Attention Business/Financial Editors:
REPAP ENTERPRISES INC. REPORTS SECOND QUARTER RESULTS
MONTREAL, Canada, July 28 /CNW/ - Repap Enterprises Inc. today reported
results for the quarter ended June 30, 1997. Repap recorded a net loss
attributable to common shareholders before discontinued operations of $21.9
million ($0.18 per share) in the second quarter of 1997, compared with a net
loss of $11.2 million ($0.09 per share) in the second quarter of 1996;
however, the Company achieved a substantially improved result compared with
the loss of $37.0 million ($0.30 per share) incurred in the first quarter of
1997. Including discontinued operations, the second quarter 1997 net loss
applicable to common shareholders was $52.2 million ($0.39 per share) compared
with $43.4 million ($0.35 per share) in the second quarter of 1996 and a
$125.9 million ($1.02 par share) net loss in the first quarter of 1997.
In the second quarter of 1997, Repap recorded a discontinued operations
provision of $30.3 million, reflecting primarily the write-off by Repap
Wisconsin of pulp receivables due from Repap's former subsidiary, Skeena
Cellulose Inc. Pulp production at this operation has recently been
discontinued by its current owners.
Revenues from continuing operations were $359.5 million, up ten percent
from $326.0 million realized in the second quarter of 1996. Higher volumes,
lower paper production costs and the favourable impact of a weaker Canadian
dollar offset the unfavourable impact of lower paper prices resulting in an
operating profit of $33.1 million in the second quarter of 1997, compared with
$36.0 million in the second quarter of 1996; however, compared with the first
quarter of 1997, Repap's second quarter operating profit was up $20.1 million,
reflecting higher paper prices, lower coated paper production costs and the
favourable impact of a weaker Canadien dollar.
Repap generated free cash flow from operations of $12.2 million after
interest and before working capital changes in the second quarter of 1997. A
reduction in working capital of $23.8 million resulted in cash flow from
operations after working capital changes of $36.0 million.
Repap also announced today that the Board of Directors, having regard to
general principles of corporate governance and because of the importance of
this sale, has decided to submit the planned sale of its United States-based
coated paper operations to the vote of its shareholders. The sale will provide
the means to significantly reduce the Corporation's debt and, in combination
with the divestiture of Repap British Columbia earlier this year and the sale
of Repap Manitoba, will result in a smaller but more financially sound
Corporation focused in the coated groundwood paper business. It is expected
that proxy material will be mailed in mid-August for a special shareholders
meeting in late September.
Repap also announced that it intends to repay its US$130 million 8.5%
convertible debentures, due August 1, 1997 through the issuance of common
shares. The actual number of shares to be issued will be based upon the
weighted average trading price of the common shares on the Toronto Stock
Exchange for the 20 consecutive trading days ending July 25, 1997. Subject to
confirmation, the Corporation will issue approximately 625 million common
shares (in addition to the approximately 123 million currently outstanding
common shares).
Repap was unable to refinance these debentures or negotiate acceptable
terms for an extension of their maturity. The August 1, 1997 maturity date is
the only date on which the debentures can be repaid in this manner. The
proposed conversion is provided for by the terms of the debentures and has
been approved by the Corporation's Independent Committee of the Board and by
the Board of Directors. The Toronto Stock Exchange and the Montreal Exchange
have approved the issuance of additional shares to repay the debentures.
The transfer from debt to equity resulting from this announcement,
coupled with the net proceeds of approximately $357 million, subject to
closing adjustments, from the planned sales of Repap USA and Repap Manitoba
will reduce debt and contingent liabilities at the Repap Enterprises level by
$510 million in the third quarter of 1997. With no material long-term debt due
until the maturity of its Cdn$75 million 9% convertible debentures in June
1998, Repap will be able to explore all available options to recapitalize its
remaining operations in New Brunswick.
Repap intends to continue to operate its New Brunswick coated paper,
market pulp and lumber operations, which generated an operating margin of $253
million and net income before unusual items of $114 million in the peak year
1995. Repap New Brunswick is a fully integrated operation with 492,000 tons of
coated groundwood paper capacity on two modern machines and the most
productive capacity per machine in North America.
Commenting on the outlook for the New Brunswick operations, George S.
Petty, Chairman and Chief Executive Officer, said, ``Short and longer-term
market fundamentals for coated groundwood paper appear to be favourable.
Prices increased US$60 per ton in the second quarter, and a further price
increase of US$80 per ton is being implemented in the third quarter. Pulp
prices are also increasing, and an aggressive program to reduce costs by over
$20 million in 1997 compared with 1996 is expected to further benefit Repap
New Brunswick's operating margins.''
<<
REPAP ENTERPRISES INC.
CONSOLIDATED STATEMENTS OF INCOME
(Millions of Canadian dollars)
Quarter Ended
-------------------------------------------------------------------------
Yr over Yr Qtr over Qtr
Jun. 30, Mar. 31, Jun. 30,
1996 1997 1997 % Change % Change
-------- -------- -------- ---------- ------------
Revenues $ 326.0 $ 334.4 $ 359.5 +10% +8%
------- ------- -------
Net sales $ 294.5 $ 299.7 $ 325.7 +11% +9%
Cost of
sales $ 229.6 $ 249.4 $ 252.3
Selling, administrative and research
$ 12.4 $ 14.4 $ 14.9
------- ------- -------
Operating
margin $ 52.5 $ 35.9 $ 58.5
Depreciation & amortization
$ 16.5 $ 22.9 $ 25.4
------- ------- -------
Operating
profit $ 36.0 $ 13.0 $ 33.1 -8% +155%
Interest
expense $ 42.5 $ 44.7 $ 46.7
Other expenses
(income) $ --- $ 0.7 $ 0.7
------- ------- -------
Pre-tax income (loss)
$ (6.5) $ (32.4) $ (14.3)
Provision for income taxes (1)
$ 0.1 $ (0.4) $ 2.5
------- ------- -------
Net income (loss) from continuing
operations $ (6.6) $ (32.0) $ (16.8)
Provision for accretion of paid-in
capital $ 4.6 $ 5.0 $ 5.1
------- ------- -------
Net income (loss) from continuing
operations applicable to common
shareholders
$ (11.2) $ (37.0) $ (21.9)
Discontinued operations (2)
$ (32.2) $ (88.9) $ (30.3)
------- ------- -------
Net income (loss) applicable to common
shares $ (43.4) $(125.9) $ (52.2)
------- ------- -------
------- ------- -------
Ave common shares outstanding
(millions) 123.4 123.4 123.4
Earnings per share :
Continuing $ (0.09) $ (0.30) $ (0.18)
Discon-
tinued $ (0.26) $ (0.72) $ (0.21)
------- ------- -------
Total $ (0.35) $ (1.02) $ (0.39)
------- ------- -------
------- ------- -------
-------------------------------------------------------------------------
Revolving credit facilities
$ 318.3 $ 226.7 $ 187.2
Capital expenditures
$ 13.5 $ 5.7 $ 5.7
-------------------------------------------------------------------------
Cash from (used by) continuing
operations before working capital
changes $ 11.5 $ (9.0) $ 12.2
Non-cash working capital
changes $ (11.5) $ 9.5 $ 23.8
------- ------- -------
Cash from (used by) continuing
operations after working capital
changes $ --- $ 0.5 $ 36.0
-------------------------------------------------------------------------
Revenues by segment (in millions)
Coated
Paper $ 274.4 $ 269.8 $ 296.3
Kraft
Paper 29.4 31.2 27.3
Pulp 10.2 18.3 18.2
Lumber 13.6 16.3 19.5
Hedged foreign exchange adjustment (3)
(1.6) (1.2) (1.8)
------- ------- -------
Total Revenues
$ 326.0 $ 334.4 $ 359.5
------- ------- -------
------- ------- -------
Shipments (in thousands)
Coated Paper
(tons) 198 239 248 +25% +4%
Kraft Paper
(tons) 35 40 32 -9% -20%
Pulp (tonnes) 15 26 25 +67% -4%
Lumber
(Mfbm) 30 35 41 +37% +17%
REPAP ENTERPRISES INC.
CONSOLIDATED STATEMENTS OF INCOME
(Millions of Canadian dollars)
Six Months Ended
-------------------------------------------------------------------------
Jun. 30, Jun. 30,
1996 1997 % Change
-------- -------- -----------
Revenues $ 632.5 $ 693.9 +10%
------- -------
Net sales $ 572.5 $ 625.4 +9%
Cost of
sales $ 420.7 $ 501.7
Selling, administrative and research
$ 28.1 $ 29.3
------- -------
Operating
margin $ 123.7 $ 94.4
Depreciation & amortization
$ 38.9 $ 48.3
------- -------
Operating
profit $ 84.8 $ 46.1 -46%
Interest
expense $ 84.1 $ 91.4
Other expenses
(income) $ 0.8 $ 1.4
------- -------
Pre-tax income (loss)
$ (0.1) $ (46.7)
Provision for income taxes (1)
$ (1.0) $ 2.1
------- -------
Net income (loss) from continuing
operations $ 0.9 $ (48.8)
Provision for accretion of paid-in
capital $ 9.3 $ 10.1
------- -------
Net income (loss) from continuing
operations applicable to common
shareholders
$ (8.4) $ (58.9)
Discontinued operations (2)
$ (71.5) $(119.2)
------- -------
Net income (loss) applicable to common
shares $ (79.9) $(178.1)
------- -------
------- -------
Ave common shares outstanding
(millions) 123.4 123.4
Earnings per share :
Continuing $ (0.07) $ (0.48)
Discon-
tinued $ (0.58) $ (0.93)
------- -------
Total $ (0.65) $ (1.41)
------- -------
------- -------
-------------------------------------------------------------------------
Revolving credit facilities
$ 318.3 $ 187.2
Capital expenditures
$ 24.2 $ 11.4
-------------------------------------------------------------------------
Cash from (used by) continuing
operations before working capital
changes $ 42.4 $ 3.2
Non-cash working capital
changes $ (56.5) $ 33.3
------- -------
Cash from (used by) continuing
operations after working capital
changes $ (14.1) $ 36.5
-------------------------------------------------------------------------
Revenues by segment (in millions)
Coated
Paper $ 529.3 $ 566.1
Kraft
Paper 65.4 58.5
Pulp 19.9 36.5
Lumber 24.0 35.8
Hedged foreign exchange adjustment (3)
(6.1) (3.0)
------- -------
Total Revenues
$ 632.5 $ 693.9
------- -------
------- -------
Shipments (in thousands)
Coated Paper
(tons) 361 487 +35%
Kraft Paper
(tons) 75 72 -4%
Pulp (tonnes) 25 51 +104%
Lumber
(Mfbm) 57 76 +33%
(1) Virtually no deferred income tax provision is currently being
recorded in the accounts of the Corporation's Canadian
operations.
(2) Ownership of Repap's British Columbia operations was transferred
to Repap B.C.'s banks on March 27, 1997 and the company has been
renamed Skeena Cellulose Inc. In addition Repap's pulp operation
in Atholville, New Brunswick and the ALCELL(R) demonstration
facility have been shut down indefinitely and have been put up
for sale. In Q2 97, the discontinued operations provision
reflects primarily the writeoff by Repap Wisconsin of pulp
receivables due from Skeena Cellulose inc., whose pulp
production has been discontinued.
(3) Represents non-cash impact of hedged currency exchange losses.
>>
%SEDAR: 00003098EB
-30-
For further information: Stephen C. Larson, President & COO, (514) 846-1316; or
Kathleen V. Cornish, Vice-president, Investor Relations, (514) 864-6220
REPAP ENTERPRISES INC. has 18 releases in this database.
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