NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Governor, Martin Dlamini said in a press statement: “The Central Bank of Swaziland has initiated a project to upgrade its entire series of banknotes in view of the fact that the existing portrait shown of His Majesty King Mswati III is outdated. Also banknote durability and security technology has advanced significantly since the issuing of the current series of notes in 1999”. The new notes are expected to be released in July or August 2010.

Durability and security were a priority with the new banknotes. The Central Bank of Swaziland will release educational materials and information to assist the public acquainted with the security features with the new banknotes to ensure familiarity with the authenticity of the new Emalangeni banknotes.

SOURCE:  Banknote News, Polymernotes

Fortress Paper Ltd. (“Fortress Paper” or the “Company”) (TSX:FTP), announces that it has entered into a financing agreement with a syndicate of underwriters led by Dundee Securities Corporation and including Jennings Capital Inc., Raymond James Ltd., and TD Securities Inc. (the “Underwriters”). Pursuant to the agreement, the Underwriters have agreed to purchase, on a bought deal basis, 1,739,000 common shares (“Shares”) of the Company priced at $23.50 per Share (the “Offering Price”), for total gross proceeds of $40,866,500 (the “Offering”).

The Company has agreed to grant the Underwriters an over-allotment option to purchase up to an additional 260,850 common shares of the Company at the Offering Price, exercisable in whole or in part, at any time on or prior to the date that is 30 days following the closing of the Offering. If the over-allotment option is exercised in full, the aggregate gross proceeds of the Offering will be $46,996,475.

Fortress Paper intends to use the net proceeds of the offering to finance certain capital expenditures relating to its Fortress Specialty Cellulose Mill in Thurso, Quebec and its rebuild of papermachine number 1 at its Landqart Mill, and for working capital and general corporate purposes.

The Offering is expected to close on or about July 9, 2010 and is subject to certain customary conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals, including the approval of the Toronto Stock Exchange and the applicable securities regulatory authorities. The offering will be made in Canada by way of a short form prospectus and may be made in jurisdictions outside of Canada on a private placement basis pursuant to prospectus and registration exemptions in accordance with applicable laws. The Company intends to file a preliminary short form prospectus relating to the offering with the applicable securities regulatory authorities in Canada in due course.

The securities being offered have not been, nor will they be, registered under the United StatesSecurities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any of the securities in the United States.

The agreement provides for a purchase price of Euro 3 Million (CAD $3.8Million) and includes the purchase and delivery of a complete displacement cooking plant consisting of 3 batch digesters, liquor accumulators and various associated specialty process equipment and piping.

Chad Wasilenkoff Chief Executive Officer of Fortress Paper, commented: “After spending a considerable amount of time assessing and evaluating the equipment, we are very pleased to be able to secure this equipment. This equipment has operated for only 12 years and we are confident of its quality and performance, which should result in a material reduction in our overall capital investment requirements for the conversion to dissolving pulp. We also believe that by acquiring almost an entire batch cooking system, we reduce the process risk for this transformation. At this time it is still too early to determine the impact this new equipment will have on the completion date.”

About Fortress Paper

Fortress Paper is a leading international producer of security and other specialty papers and products. Fortress Paper operates three mills, the Landqart Mill located in Switzerland, the Dresden Mill located in Germany and the Fortress Specialty Cellulose Mill located in Quebec, Canada. Fortress Paper’s security papers include banknote, passport and visa papers and its specialty papers include non-woven wallpaper base products, and graphic and technical papers. Fortress Paper’s pulp business will include NBHK with the re-start of the Fortress Specialty Cellulose Mill with plans to convert this capacity into dissolving pulp production along with the construction of a biomass based cogeneration plant.

A the adage goes, the best time to plant a tree is 20 years ago; the second best time is now.

Ideally, investors planted their money into forestry early enough to see their money grow along with the recent surge in commodity and equity prices.

But the second best time to invest money smartly in the sector is now.

Over the past three years, Canadian forestry has suffered through one of the worst periods in its history. And for an industry already facing seasonal decline, there were several possible factors that could have aggravated the problem. Most of them came true.

In late 2006, the U.S. housing bubble popped, sparking what analysts have come to lament as the “lumber depression.”

In 2008, Canada’s forest, paper and packaging sector was the global industry’s worst performer, with the biggest companies accounting for half of the sector’s losses of US$8-billion. That year, Canada was the only country in the world to post a negative return on employed capital.

For companies focusing on building products, 2009 was no better. Severely curtailed demand drove about one-third of building material suppliers out of business, estimates Paul Quinn, a RBC Capital Markets analyst.

The supply chain is empty.

Extremely low inventory levels, when combined with even the modest uptick in demand in recent months, have sent market prices through the roof and the equities of Canadian forestry companies skyward.

The swift and stunning turnaround is evident in the share-price gains of industry leaders over the past year: Canfor Corp. and West Fraser Timber Co.’s have more than doubled to about $10 and $40, respectively. Shares of Fortress Paper Ltd. are up almost 400% to about $22. Now at about the $70-mark, Domtar Corp.’s shares have risen more than 650%. And Canfor Pulp Income Fund is trading at about $15, more than 11 times higher than in May 2009.

With much uncertainty in demand and prices, the challenge for investors is predicting which forestry stocks are poised to be cut down, having risen too far, too fast, and which still have room to grow.

The answer probably depends on investing style. Put money into lumber for long-term gains, says Daryl Swetlishoff, an analyst at Raymond James. For momentum traders looking to capitalize on inflated prices, pulp and paper are probably the best bet.

The fortunes of a Canadian lumber outfit are, of course, intimately tied to the fluctuations of the U.S. housing market. And in 2009, housing starts in the United States totalled 553,000, down almost 75% from the 2005 peak.

“In housing materials, it was really a depression,” Mr. Quinn says. Companies closed sawmills and curtailed production.

This year, a marginal increase in housing starts has combined with emerging demand in China to put some upward pressure on lumber prices.

But depleted inventories have been the true driving force, Mr. Swetlishoff says. “It’s more of a supply-side event.”

According to price tracker Random Lengths, the composite price for western spruce/pine/fir stands at about US$320 per thousand board feet, up more than 50% since the end of 2009.

“The big question in the building material space is: Are today’s high prices sustainable? And have the stocks gotten ahead of themselves?” Mr. Swetlishoff says.

With much variation in recommendations, most analysts monitoring lumber stocks have “hold” or “sector perform” recommendations on large solid-wood companies.

However, Mr. Swetlishoff says he believes those equities are currently trading at mid-cycle valuations and still have room to run. He has “outperform” recommendations on Canfor, West Fraser and International Forest Products Ltd.

“Our take is that if you’re looking at these stocks, it’s not for a six-month trade, because we see an emerging cycle in lumber products.”

Those less optimistic about the sector believe prices are due to fall and compress valuations.

“To the extent that forest-product stocks need ongoing lumber-price gains to outperform, we are doubtful that the recent spurt of share-price strength will persist,” said a report by Montreal-based think-tank BCA Research Inc.

The lack of consensus reflects a great deal uncertainty around market forces. The timing of the U.S. housing recovery is far from a sure bet, with some predicting a surge of shadow inventory from foreclosures and a double dip in prices.

But the price of lumber may be somewhat insulated from demand fluctuations by other supply constraints, including the destruction wrought by the mountain pine beetle, Mr. Swetlishoff argues.

“Until flying over the B.C. central interior and seeing nothing but red (dead) trees for hours, it is difficult to grasp the scale of the disaster that is the … beetle,” Mr. Swetlishoff said in a note.

Also, the reduction in capacity over the past three years is not immediately reversible, even though demand has picked up. And a strong loonie offsets some of the incentive to crank up production, despite the allure of high prices.

“While restarting mills is relatively easy, a strong Canadian dollar would prolong the lean supply backdrop. The latter raises the break-even cost of restarting Canadian mills and/or adding capacity, given that lumber is priced in U.S. dollars,” the BCA report said.

In fact, Mr. Swetlishoff goes so far as to apply the theory of peak oil to timber, predicting that a number of demand and supply factors will combine to produce a lumber “super cycle.”

That will lead to “sustained elevated pricing associated with structural supply deficits,” he wrote. On that front, he recommends International Forest as a small-cap pick, as well as West Fraser and Canfor.

While the peak lumber theory applies to the long term, Mr. Swetlishoff also predicts that the seasonal industry decline expected in the second half of 2010 will not push prices below break-even levels, and thus will not strip his stock picks as recommendations for deep-value investments.

Without the reliance on U.S. housing, pulp and paper companies were better able to weather the recession, but are still enjoying a recent run in prices due to supply constraints.

After a number of pulp mills closed last year, the earthquake in Chile wiped out about 7% to 8% of global capacity. Pulp is expected to hit US$1,000 per tonne soon, an increase of almost 60% since last May.

In that sector, Domtar has consistently beat earnings expectations, attacked its debt levels and recently announced the reinstatement of its dividend.

And even with big gains already realized, Domtar’s equity is considerably undervalued, Mr. Quinn says.

“Domtar’s our favourite story,” he says. “We love it.”

His share-price target is $100, well above Domtar’s current price of about $70.

“It’s balance sheet is underleveraged, it’s going to generate some significant free cash, almost $10 a share in our estimate in 2010,” Mr. Quinn says.

As a unique pulp and paper investment opportunity, Mr. Swetlishoff has a strong “buy” recommendation on Fortress Paper.

The B.C.-based producer of security and specialty papers recently acquired a hardwood pulp mill and converted it to a facility producing dissolving pulp, which is used in the production of rayon, a substitute for cotton with a large market.

“That is one I do not have to stress my model at all, and I get a lot of upside,” he said. “A lot of the other stocks I cover, I run pretty hard.”

In the wood-panel market, Norbord Inc. continues to garner “buy” recommendations on the strength of an extraordinary price environment for oriented strand board, whose price has soared to the highest levels in five years.

“At this price, they’re making lots of money,” Mr. Quinn says.

By: Tim Shufelt, Financial Post
Source: National Post

Under the Agreement, the Company will construct a cogeneration facility to provide net 18.8 megawatts of green power to Hydro Québec over a 15 year term, with deliveries estimated to commence in the fourth quarter of 2012.

Chadwick Wasilenkoff, CEO of Fortress Paper, states, “The signing of the Agreement represents an important step in achieving our business plan at the Thurso Mill, which includes the building of a cogeneration plant that produces green electricity that in turn will ultimately benefit Québec residents.  We believe that the results of this partnership with Hydro Québec will be beneficial to the environment and the economy of Québec, as well as providing net energy savings (income) to Fortress Paper.”

The Agreement is subject to final approval by the Régie de l’énergie in Québec which is expected to be received in the third quarter of 2010.

About Fortress Paper

Fortress Paper is a leading international producer of security and other specialty papers. Fortress Paper operates three mills, the Landqart Mill located in Switzerland, the Dresden Mill located in Germany and the Thurso Mill located in Canada. Fortress Paper’s security papers include banknote, passport and visa papers and its specialty papers include non-woven wallpaper base products, and graphic and technical papers. Fortress Paper’s pulp business currently includes NBHK with plans to convert this capacity into dissolving pulp production. Fortress Paper plans to build a biomass based cogeneration plant at the Thurso Mill.

Chad Wasilenkoff, CEO of Fortress Paper, states, “We are pleased to announce the transaction has closed. We intend to move aggressively to ramp up operations at the Thurso Mill and anticipate production of NBHK to commence in mid June of this year during the interim period while we immediately begin the conversion of the Thurso Mill into a dissolving pulp operation.  We are finalizing the terms of employment with several key individuals with extensive experience in dissolving pulp conversions and should be able to provide more details on this matter in the coming weeks.  This acquisition will diversify our specialty product mix and we believe will provide a significant financial contribution to Fortress’ growth aspirations.”

The acquisition of the Thurso Mill has been completed through its wholly-owned subsidiary Fortress Specialty Cellulose Inc. (“Fortress Specialty”).  The Corporation intends to incur capital expenditures of approximately $153 million to convert the non‑operating NBHK mill into a high quality specialty cellulose mill and to construct a new cogeneration facility.

Concurrent with the completion of the acquisition the Company has finalized $102.4 million project financing with Investissement Québec (“IQ”) and a $15 million convertible debenture (the “Debenture”) with Solidarity Fund QFL.  Additionally, included in the assets being purchased is approximately $9.9 million in credits (black liquor credits) granted under the Canadian government’s Pulp and Paper Green Transformation Program. Fortress Paper also intends to apply for approximately $15.2 million in federal credits under the Green Infrastructure Fund program of the Minister of Transport, Infrastructure & Communities relating to the planned cogeneration project.

New collective agreements have been negotiated with all three unions which will be in effect until 2016.  The defined benefit pension plan which existed under the previous collective agreements has been replaced with a defined contribution pension plan, eliminating the risk of future unfunded pension liabilities.  Under these new agreements, Fortress will not be assuming any of the previous pension liabilities.  Management is confident that these agreements will ensure a positive partnership with the union and a stable, efficient cost structure through the transition into dissolving pulp.

Further Details:

Fortress Paper has completed a loan agreement whereby Investissement Québec has agreed to provide up to $102.4 million to Fortress Specialty to support the proposed business plan in respect of the Thurso Mill. The loan is secured by the capital assets of Fortress Specialty and has a term of 10 years. Interest will be calculated at a fixed rate of 5.0% per annum for the first five years, followed by a rate based on the cost of IQ’s funds plus 2.0% for the remaining five years, up to a maximum of 5.5% per annum.

Fortress Paper has also issued a $15 million convertible debenture (the “Debenture”) to Solidarity Fund QFL.  The convertible debt matures in five years with an interest rate of 7% per annum.  The Debenture is convertible, in whole or in part, at the option of Solidarity Fund QFL into common shares of Fortress Paper at any time after closing of the debenture at a conversion price equal to $20.00.

The Solidarity Fund QFL is a development capital company that channels the savings of Québec residents into investments in all sectors of the economy to help create and maintain jobs and to further Québec’s economic growth. The Fund is a partner, either directly or through its network members, in approximately 2,000 companies.

The specialty cellulose mill is planned to have an annual production capacity of more than 200,000 air dried metric tonnes and is expected to be completed in mid-2011. In entering into the specialty cellulose sector, Fortress Specialty will focus on producing dissolving grade cellulose for the textile industry, primarily targeting viscose fibre (rayon) products which have shown strong growth of approximately 10% in China and 7% worldwide over the past five years. Rayon is a technically evolved and versatile fibre with many advantages, particularly in the warmer and higher growth regions of the world.

Fortress Paper also plans to construct an approximately 25 megawatt cogeneration facility to service a net 18.8 megawatt power supply agreement over a 15 year term. The location of the cogeneration facility provides it with access to on‑site generation of biomass and an extensive local network of chip and other biomass suppliers. The cogeneration facility is expected to be supplying electricity in the fourth quarter of 2012.

FORTRESS PAPER TO RELEASE FIRST QUARTER 2010 EARNINGSVancouver, British Columbia, April 27th, 2010 – Fortress Paper Ltd. (“Fortress Paper” or the”Corporation”) announced today that it intends to release its first quarter financial results for the periodended March 31, 2010 after the close of the market on Tuesday, May 11th, 2010. In connection with therelease of its results, Fortress Paper will host a conference call Wednesday, May 12th, 2010 at 8:00 a.m.(PST) to discuss the financial results and the Corporation’s operations. Mr. Chadwick Wasilenkoff, ChiefExecutive Officer, Alfonso Ciotola, President, Erich Sulser, Chief Operating Officer, and Kurt Loewen,Chief Financial Officer will host the call.To participate in the conference call, please dial one of the following numbers:Dial In Numbers: 604-681-0262 Vancouver403-532-8075 Calgary or International780-429-7423 Edmonton647-837-0597 Toronto613-683-0932 Ottawa514-788-7663 MontrealToll Free Dial In Number: 1-877-353-9586 from Canada and USAParticipant Pass Code: 90198#A replay of the conference call will be available for 7 days. To access the replay, listeners may dial1-877-245-4531 from Canada & the USA or dial 403-205-4531 from local Calgary or International. Thepass code to access the replay is 347381 #.About Fortress Paper Ltd.Fortress Paper is a leading international producer of security and other specialty papers. Fortress Paperoperates two paper mills, the Landqart Mill located in Switzerland and the Dresden Mill located inGermany. Fortress Paper’s security papers include banknote, passport and visa papers and its specialtypapers include non-woven wallpaper base products, and graphic and technical papers. As an extension ofits security papers business, the Landqart Mill has been actively developing and marketing innovativepaper-based security products.For further information, please contact:Chadwick WasilenkoffFortress Paper Ltd.604-904-2328info@fortresspaper.comwww.fortresspaper.comNot for distribution to United States newswire services or for dissemination in the United States.

Fortress Paper President and CEO Chad Wasilenkoff. Source: The Globe and Mail

That explains why Fortress Paper shares were bruised last Friday, after the company announced that it was buying a pulp mill from a bankrupt operator in Quebec.

Fortress is a smart little company that literally makes money.  To be precise, the company makes bank notes for Switzerland and euros for 10 countries. It also makes passport and other security papers. Plus it makes high-end wallpaper. It’s been a great little investment, returning more than 100 per cent since it started trading less than three years ago and 300 per cent since it bottomed in the market crash a year ago.

At first glance, the pulp purchase looks like a change of strategy. While Fortress is technically in the paper business, it’s nowhere near pulp on the food chain. No one wants pulp, which explains how the mill ended up in bankruptcy protection.

But this is not a change of strategy. It fits in very well with how Fortress has made such gains for investors, and analysts have figured it out, which is why the stock was up so much yesterday. If it works out – and CEO Chadwick Wasilenkoff told me yesterday that he thinks this is the best deal he’s ever done – the stock has lots of room to rise.

While it’s true that pulp demand is in decline as we consume less paper, demand for rayon is climbing briskly. Rayon is a substitute for cotton, and according to the U.S. Department of Agriculture, cotton production is dropping, down by about a sixth in the past four years. The economics don’t make sense for farmers who can make more by growing food or ethanol feed stocks.

Demand for cotton, meanwhile, is growing. But there isn’t enough of it, so demand for rayon is climbing at about 7 per cent a year, according to Fortress.

What does that have to do with a pulp mill in poor old Thurso, Quebec? With a healthy investment, the mill can be converted to produce what’s called “dissolving pulp,” which is what they use to make rayon among other things. And that’s what Mr. Wasilenkoff intends to do.

Fortress is paying all of $3-million for the mill. It has to invest $153-million to convert the plant – $91-million for the actual conversion and another $62-million to build co-generation, which produces electricity. Once up and running, the refurbished plant will, analysts figure, be a cash cow.

Why? Well, since there’s a shortage of production capacity out there, dissolving pulp is changing hands for $1,500 a tonne – that compares nicely to the $800 a tonne the mill’s pulp product fetches now.

What’s more, Mr. Wasilenkoff arranged for attractive and cheap government financing for much of the acquisition. Fortress is putting up equity of only $15-million in total. The risk to shareholders is limited.

The analysts whose reports I looked at show, on average, a doubling of earnings before interest, taxes, depreciation and amortization over the next two or three years. The new price targets are twice as high as the stock price today, which may seem ambitious and may even be ambitious but isn’t ridiculous.

Meanwhile, Fortress’s other divisions – wallpaper and security paper – also show promise. The wallpaper mill is one of the lowest-cost mills in the world, and Fortress has about half of the global market share of coated and uncoated non-woven wallpaper.

And the banknote business is also stable with room to grow, although Fortress needs to make investments to modernize the works. Fortress’s EBITDA grew 125 per cent from 2006 to 2009.

The truth is that this deal fits in perfectly with what Mr. Wasilenkoff has been doing all along: being a contrarian, buying cheap, seeing opportunities others overlook, allocating capital intelligently and being patient – the sorts of things only CEOs who own a lot of stock (23 per cent in this case) do.

Asked what is most challenging about his job, Mr. Wasilenkoff says “the stock price. We think it’s lower than it should be and that’s frustrating.”

While small companies bear risks that bigger ones don’t, like concentrated customer sales, I think he’s right. The stock does look cheap, especially given that he’s demonstrated an ability to make money for not only central banks but investors as well.

By: Fabrice Taylor for The Globe and Mail. Tuesday, March 23, 2010.

SOURCES: The Globe and Mail: “Rayon is Fortress’s True Story”.

Fortress Paper