Fortress Global Enterprises Inc - Class A FTPLF

RE: RE: RE: RE: RE: RE: RE: RE: RE: Lets hope Q4 2

[mr1derful]

Q4 just demonstrated to me why dissolving pulp is a lousy business with low returns and very high capital expenditures.The amount of new dp supply coming on stream is so significant that it will take years for demand to catch up. Meanwhile Thurso's true costs per ton are much higher if you add interest payments, depreciation, sustaining cap-ex, and share of corporate overhead. The company has $257 million of debt of which most of it is the cap-ex for Thurso. I don't see FTP earning a high rate or return on all the capital invested. Meanwhile LSQ is going to require another $230 million of cap-ex of which $135 million of it will be funded by the Quebec government. FTP's balance sheet is so levered now that you can imagine what the balance sheet will look like once they start spending at LSQ. The original game plan was that Thurso would generate enough cash flow to fund LSQ but unfortunetely I don't see that happening. Selling Dresden to pay down debt seems like the most logical scenario.The sad thing is that even if all the current debt were paid down it is only going to increase again with the cap-ex at LSQ.