The head of North Vancouver's Fortress Paper Ltd. (TSX:FTP) has told BIV that his company has more than a dozen potential acquisition targets on its radar after announcing the closure of a $40.9 million financing Wednesday morning.
The acquisition opportunities come as the company seeks to broaden its business into a number of sectors beyond banknotes and security-paper.
Chad Wasilenkoff, Fortress’ CEO, said: “Now we consider ourselves more of an industrialized-type of company. … It’s allowed me, as head of strategy and acquisition, to broaden my horizons in where I can look at acquisition opportunities.”
Pending further developments, Wasilenkoff declined to elaborate on what the potential acquisition targets are or in which sectors they operate.
The company is spending $153 million to convert a recently acquired cellulose pulp mill in Thurso, Quebec to the production of dissolving pulp.
It plans to sell the dissolving pulp to chemical companies that produce a liquid extract called viscose from it. Viscose is further refined to produce rayon, which is used in fabric and textile industries.
Wasilenkoff said: “We will become the second lowest-cost producer in the world for [dissolving pulp], which has very strong growth profiles and allows for very attractive margins.”
Of the $153 million Fortress is investing, $62 million is earmarked for construction of a biomass-fueled co-generation facility. Power produced by the facility is being sold to Hydro Quebec through a 15-year contract.
Wasilenkoff said that Fortress’ initial five-year plan had the company predominantly focused on growth in its banknote and security-paper business.
He said: “This opportunity came up at Thurso and the risk to reward and the return on investment was so compelling that we really had no choice but to take this direction with the company – we just couldn’t pass this opportunity up.”
Fortress is by no means getting out of the banknote-making business. It is spending $50 million to rebuild a paper-making machine in its Switzerland-based facility that, when finished in November, will quadruple the company’s banknote- and security-paper-making capacity.