Earnings Estimate with LSQ I did my preliminary estimate of earnings for Fortress Paper with the new LSQ acquisition. I have to give Fortress Paper credit for how open they are, giving an investor the ability to do this. 1st some background details and assumptions:
.
1) Outstanding shares. Currently 15.275 M, fully diluted (Q3), add 1.073 M from recent CV debenture offering. 0.45M for new $25M loan from Quebec FI adding 0.45 M shares and 0.715M warrants. That adds up to:
.
15.275 + 1.073 + 0.45 + 0.715 = 17.5 Million shares fully diluted.
.
2) Debt: Quebec Gov't Thurso Loan + $102.4M @ 5% = $5.12M interest payments, QG LSQ loan $132.4M @ 5% = $6.62M interest, $40.25 recent CV deb. offering @ 6.25% = $2.5M interest and $25M loan for LSQ @ 7% = $1.75M interest.
.
So final annual interest payments = $5.12+$6.62+$2.5M+$1.75M = $16Million in annual interest payments.
.
Depreciation in Q3-11 was indicating an annual rate of $14M, so since some would have depreciated in 2 years and then we add the LSQ investments, I used $30 million for depreciation expense. Please not that this is a non-cash charge. More of an accounting entry then an expense.
.
I used $30 million EBITDA for Dresden. Note the Euro has dropped about 5% since Chad gave that estimate but the reduction would also effect taxes and depreciation and would amount to less then $1M of loss, so I ignored it. Since I am estimating
EBITDA for Landqart, the decrease in the Swiss Franc was also ignored but it should be noted that this will significantly help their EBITDA move higher then
.
.
I assumed about $10 million from Thurso's Co-gen that kicks in in the 3rd quarter of this year.
.
Two Scenerios all taken from the two respective presentation for Dissolving pulp prices.
1) Dissolving Pulp Price $1,200 per MT
.
EBITDA:
Thurso = $122.2M
LSQ = $125.0M
Dresden = $30M
Landqart = $ 0M
Thurso Co-Gen = $10M
EBITDA = $287.2 M
.
Minus $16M interest, $30M in depreciation, $10M in corp. expenses = $231.2M pre-tax profit
minus 30% tax =
.
$161.8M after tax profit. Divide by 17.5million shares = EPS of $9.25 per share.
.
.
1) Dissolving Pulp Price $1,600 per MT
.
EBITDA:
Thurso = $205.2M
LSQ = $217.0M
Dresden = $30M
Landqart = $ 0M
Thurso Co-Gen = $10M
EBITDA = $462.2 M
.
Minus $16M interest, $30M in depreciation, $10M in corp. expenses = $406.2M pre-tax profit
minus 30% tax =
.
$284.3M after tax profit. Divide by 17.5million shares = EPS of $16.25 per share.
.
.
Note Above: No value or benefit was given for the exercise of 715,000 warrants that would have provided FTP with about $40 million of new capital. The warrants were used, however, in the calculation of fully diluted shares.