According to Bloomberg, Canadian Fortress Paper CEO Chad Wasilenkoff says his strategy of buying unprofitable Canadian pulp mills will either spark a rally or push him to buy the whole company.
Wasilenkoff is betting idled paper-grade pulp mills can be transformed into some of the world’s lowest-cost makers of the pulp used in synthetic fabrics and LCD screens. Fortress bought a second Quebec mill last month and the CEO said he’s in talks to acquire another in North America and one in Europe.
The growing market for so-called dissolving pulp, combined with Fortress’s cheap acquisition costs, government financial support and wage concessions from workers, will generate“staggering” returns for investors, Wasilenkoff said. Fortress’s market value has declined 56 percent in the past year.
In 2010 Fortress Paper purchased its first mill in Quebec, Thurso, and has transformed it into a producer of dissolving pulp. However, the transformation has been slower and more expensive than expected.
The project was first forecast to be completed by mid-2011 and to cost C$153 million, according to a March 2010 statement. Production began in December and the project is now projected to cost C$210 million.