I would say this looks as though this is showing that the plan is on track in general.Let's see what trading does with this to-day.
Repap Enterprises Inc -
Second quarter results
Repap Enterprises Inc
RPP
Shares issued 742,460,637
1998-07-21 close $0.23
Wednesday Jul 22 1998
Mr. Stephen Larson reports
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 (seven cents
per share) compared with a loss of $52.2-million (42 cents 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 unusual costs included the non-cash
writeoff 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 per cent from revenues of $149.3-million in the second
quarter of 1997 and up 3.4 per cent 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 per cent 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 per cent 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 per cent,
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 per
cent 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 (five cents 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 of $45-million (U.S.), six per cent, convertible
debentures due 2005 to Enron Capital and Trade Resources. The proceeds,
along with cash on hand, were used to repay in full the $75-million, nine per cent,
debentures maturing in June 1998.
2.
Along with this investment, Repap New Brunswick 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
$320-million (U.S.) financing comprised of $200-million (U.S.), nine per cent,
first priority fixed rate senior secured notes due 2004 and $120-million (U.S.)
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 1999.
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
under way. 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.
STATEMENT OF EARNINGS
Three months ended June 30
(in millions of dollars)
1997 1998
Revenues $ 149.3 $ 168.8
Hedge foreign ex-
change adjustment (1) 1.7 1.7
------- -------
Net revenues 147.6 167.1
------- -------
Net sales 133.7 151.2
Cost of sales 102.7 99.4
Selling, admin and
research 10.5 8.6
------- -------
Operating margin 20.5 43.2
Depreciation and
amortization 14.6 15.0
------- -------
Operating profit
(loss) 5.9 28.2
Interest expense 31.5 27.0
Other expenses
(income) 0.2 1.8
------- -------
Pre-tax loss (25.8) (0.6)
Provision for income
taxes (2) 0.5 0.5
------- -------
Loss from continuing
operations (26.3) (1.1)
Unusual item (3) 0.0 46.3
Provision for accretion
of paid-in capital 5.1 1.3
------- -------
Net loss from continu-
ing operations (31.4) (48.7)
Discontinued
operations (4) (20.8) (0.3)
------- -------
Net income (loss) $ (52.2) $ (49.0)
======= =======
EBITDA (5) $ 22.2 $ 44.9
======= =======
Earnings (loss) per
share:
Continuing (25 cents) (7 cents)
Discontinued (17 cents) (0 cents)
-------- -------
Total (42 cents) (7 cents)
======== =======
SHIPMENTS (IN
THOUSANDS)
Coated paper (tons) 110 114
Pulp (tonnes) 27 20
Lumber (mmbf) 18 16
Revolving credit
facilities (6) $ 187.2 $ 88.3
Capital expenditures $ 2.1 $ 5.5
Cash from (used by)
operations $ (9.9) $ 18.6
Non-cash working
capital changes 26.1 (22.3)
------- -------
Cash from (used by)
operations after
working capital
changes $ 16.2 $ (3.8)
------- -------
STATEMENT OF EARNINGS
Six months ended June 30
(in millions of dollars)
1997 1998
Revenues $ 290.2 $ 332.1
Hedge foreign exchange
adjustment (1) 2.9 2.9
------- -------
Net revenues 287.3 329.2
------- -------
Net sales 257.4 298.1
Cost of sales 211.5 194.4
Selling, admin and
research 20.1 16.5
------- -------
Operating margin 25.8 87.2
Depreciation and
amortization 26.8 31.1
------- -------
Operating profit (loss) (1.0) 56.1
Interest expense 61.4 53.5
Other expenses
(income) (0.2) 1.6
------- -------
Pre-tax loss (62.2) 1.0
Provision for income
taxes (2) 1.2 1.3
------- -------
Loss from continuing
operations (63.4) (0.3)
Unusual item (3) 0.0 46.3
Provision for accretion
of paid-in capital 10.1 2.9
------- -------
Net loss from continu-
ing operations (73.5) (49.5)
Discontinued
operations (4) (104.6) 17.8
------- -------
Net income (loss) $(178.1) $ (31.7)
======= =======
EBITDA (5) $ 28.7 $ 90.1
======= =======
Earnings (loss) per
share
Continuing (60 cents) (7 cents)
Discontinued (84 cents) 2 cents
-------- -------
Total ($1.44) (5 cents)
SHIPMENTS (IN
THOUSANDS)
Coated paper (tons) 220 226
Pulp (tonnes) 58 33
Lumber (mmbf) 31 28
Revolving credit
facilities (6) $ 187.2 $ 88.3
Capital expenditures $ 2.7 $ 8.2
Cash from (used by)
operations $ (33.6) $ 34.4
Non-cash working
capital changes 45.2 0.9
------- -------
Cash from (used by)
operations after
working capital
changes $ 11.6 $ 35.4
(1) Represents non-cash impact of hedged currency exchange losses.
(2) Virtually no deferred income tax provision is currently being recorded in the
accounts.
(3) Reflects costs associated with Repap New Brunswick refinancing.
(4) Discontinued operations reflect the operations and proceeds from sale of Repap
British Colombia, Alcell, Repap USA, Repap Manitoba and Atholville magnefite
pulp mill.
(5) EBITDA = Operating profit plus depreciation and amortization plus non-cash
hedged foreign exchange loss.
(6) Under Canadian GAAP, prior period balance sheets are not restated for
discontinued operations, therefore prior periods include the revolvers of discontinued
operations.
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