is somewhat controlled by barriers to entry in terms of lag time, environmental regs, etc.  So that leaves demand and who knows?

 

I would like to see FBK go debt free and institute a dividend before they do anything stupid with the cash flow.  I would also like to see them get on with the energy facilities PDQ before they lose their grant.  

 

I am holding but nervous, like yourself Carboard.

 

 

 

[triedtestedand]

Count me as well as nervous, but optimistic ... which may be symptomatic of some type of split-brain disorder. ;-)

 

That said, there's potentially encouraging tidbits from the following two recent posts by one analyst:

 

http://www.glgroup.com/News/Fibrias-1Q11-Reports-Shows-Impressive-Results-53829.html?cb=1

http://www.glgroup.com/News/China-Gains-On-The-US-But-Still-2-Paper-Producer-53811.html?cb=1

 

 

Canfor and West Fraser results looked good (from NBSK perspective), so we'll see in about 2 weeks what to make of Fibrek's results.  I continue to hope they are at point to pay off the remaining 1/2 of the debentures this quarter, as that cleans up their capital structure nicely, and if nothing else, would remove an impediment for other firms to do some sniffing.

[FFHWatcher]

I think I heard a manager (I think it was Tim McElvaine) once say, 'Buy, Hold and Worry'.  Not sure if it was original line or not.  

[Alekbaylee]

I would like to see FBK go debt free and institute a dividend before they do anything stupid with the cash flow.  I would also like to see them get on with the energy facilities PDQ before they lose their grant.  

 

Amen!

 

[Hoodlum]

Mercer International Q1 results.

 

http://www.globenewswire.com/newsroom/news.html?d=220937

 

 

[cwericb]

Seems that for the last couple of years there has been a run up in share price prior to quarterly earnings release.

Then the market would be unimpressed with the results and the price would drop - sometimes substantially.

This time, however the price has been slipping for the past week as we wait for the earnings release in a couple of weeks.

Perhaps the reverse will happen when the results are released this time for a change.  javascript:void(0);

[FFHWatcher]

Seems that for the last couple of years there has been a run up in share price prior to quarterly earnings release.

Then the market would be unimpressed with the results and the price would drop - sometimes substantially.

This time, however the price has been slipping for the past week as we wait for the earnings release in a couple of weeks.

Perhaps the reverse will happen when the results are released this time for a change.  javascript:void(0);

 

For the most part, FBK results have been unimpressive.  FBK hasn't fully benefited from the huge NBSK price reversal from 2009.  US $ has hurt them.  US operations have hurt them, extended timeline for energy sales, etc.  On the other hand, their debt reduction using free cash flow and share issuance has been excellent (aside from dilution).  In my opinion, unfortunately management has done little to add value that I can tell, with the exception of paying down debt and not blowing the free cash flow, yet.

 

While I wish other shareholders will push for a dividend, I just don't think that is where management's thoughts are at in 2011 (we need FFH on board).  If they continue to buy shares, perhaps they will start to think MORE like shareholders and start paying us a portion of our income. 

[cwericb]

"If they continue to buy shares, perhaps they will start to think MORE like shareholders and start paying us a portion of our income. "

 

Agreed, and you would think that those options they own would give them incentive to get the share price up as well.

 

However, in their defense, they have access to a lot more information than we do and there is hope that perhaps they are following an agenda that looks good to them, but may be a little more long term that we would like. They said they had plans to improve the results from the RBK plants and NBSK prices have been running in a pretty good range for quite a while now. I also saw somewhere (here?) where chip prices have dropped, so it will be interesting to see the results of the first quarter.

 

You would also think that FFH would be keeping tabs on what is going on within the company and perhaps they also are looking at it with a more long term view as well. The concern there is what happens if NBSK prices start to decline? With the pressure on commodity prices this week it will be interesting to see if there is a dip in the NBSK price on Tuesday.

 

You know, back when it was first announced that 2012 date for the power generation used to seem like such a long way off. But now it doesn't seem like so far away.

[Hoodlum]

You know, back when it was first announced that 2012 date for the power generation used to seem like such a long way off. But now it doesn't seem like so far away.

 

They had mentioned 2012 all of last year, but the lastest Q4 release mentioned that there would be no impact on earning until 2013.  Still close to 2 years away.

[Alekbaylee]

Interesting paper from PWC on the M&A perspective in FPP industry :

 

http://www.pwc.com/en_GX/gx/forest-paper-packaging/publications/pdf/FPP_deals_2011_v6.pdf

 

Looking ahead into 2011 and 2012, we believe the prospects are good for a sustained upturn in FPP deal value from the floor reached in 2009 and 2010. Confidence is returning to those markets that have been hit hardest by the downturn while the outlook for growth markets, and the need to secure and grow fibre supply, remains very strong. The contrasting balance sheet strength and weakness between companies in the pulp and paper sector will present deal opportunities and, in Europe, a round of much-needed consolidation appears finally to have begun. We also expect deal momentum to flow from moves by companies to diversify into new, growth markets, reposition product and operational portfolios and from a continuing flow of institutional money into timberlands.

[SharperDingaan]

 

We know the global industry is expected to consolidate, & the process has allready begun (PwC Report).

 

We know that FBK is a weak player, consolidation has always been in the game plan from Day-1, & shareholders are restless. We know that a share price < $5 prevents the significant majority of institutions from owning it. We know that 1/2 the Debs have been called, FBKs pulp markets are likely to remain strong for the next 1-2 years, & that it is highly likely they have the means (COH + credit lines) to recall the remaining Debs anytime they wish. Todays price of 1.56 is up 42% on the year - to go up 100% to 2.20 - what really needs to happen?

 

Most would think we need new shareholders. A 2.5-3:1 share consolidation to get > $5/share

With 3:1 consolidation to 44M shares, most would expect a new share issue to retire the remaining debs

New shareholders would want an asset sale - as soon as the power contracts start adding EBITA

 

A 2.5-3:1 consolidation produces a current share price range of 1.67-2.00/share. On May-02 the shares closed at 1.64.

 

Patience.

 

SD

 

 

[tyska]

Just came across this while searching for something else. I thought I remembered something about FBK in labour negotiations, not sure were they are at on that.

 

http://foresttalk.com/index.php/2011/05/10/workers-on-strike-at-tembecs-pulp-mill-in-matane-quebec/

 

"Workers on strike at Tembec’s pulp mill in Matane, Quebec

 

May 10th, 2011 | Posted in Labour Negotiations | 1 comment »

 

TembecFollowing a breakdown in labour discussions between Tembec representatives and the union representatives at the Tembec high-yield pulp mill located in Matane, Quebec, unionized employees did not report to work this morning and went out on strike.

 

Consequently, all production activities have been suspended indefinitely.

 

Tembec is monitoring the situation very closely and is putting into place measures that will ensure uninterrupted supply to its customers.

 

The plant in Matane employs 143 people, of which 99 are unionized, and ships to customers in North America, Europe and Asia.

 

Source: Tembec" 

[cwericb]

FIBREK AND THE SAINT-FÉLICIEN MILL EMPLOYEE UNION SIGN NEW COLLECTIVE AGREEMENT

 

LONGUEUIL,QC, May 25, 2011 /CNW Telbec/ - Mr. Pierre Gabriel Côté, President and CEO of Fibrek, is pleased to announce that the members of the Communications, Energy and Paperworkers Union of Canada (CEP, local 24-Q) have voted in favour of a new collective bargaining agreement based on the agreement in principle concluded last April 29. The new labour conditions are retroactive to May 1, 2009 and will be effective until April 30, 2014.

 

"This agreement is the result of a long process. The negotiations unfolded in a climate of respect, cooperation and transparency that reflects our corporate values. I applaud the openness and pragmatism shown by the union representatives throughout the negotiations. Together, we concluded an agreement that meets both parties' needs", said Mr. Côté.

 

The agreement contains several measures to improve the mill's productivity. The parties will work closely to implement the agreed-upon terms and conditions, in particular to achieve greater flexibility in the maintenance department, to reorganize the workforce and to improve employee training and development.

 

"After successfully completing this process, I believe that Fibrek is now stronger and better positionned to face its challenges. I thank and congratulate both negotiating teams for their hard work and constructive discussions leading to this agreement. It takes into account the particular context of our industry and sets the foundations to continue building a successful, competitive and sustainable organization", concluded Mr. Côté.

[lessthaniv]

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.

[triedtestedand]

Excellent news regarding both the new agreement with the union, as well as the redemption of the remaining debentures, which highlights not only a strengthening of the balance sheet, but a simplification of it as well, importantly eliminating it's potential dilutive effect.  Next target ... share buyback and/or dividend announcement (after Q2 results are out)?

[Alekbaylee]

Next target ... share buyback and/or dividend announcement

 

T&T, you beat me to it...

[alertmeipp]

share buyback? - like buying back those shares they sold at 1 buck not long ago?

 

Back then some of us were questioning whether they really need that right offering - I guess the answer is obviously now.

 

Fairfax got a free pass to average down tho.

[Alekbaylee]

So, that would bring FBK closer to Canfor in terms of Debt to capitalization ratio : 14 vs 15% for FBK.

Among the lowest in the industry. Very good!

[Alekbaylee]

share buyback?

 

Ooooppss, share consolidation.