Fraser Papers Posts Fourth Quarter Loss
Feb. 7, 2006 - Fraser Papers Inc. today announced its financial results for the fourth quarter and year ended December 31, 2005 and reported continued progress toward achieving its asset repositioning initiatives in a challenging industry environment.
In the fourth quarter and during the year ended December 31, 2005 Fraser Papers:
- Announced the monetization of timberlands in New Brunswick for estimated net pre-tax proceeds of $125 million consisting of net pre-tax cash proceeds of $94 million and a $31 million investment in the Acadian Timber Income Fund;
- Sold timberlands in Maine generating net pre-tax cash proceeds of $78 million;
- Completed the sale of the Midwest operations resulting in a more geographically concentrated portfolio of assets and streamlined costs;
- Divested of non-core paperboard assets while generating sufficient cash proceeds to cover the costs of exiting this business;
- Achieved margin improvements of $11 million in the fourth quarter and $15 million during 2005;
- Increased shipments of technical specialty papers by 15% from 180,000 tons in 2004 to 207,000 tons in 2005;
- Issued $150 million of 8.75% senior, unsecured notes due March 2015 and repaid $75 million of short term debt;
- Reduced the amount of outstanding guarantees to Norbord Inc. from $84 million at December 31, 2004 to $13 million at December 31, 2005;
- Repurchased 602,100 common shares resulting in a $4 million contributed surplus; and
- Completed reorganization of senior management including the appointment of a new Chief Financial Officer and two Senior Vice Presidents of Operations.
For the year ended December 31, 2005, Fraser Papers generated EBITDA of $4 million and a net loss of $29 million or $(0.98) per share. In the prior year ended December 31, 2004, Fraser Papers generated EBITDA of $20 million and a net loss of $43 million or $(1.43) per share. The year over year performance represents the impact of a moderate improvement in paper pricing combined with a decline in lumber pricing and rising costs for fibre and energy as well as the impact of a higher Canadian dollar.
Fraser Papers generated a loss of $22 million or $(0.75) per common share for the quarter ended December 31, 2005 compared with a loss of $21 million or $(0.70) per share in the same quarter in 2004. A non-cash restructuring charge of $8 million was recorded in the fourth quarter of 2005 related to the sale of our Paperboard operations. A non-cash restructuring charge of $7 million was recorded in the fourth quarter of 2004 relating to a number of productivity initiatives at the Thurso pulp mill and the Edmundston/Madawaska pulp and paper mill.
"The past year was challenging for Fraser Papers and for the paper industry in general. Operating results were disappointing as the full impact of rising costs could not be passed on in the markets for our products. In this difficult environment, we made significant progress on our asset repositioning initiatives and surfaced value from our timberland assets, exited non core operations and strengthened our balance sheet. We believe that our low net debt level positions us well in 2006 to continue to execute our strategy of repositioning Fraser's asset base and cost structure for the long term benefit of our shareholders," commented Dominic Gammiero, President and CEO of Fraser Papers.
SOURCE: Fraser Papers Inc.