VANCOUVER, BRITISH COLUMBIA–(Marketwire – June 8, 2010)

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.

VANCOUVER, British Columbia, June 7, 2010 – Fortress Paper Ltd. (“Fortress Paper” or the “Corporation”) announces the signing of a purchase agreement by its wholly owned subsidiary, Fortress Specialty Cellulose Ltd. (“Fortress Specialty”) with Stora Enso Oyi Cellulose Inc. to acquire digesters, specialized process equipment and other ancillary equipment to be used in the conversion of its Thurso mill to produce dissolving pulp.

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.

VANCOUVER, BRITISH COLUMBIA–(Marketwire – June 1, 2010) – Fortress Paper Ltd. (“Fortress Paper” or the “Corporation”) (TSX:FTP) announces that its wholly-owned subsidiary, Fortress Specialty Cellulose Inc. (“Fortress Specialty”), commenced production and sale of NBHK pulp on May 28th. The mill reopened May 1st after being shut down by the former owner in early 2009.
Chad Wasilenkoff, CEO of Fortress Paper Ltd. commented: “The commencement of production at the Fortress Specialty Cellulose Mill marks the achievement of an important milestone at Thurso. We are pleased that production has commenced ahead of schedule and this will enable us to take advantage of the current strong NBHK pulp prices.”

Fortress Specialty’s Thurso Mill is expected to produce approximately 250,000 air dried metric tonnes per annum of high grade northern bleached hardwood kraft pulp. Fortress Specialty intends to produce NBHK pulp while undergoing transformation to become a dissolving pulp producer in mid 2011.

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.

This news release contains certain forward-looking statements that reflect the current views and/or expectations of Fortress Paper with respect to its performance, business and future events, including statements relating to its plans to re-start, convert and build a biomass based cogeneration plant at the Fortress Specialty Cellulose Mill. Forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about the business and the industry and markets in which the Corporation operates, including assumptions relating to the Corporation’s ability to successfully implement its business plan in respect of the Fortress Specialty Cellulose Mill; that the Corporation will be able to receive all required approvals and complete construction of the cogeneration facility; and the expected effects of the cogeneration facility on the business of the Corporation. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Investors are cautioned that all forward-looking statements involve risks and uncertainties including, without limitation, that the Corporation will be unable to implement its business plan in respect of the Fortress Specialty Cellulose Mill as planned or at all; that the Corporation will be unable to receive all necessary approvals to begin construction of the cogeneration facility; and those risks relating to changes in the market, potential downturns in economic conditions, fluctuations in the price and supply of raw materials, foreign exchange fluctuations, labour relations, regulatory requirements, reputation, competition, dependence on major customers, and other risk factors listed from time to time in the Corporation’s public filings. These risks, as well as others, could cause actual results and events to vary significantly. Accordingly, readers should not place undue reliance on forward-looking statements and information, which are qualified in their entirety by this cautionary statement. Fortress Paper does not undertake any obligations to release publicly any revisions for updating any voluntary forward-looking statements, except as required by applicable securities law.

SOURCE:
Fortress Paper Ltd.

An Indonesian Peacock or Swallowtail butterfly Photo: Cambridge University

In the world of banknote security, anti-counterfeit technology has to be developed at a feverish pace. To keep ahead of counterfeiters, banknote producers have to be consistently inventing and innovating new features to deter the future creation of bogus bills.

Recently, a number of security devices have been introduced that are proving to be revolutionary to the banknote industry. From the new US $100 bill’s 3D Liberty Bell, to Bermuda’s Optiks thread on its $2 bill, to Fortress Paper’s see-through window, banknote makers across the globe show that high-tech security features are the key to a secure banknote.

Teams of researchers and industry professionals are at the helm of developing these new technologies, but sometimes the idea for a security feature comes from an unexpected source – such as butterflies.

Research conducted by scientists at the University of Cambridge found distinctive iridescent patterns on the Indonesian Peacock Swallowtail butterfly that could – with some work – be reproduced as a near-impossible-to-copy security device for banknotes.

The wings of the Swallowtail have an intricate, multi-layered, microscopic makeup that produce intense depth and colour, and it is this multiplicity of layers (which look a little like the inside of an egg carton) that may open the doors to new security technology in banknotes.

Long a mystery to scientists, a butterfly’s colours are produced by light bouncing off microscopic structures on the insects’ wings instead of relying on pigment. The researchers at Cambridge were one of the first teams to devise a method of reproducing these intense colours and patterns.

Using a combination of nanofabrication procedures (recreating things on an miniscule atomic level) the Cambridge scientists made structurally identical copies of the butterfly scales, and these copies produced the same vivid colours as the butterflies’ wings.

So what does all this have to do with banknotes?

The idea is that now that scientists understand how to reproduce these colours and patterns on a microscopic level, they can apply this knowledge to banknotes to create specialized security features that will not only mimic the vividness of the colours and the intricacies of the patters, but also be near impossible to copy.

“These artificial structures could be used to encrypt information in optical signatures on banknotes or other valuable items to protect them against forgery. We still need to refine our system but in future we could see structures based on butterflies wings shining from a £10 note or even our passports,” says Mathias Kolle, one of the lead researchers for the Cambridge study. “Although nature is better at self-assembly than we are, we have the advantage that we can use a wider variety of artificial, custom-made materials to optimise our optical structures.”

Though the research is complete, and the findings have been published in Nature Nanotechnology Journal, there is no word yet on whether security paper makers have taken the next step to begin applying this research to security papers such as banknotes and passports.

SOURCES:
Science Daily: “From Butterflies’ Wings to Banknotes: How Nature’s Colours Could Cut Bank Fraud”
TG Daily: “Butterflies’ Wings Could Cut Bank Fraud”
The Telegraph UK: “Scientists Use Butterflies In Fight Against Banknote Forgery”

Once-moribund industry sprouts new demand and higher share prices.

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

VANCOUVER, British Columbia, May 11 2010 – Fortress Paper Ltd. (“Fortress Paper” or the “Company”) (TSX:FTP) reported adjusted net income of $3.0 million for the first quarter of 2010 on sales of $50.3 million or adjusted earnings per share of $0.30. In the first quarter of 2009 the Company reported adjusted net income of $2.5 million on sales of $46.6 million or adjusted earnings per share of $0.25. For the fourth quarter of 2009 the Company reported adjusted net income of $4.8 million on sales of $51.0 million or adjusted earnings per share of $0.47.

Analysis of Specific Items Affecting Comparability of Net Income

EBITDA was $5.8 million or 11.5% of sales for the three months ended March 31, 2010. For the three months ended March 31, 2009 EBITDA was $5.0 million or 10.8% of sales. EBITDA was $7.9 million or 15.4% of sales for the three months ended December 31, 2009.

In the first quarter of 2010 the Dresden mill continued to experience strong sales and earnings throughout the quarter. The Landqart mill results reflected the product mix during the quarter. The banknote paper machine remains full and the conversion of paper machine one from a specialty paper machine to a banknote paper machine is on track. The increase in EBITDA relative to the prior year comparative period was partially due to the global financial and economic crisis which impacted sales early in 2009.

EBITDA is defined as net income before interest, income taxes, depreciation, amortization, non-operating income and expenses and stock based compensation which the Company considers to be a key performance indicator. EBITDA is not a generally accepted earnings measure and should not be considered as an alternative to earnings or cash flows as determined in accordance with Canadian generally accepted accounting principles. As there is no standardized method of calculating EBITDA, the Company’s use for the term may not be comparable with similarly titled measures used by other companies.

Chadwick Wasilenkoff, chief executive officer of Fortress Paper, states: ”This is an exciting time for the Company. The recently announced acquisition of the Thurso mill will diversify our specialty product mix and we believe will provide a significant financial contribution to Fortress’s growth aspirations. We plan to ramp up operations at the Thurso mill while we immediately begin the conversion into a dissolving pulp operation. The Dresden mill continues to perform extremely well, while the Landqart mill is experiencing results which are reflective of the current product mix of banknotes which offer lower margins.”

Selected Financial Information

The selected financial information presented herein is qualified in its entirety by, and should be read in conjunction with, our audited consolidated financial statements as at and for the year ended December 31, 2009 and the related notes thereon and our Management’s Discussion and Analysis filed on SEDAR.

Three Months Ended March 31, 2010
Selected Financial Information and Statistics

Operational Results

Landqart produces various security and specialty papers. Security paper production includes banknote paper which results in varying degrees of EBITDA margin depending on the complexity of the features included. During 2008 Landqart also started producing non-woven wallpaper base. Included in Landqart’s sales number for the quarter ended March 31, 2010 is approximately 1,581 tonnes of non-woven wallpaper base. At the Landqart mill the order log for security papers remains stable.

At the Dresden mill, the wallpaper base market experienced continued strength throughout the quarter. Sales tonnage has increased relative to the prior year comparative periods and profitability remains solid.

Subsequent Events

On April 30, 2010 the Company completed the purchase of a northern bleached hardwood kraft pulp mill located in Thurso, Quebec from Fraser Papers Inc. through a wholly-owned subsidiary, Fortress Specialty Cellulose Inc. (“Fortress Specialty Cellulose”), for the net proceeds of approximately $1.2 million. The Company has announced the intention of converting this mill into a specialty cellulose (dissolving pulp) operation and to build a biomass-based cogeneration plant. The valuation of this acquisition for accounting purposes and the effect on the financial statements of the Company are still being determined.

Concurrent with this acquisition the Company finalized $102.4 million in project financing with a term of 10 years secured by the assets of Fortress Specialty Cellulose. Interest will be calculated at a fixed rate of 5.0% per annum for the first five years, followed by a rate of up to 5.5% for the remaining 5 years.

Also concurrent with this acquisition Fortress Paper issued a $15 million convertible debenture to a financial institution. 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 the holder into common shares of Fortress Paper at any time at a conversion price equal to $20.00 per share. Fortress Paper can redeem the debenture, in whole or in part, at any point after two years at a conversion price of not less than $25.00 per share.

The Company

Fortress Paper is a leading international producer of security and other specialty papers. The Company operates two paper mills, the Landqart mill located in Switzerland and the Dresden mill located in Germany. The Company’s security papers include banknote, passport and visa papers and its specialty papers include non-woven wallpaper base products, and graphic and technical papers. As an extension of its security papers business, the Landqart mill has been actively developing and marketing innovative paper-based security products.

Conference Call

A conference call to discuss the financial results for the first quarter 2010 will be held on May 12, 2010 at 8:00 a.m. (PST). To attend the conference call, please dial one of the following numbers:

North America: 1-877-353-9586

International: 1-403-532-8075

Participant pass code: 90198#

A replay of the conference call will be available for 7 days. To access the replay, listeners may dial 1-877-245-4531 from North America or 403-205-4531 International. The pass code to access the replay is 347381#.

For more information, please contact

Fortress Paper Ltd.
Mr. Chadwick Wasilenkoff
Chief Executive Officer
604-904-2328

VANCOUVER, British Columbia, May 10 2010 – Fortress Paper Ltd. www.fortresspaper.com (“Fortress Paper” or the “Corporation”) (TSX:FTP) announces that its wholly-owned subsidiary, Fortress Specialty Cellulose Inc. (“Fortress Specialty”) has entered into a pulp purchase and sale agreement (the “Agreement”) with International Forest Products Corp. (“IFP”) of Foxboro, Massachusetts.

Pursuant to the terms of the Agreement, IFP will be the exclusive distributor for the sale of northern bleached hardwood kraft (“NBHK”) pulp produced at the Thurso Mill for the duration of such production.

The Thurso Mill is expected to commence commercial production in June of this year and is anticipated to produce approximately 250,000 air dry metric tonnes of high quality NBHK pulp per year. The re-start plans are on track and the mill expects to promptly deliver the high quality that it was well known for in the market place.

“Everyone at International Forest Products Corporation (IFP) is extremely pleased to be working with Fortress Paper on this exciting venture,” said Daniel Kraft, President and CEO of IFP. ”This relationship will align IFP with one of the world’s premier specialty paper producers.”

VANCOUVER, British Columbia, May 6, 2010 – Fortress Paper Ltd. (“Fortress Paper” or the “Corporation”) announced today that it has signed, through its wholly‑owned subsidiary, Fortress Specialty Cellulose Inc. (“FSC”), an Energy Supply Agreement (the “Agreement”) with Hydro Québec for the sale of green electricity to be produced at the Thurso Mill upon completion of a biomass-based cogeneration facility.

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.

VANCOUVER, British Columbia, April 30, 2010 – Fortress Paper Ltd. (“Fortress Paper” or the “Corporation”), a leading producer of security and specialty papers, is pleased to announce the successful completion of its acquisition of the assets of a northern bleached hardwood kraft (“NBHK”) manufacturing facility located in Thurso, Quebec (the “Thurso Mill”) from Fraser Papers Inc. (“Fraser”) for net proceeds of approximately $1.2 million.    With this successful acquisition, Fortress Paper will commence the conversion of the Thurso Mill into a world class, low cost, specialty cellulose (dissolving pulp) operation.  Concurrently, Fortress Paper intends to build a biomass-based cogeneration plant at the Thurso Mill which will produce green electricity resulting in material net energy savings (income).

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.

MONTREAL – With a $15 million investment, the Solidarity Fund QFL (the “Fund”) is playing an active role in the re-opening of the pulp mill in Thurso, in the Outaouais region. The project is part of an acquisition of the old Fraser Paper mill, which shut down in June 2009, by Fortress Specialty Cellulose Inc., a subsidiary of Fortress Paper Ltd., a leading global producer of security paper (e.g. banknotes) and specialty papers such as wallpaper.

Fortress Specialty Cellulose has a very innovative plan in store for the Thurso mill. Initially, it plans to convert the pulp mill to a speciality cellulose (dissolving pulp) operation. The new product will be sold mainly to the rayon market, a segment that is growing rapidly worldwide. In fact, rayon is increasingly replacing cotton because it breathes, is comfortable and easy to dye. Then, the corporation plans to build a 25 megawatt cogeneration plant that will produce electricity.

“This is great news for the region and for the forest industry, which will benefit from the expertise of a company that’s already a leader in its field. Innovation and R&D are central to Fortress Paper’s business strategies, which is very exciting. Since the mill will be producing products with substantial added value, the company has an ambitious business plan in mind that we are happy to back. In so doing, we continue to play an important role in the Québec wood industry, be it in sustainable forest management through Solifor or by investing in secondary and tertiary wood processing companies,” said the Fund’s executive vice-president of investments, Gaétan Morin.

About the Solidarity Fund QFL

The Solidarity Fund QFL helps drive our economy. With net assets of $7.0 billion as at November 30, 2009, the Fund is a development capital company that through its RRSP channels the savings of Quebecers 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 2,000 companies. It currently has nearly 571,000 shareholders and has helped, on its own or with other financial partners, to create, maintain and protect nearly 143,000 jobs. For more information, visit www.fondsftq.com.

SOURCE:
NewsWire: “Solidarity Fund QFL Helps Reopen Thurso Pulp Mill and 290 Jobs Will be Recalled”