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REPAP REPORTS SECOND QUARTER RESULTS
STAMFORD, July 22 /CNW-PRN/ - Repap Enterprises Inc. today reported results for the second quarter ended June 30, 1998. Including the losses on discontinued operations and unusual items, Repap recorded a loss of $49.0 million ($0.07 per share) compared with a loss of $52.2 million ($0.42 per share) in the second quarter of 1997.
Excluding discontinued operations and unusual items, Repap's loss from continuing operations was $2.4 million for the second quarter of 1998 compared with a loss from continuing operations of $31.4 million in the second quarter of 1997.
The second quarter of 1998 included a loss from discontinued operations of $0.3 million and a loss from unusual charges of $46.3 million, reflecting one-time costs associated with the refinancing of Repap New Brunswick's US$300 million First Priority Senior Secured Notes due 2000 (''the Notes''). The unusual costs included the non-cash write-off of deferred foreign exchange losses and deferred financing costs ($28.3 million) and the costs of early redemption and certain consent payments ($18.0 million) related to the Notes. During this second quarter of 1997, a net loss of $20.8 million from discontinued operations was recorded, reflecting mainly operating losses incurred during that period related to discontinued operations.
Revenues from continuing operations for the second quarter of 1998 were $168.8 million, up 13.1% from revenues of $149.3 million in the second quarter of 1997 and up 3.4% from revenues of $163.3 million in the first quarter of 1998. Revenues from coated paper were $148.0 million, up $26.9 million or 22.2% over the second quarter of 1997, revenues of $121.1 million, reflecting increased pricing and shipments. Pulp revenues for the second quarter of 1998 were $14.7 million, down by $5.1 million or 25.8% from the second quarter of 1997, revenues of $19.8 million, reflecting mainly lower shipments. Revenues from lumber were $6.1 million in the second quarter of 1998 compared to $8.4 million in the same period of 1997, a decrease of $2.3 million or 27.4%, reflecting mainly lower pricing.
Repap's operating profit from continuing operations, excluding non-cash hedged foreign exchange adjustments, (''EBITDA'') was $44.9 million for the second quarter of 1998 compared to an EBITDA of $22.2 million in the second quarter of 1997 and to an operating profit of $45.2 million in the first quarter of 1998.
Revenues for the six months ended June 30, 1998 were $332.1 million up 14.4% from the $290.2 million reported for the corresponding period in 1997, reflecting higher coated paper prices. EBITDA for the six months of 1998 was $90.1 million compared to $28.7 million for the same period in 1997. Repap recorded a loss of $31.7 million ($0.05 per share) in the first six months compared to a loss of $178.1 million ($1.44 per share) last year. Excluding discontinued operations and unusual charges, the loss for the first half of 1998 was $3.2 million compared to a loss of $73.5 million in the first half of 1997.
During the second quarter of 1998, Repap completed a major recapitalization which included the following elements:
1 . The issue by Repap Enterprises Inc. of US$45 million,
6%, Convertible Debentures due 2005 to Enron Capital and Trade
Resources Corp.(''Enron''). The proceeds, along with
cash-on-hand, were used to repay in full the $75 million,
9%, debentures maturing in June 1998.
2. Along with this investment, Repap New Brunswick Inc. entered into
a product price hedging program with Enron designed to partially
protect the company against the volatility of commodity prices.
A five-year energy advisory agreement was also signed with Enron,
whereby Enron will work with the operations to review and analyze
all energy related activities and develop a cost savings program
in which both Repap New Brunswick and Enron will share in any
realized savings.
Finally, Enron has also taken on the pulp marketing agency
function for Repap New Brunswick and is responsible for the
marketing, sales and customer service functions related to pulp.
3. During the second quarter, Repap New Brunswick successfully
completed a US$320 million financing comprised of US$200 million,
9%, First Priority Fixed Rate Senior Secured Notes due 2004 and
US$120 million Floating Rate Senior Secured Loans due 2004. The
proceeds of the issue were used to repay or redeem the existing
first priority fixed and floating rate notes due 2000, including
premiums on redemption. The refinancing increased financial
flexibility through the extension of maturity dates and
elimination of mandatory fixed principal repayments, while
maintaining flexibility in repayment of debt through the floating
rate tranche. Repap New Brunswick also completed the renewal of a
120 million operating credit facility maturing in October 1999
and received consents to amalgamate with the Holding Company in
January of 1999.
Commenting on the results, Mr. Stephen Larson, President and Chief Executive Officer, said: ''The Company was successful in achieving several objectives during the second quarter including a repayment of the $75 million convertible debentures without any immediate dilution to shareholders and a recapitalization of Repap New Brunswick which will improve financial flexibility. The creative partnership with Enron is well underway. None of these objectives would have been achieved without the tremendous performance of the operations. The second quarter marked the third consecutive quarterly production record for coated paper and costs continue to decline.''
Repap Enterprises Inc. is a major producer of lightweight coated groundwood paper with 9% of North American capacity. This high quality paper is utilized in magazines, catalogs, inserts and commercial printing applications. The Company's world-class coated paper complex in New Brunswick has two modern paper machines with an annual design capacity of 492,000 tons, a northern bleached softwood kraft pulp mill with an annual capacity of 235,000 metric tons, an integrated groundwood pulp mill with an annual capacity of 123,000 metric tons and lumber operations with an annual capacity of 58 mmbf. |
