Fortress Paper Announces Third Quarter 2013 Results

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


Fortress Paper Ltd. (TSX:FTP) ("Fortress Paper" or the "Company") reported 2013
third quarter EBITDA loss of $7.3 million. The Dissolving Pulp Segment generated
EBITDA loss of $6.6 million and the Security Paper Products Segment generated
EBITDA of $1.6 million. Corporate costs contributed $2.3 million to EBITDA loss.


Fortress reported adjusted net loss from continuing operations of $15.6 million,
or diluted loss per share of $1.07 for the third quarter of 2013 on sales of
$53.2 million. In the second quarter of 2013, the Company reported adjusted net
loss from continuing operations of $20.6 million or diluted loss per share of
$1.42 on sales of $59.9 million, and for the third quarter of 2012, adjusted net
loss from continuing operations of $23.2 million or diluted loss per share of
$1.61 on sales of $38.3 million. Adjusted net loss in the second quarter of 2013
was impacted by an expense of approximately $3.5 million recorded as a deferred
tax accrual.


Fortress reported a net loss from continuing operations of $13.4 million, or
diluted loss per share of $0.92 for the third quarter of 2013. In the second
quarter of 2013, the Company reported a net loss from continuing operations of
$20.9 million or diluted loss per share of $1.43, and for the third quarter of
2012, net loss from continuing operations of $24.1 million or diluted loss per
share of $1.67.


Fortress reported a net loss, including discontinued operations, of $12.4
million, or diluted loss per share of $0.85 for the third quarter of 2013. In
the second quarter of 2013, the Company reported a net income, including
discontinued operations of $134.1 million or diluted earnings per share of
$9.23. Included in discontinued operations was a $153.3 million gain on the sale
of the Dresden mill. In the third quarter of 2012, the Company reported a net
loss of $19.1 million or diluted loss per share of $1.32, including discontinued
operations.


The Dissolving Pulp Segment has experienced another difficult quarter due to
depressed market prices, delays in the cogeneration facility completion and
operational and maintenance issues. The Fortress Specialty Cellulose ("FSC")
mill cogeneration facility project was successfully completed on October 2, 2013
and began delivering power to the Hydro Quebec grid at the contracted commercial
rate. This is a significant milestone for the reduction of the overall cost
structure at the mill.


As a result of a strategic assessment and testing of alternatives for the FSC
mill, the Company has been pursuing a strategy of modifying the mill to be
capable of swinging production from dissolving pulp to northern bleached
hardwood kraft (NBHK) pulp. This redesign is expected to enable the Company to
maximize margins in response to changing market conditions.


The Security Paper Products Segment has experienced a third consecutive quarter
with sales, volumes and revenues significantly higher relative to any
comparative period in 2012 and 2011. The Landqart mill continues to implement
new programs to improve efficiencies and profitability. EBITDA for the Security
Paper Products Segment for the quarter ended September 30, 2013 was $7.4 million
higher when compared to the third quarter of 2012, and $1.1 million higher
compared to the previous quarter. However, less than favourable conditions,
including the strength of the Swiss franc against the Euro, overcapacity in the
banknote paper industry and increased competition for orders, continue to
adversely impact the results of the Security Paper Products Segment.


Management's Outlook

Dissolving Pulp Segment

Dissolving pulp markets remained challenging during the third quarter of 2013
due to continued excess supply. The average market price of dissolving pulp in
China, as reported by China Chemical Fibers & Textiles Consultancy Group (CCF),
a leading professional data analysis company relied upon in the dissolving pulp
industry, was approximately US$880 per air dried metric tonne (ADMT) during the
third quarter of 2013. Management believes that the current depressed dissolving
pulp prices are indicative of unusual market conditions and are not sustainable
in the long term. Following the interim anti-dumping duty announcement of the
Ministry of Commerce of China ("MOFCOM") on November 6, 2013 for Canadian,
American and Brazilian companies, based on its preliminary assessment, the
Company believes that the supply of dissolving pulp will decrease significantly
and lead to a price increase in the short to medium term. The Company also
believes that if the interim duty for all other unnamed Canadian, American and
Brazilian dissolving pulp producers remains unchanged, it will have a long term
deterrent effect on supply dynamics. See "Subsequent Event - China Anti-Dumping
Investigation".


Prior to the third quarter of 2013, viscose producers in China had decreased
operating rates to manage inventory and stabilize prices. However, operating
rates in the third quarter have increased which has eroded viscose staple fibre
prices to their lowest levels in many months. Dissolving pulp is the main raw
material input for the production of viscose staple fibre. Cotton prices
remained relatively stable in China during the third quarter of 2013 and well
above viscose staple fibre prices. Viscose staple fibre is a substitute for
cotton.


The FSC mill operated more efficiently during the third quarter of 2013 relative
to the prior quarter. Cash costs continued to improve in the third quarter but
were higher than expected due to operational and maintenance issues and delay in
the cogeneration facility start-up.


Shortly after quarter end the cogeneration project was successfully completed
and the facility commenced delivering power to the Hydro Quebec grid at the
contracted commercial rate. The cogeneration start-up was delayed due to
unexpected mechanical failure of the high pressure water pump and the back-up
pump which were resolved when a new supplier was engaged and the 100 hour test
could be completed.


Although depressed dissolving pulp prices continue to impact FSC mill results,
the Company expects to realize significant cost-savings from production
improvements, cost reduction initiatives and the cogeneration facility in the
fourth quarter of 2013 and into fiscal 2014.


Finished goods inventory levels of dissolving pulp at the end of the third
quarter were higher than previous periods. During the third quarter of 2013, the
FSC mill implemented a plan to reduce logistics, transportation and distribution
costs. Dissolving pulp inventory levels were higher due to the mill retaining
ownership of the inventory for a longer period in the sales cycle, as well as
ongoing negotiations with Chinese buyers resulting from the uncertainty
surrounding the ongoing China dissolving pulp anti-dumping investigation.
Subsequent to the quarter end, dissolving pulp sales with our existing customers
have resumed.


The Company is evaluating the impact of the MOFCOM decision on the Fortress
Global Cellulose ("FGC") mill project in Lebel-sur-Quevillon, Quebec. The
Company is also continuing the process of exploring strategic options for the
FGC mill project, to mitigate the financial risk, including alternative
financing structures, joint ventures and partnership opportunities. The Company
will be comparing the FGC mill investment opportunity to other strategic options
for shareholder value creation. The Company is currently in discussions with
prospective equity investors for the project and is in the process of discussing
potential revised terms for its project financing to provide greater
flexibility. Approximately $25 million has been spent to date on the FGC mill
project. Due to changing economics and market conditions, there is no assurance
that definitive investment arrangements will be concluded or that the FGC mill
project will proceed to completion as previously planned.


Due to a change in timelines relating to the FGC mill project, the Company
reviewed with Hydro Quebec its electricity supply agreement dated September 28,
2012, resulting in the agreement no longer being in effect. The FGC mill intends
to submit a tender for a new power supply agreement under Hydro Quebec's power
purchase program request for proposals expiring December 21, 2013. Among other
things, the new tender will include a request for an increase in the amount of
power to be supplied by the cogeneration facility from the previously approved
34 megawatts to 42 megawatts. There is no assurance that the Company will be
granted another power supply agreement.


Security Paper Products Segment

The Landqart mill has had a strong third quarter order intake including a
contract extension on one of the mill's more significant orders. The pipeline of
opportunities to year end is strong and consists of a mix of tender and repeat
order possibilities which, if successfully secured, will further improve an
already stable order book for next year.


Subsequent Event

China Anti-Dumping Investigation

In February 2013, MOFCOM announced the commencement of an anti-dumping
investigation on the importing of cellulose pulp originating from Canada, the
United States and Brazil, after receiving a petition from certain manufacturers
in China. The announcement included Fortress Specialty Cellulose Ltd. ("Fortress
Specialty") as one of the Canadian producers that is subject to the
investigation. Fortress Specialty registered with MOFCOM the same month and
submitted its responses to MOFCOM.


On November 6, 2013, the Company announced that MOFCOM made a preliminary
determination to impose an interim duty on the import of dissolving pulp into
China from each of the originating countries. The interim duty applied against
Fortress Specialty's dissolving pulp imports has been calculated at 13% of the
CIF price to China, and will be payable in cash bonds in respect of prospective
imports during the period between MOFCOM's preliminary and final determination.
The interim duty applied against the Company's imports is consistent with that
applied against other Canadian dissolving pulp importers who were specifically
named in the investigation. The interim duty applied to American dissolving pulp
producers ranged from 18.7% to 21.7% and 6.7% for one Brazilian producer which
were named in the investigation. All other unnamed current or future Canadian,
American and Brazilian dissolving pulp producers will be subject to an interim
duty of 50.9%, 49.8% and 49.4%, respectively.


The Company believes that MOFCOM's preliminary decision may serve to materially
harm the business of Chinese viscose staple fibre (VSF) producers and continues
to believe, as previously submitted to MOFCOM, that the assessment of injury to
China's dissolving pulp market and allegations of 'dumping' activities by
Canadian producers are unsupported by the facts. Chinese VSF producers have
petitioned to MOFCOM against the duty as being harmful to their businesses. The
Company is evaluating its legal options to reverse the preliminary decision of
MOFCOM. Fortress Specialty will initially have 10 days to submit a response to
MOFCOM's preliminary determination. The Company is also preparing further
submissions to be made to MOFCOM prior to its final determination and is
reviewing the possibility of requesting a public hearing. MOFCOM's final
determination is expected to be made in February 2014, unless the investigation
period is further extended. If MOFCOM calculates a final dumping margin lower
than 13%, any excess cash bonds paid on shipments during the interim period will
be refunded. If the final dumping margin is higher than 13%, any outstanding
cash bonds will be fully applied towards the formal import duty on imports
subsequent to the final determination, however no additional amount will be
payable for imports during the interim period.


Upon the completion of the investigation and MOFCOM's final determination, an
application may be made by the Canadian Government to the World Trade
Organization (WTO) to review MOFCOM's determination. WTO cases typically have a
duration of approximately two years, inclusive of appeal processes. Although
Fortress Paper believes that it has strong arguments against the imposition of a
dumping duty, there is no assurance that it will be successful in reversing
MOFCOM's preliminary determination or in securing the Canadian Government's
support in commencing a WTO review.


Selected Financial Information

The selected financial information presented herein is qualified in its entirety
by, and should be read in conjunction with, our unaudited condensed consolidated
interim financial statements as at and for the three and nine month periods
ended September 30, 2013 and the related notes thereon and our Management's
Discussion and Analysis filed on SEDAR.


Three Months Ended September 30, 2013

Selected Financial Information and Statistics



(thousands of dollars, except shipments,                                   
 unaudited)                                   Q3 2013    Q2 2013    Q3 2012
---------------------------------------------------------------------------
                                                                           
Sales from continuing operations               53,160     59,883     38,257
EBITDA from continuing operations(1)           (7,290)    (8,356)   (14,876)
EBITDA(2)(3)                                   (7,290)    (4,934)    (6,559)
Net loss from continuing operations           (13,427)   (20,851)   (24,051)
Net (loss) income(3)                          (12,436)   134,125    (19,061)
Adjusted net loss from continuing                                          
 operations(4)                                (15,573)   (20,632)   (23,239)
Paper shipments (tonnes)(5)                     1,856      1,953      1,207
Pulp shipments (ADMT)                          31,258     38,006     30,561

(1) See Net Loss to EBITDA Reconciliation for Continuing Operations.
(2) See Net (Loss) Income to EBITDA Reconciliation including Discontinued
    Operations.
(3) Including discontinued operations.
(4) See Net Loss to Adjusted Net Loss Reconciliation for Continuing
    Operations.
(5) From continuing operations.



Net Loss to Adjusted Net Loss Reconciliation for Continuing Operations:



(thousands of dollars, except per share                                    
 amounts, unaudited)                          Q3 2013    Q2 2013    Q3 2012
---------------------------------------------------------------------------
                                                                           
Net loss                                      (13,427)   (20,851)   (24,051)
Foreign exchange loss (gain)                      739       (534)       812
(Gain) loss on sale of property, plant and                                 
 equipment                                     (4,135)       753          -
Legal provision                                 1,250          -          -
---------------------------------------------------------------------------
Adjusted net loss                             (15,573)   (20,632)   (23,239)
                                                                           
Basic and diluted net loss per share            (0.92)     (1.43)     (1.67)
Adjusted net loss per share, basic and                                     
 diluted                                        (1.07)     (1.42)     (1.61)



Net Loss to EBITDA Reconciliation for Continuing Operations:



(thousands of dollars, unaudited)             Q3 2013    Q2 2013    Q3 2012
---------------------------------------------------------------------------
                                                                           
Net loss                                      (13,427)   (20,851)   (24,051)
Income tax                                       (611)     3,392     (3,390)
Foreign exchange loss (gain)                      739       (534)       812
Net finance expense                             4,021      3,944      4,227
Amortization                                    4,296      4,281      4,203
(Gain) loss on sale of property, plant and                                 
 equipment                                     (4,135)       753          -
Legal provision                                 1,250          -          -
Dispute resolution accrual                          -          -      1,346
Stock based compensation                          577        659      1,977
---------------------------------------------------------------------------
EBITDA                                         (7,290)    (8,356)   (14,876)



Net (Loss) Income to EBITDA Reconciliation Including Discontinued Operations:



(thousands of dollars, unaudited)             Q3 2013    Q2 2013    Q3 2012
---------------------------------------------------------------------------
                                                                           
Net (loss) income                             (12,436)   134,125    (19,061)
Income tax                                       (611)     3,951     (1,386)
Foreign exchange loss (gain)                      739       (534)       834
Net finance expense                             4,021      5,105      4,600
Amortization                                    4,296      4,281      5,131
Gain on disposal of business                     (991)  (153,274)         -
(Gain) loss on sale of property, plant and                                 
 equipment                                     (4,135)       753          -
Legal provision                                 1,250          -          -
Dispute resolution accrual                          -          -      1,346
Stock based compensation                          577        659      1,977
---------------------------------------------------------------------------
EBITDA                                         (7,290)    (4,934)    (6,559)



The Company

During the nine month period ended September 30, 2013, the Company operated
internationally in three distinct business segments: the Dissolving Pulp
Segment, the Security Paper Products Segment, and the Specialty Papers Segment.
The Specialty Papers Segment was sold on April 30, 2013. Accordingly, references
in this news release to "discontinued operations" refer to the Specialty Papers
Segment. The Company operates its dissolving pulp business through the Fortress
Specialty Cellulose mill located in Canada. The mill expanded into the renewable
energy generation sector in October 2013. The Company is also seeking to expand
its dissolving pulp capacity with the 2012 acquisition of the Fortress Global
Cellulose mill located at Lebel-sur-Quevillon, Quebec, Canada, which the Company
is evaluating to convert into a dissolving pulp mill and re-start the
cogeneration facility. The Company operates its security paper products business
through the Landqart mill located in Switzerland, where it produces banknote,
passport, visa and other brand protection and security papers, and at its high
security production and research facility located in Canada, where it
manufactures optically variable thin film material. The segmentation of the
Company's manufacturing operations is based on a number of factors, including
production, production processes, and economic characteristics.


Conference Call

A conference call to discuss the financial results for the third quarter 2013
will be held on November 13, 2013 at 9:00 a.m. (PST). To participate in the
conference call, please dial one of the following numbers:


North America: 1-855-353-9183

Vancouver: 604-681-8564

Calgary and international: 403-532-5601

Edmonton: 780-429-5820

Toronto: 416-623-0333

Ottawa: 613-212-0171

Montreal: 514-687-4017

Participant pass code: 15086#

Conference Reference Number: 1053825#

A replay of the conference call will be available for 30 days. To access the
replay, listeners may dial 1-855-201-2300 from North America or 403-255-0697
International. The conference reference number is 1053825# and the participant
pass code to access the replay is 15086 #.


Forward-Looking Statements

This news release contains certain forward-looking statements that reflect the
current views and/or expectations of the Company with respect to its
expectations, beliefs, assumptions, estimates and forecasts about its business
and the industry and markets in which it operates. The reader is cautioned that
forward-looking statements are not guarantees of future performance and involve
known and unknown risks, uncertainties, assumptions and other factors which are
difficult to predict and that may cause actual results or events to differ
materially from those anticipated in such forward-looking statements.
Accordingly, readers should not place undue reliance on forward-looking
statements. Examples of such forward-looking statements contained in this news
release include: growth and future prospects of our business; market conditions
for dissolving pulp and our other products; expected returns on certain business
segments; availability of funds for debt allocation; our perceptions of the
industry and markets in which we operate and anticipated trends in such markets
and in the countries in which we do business; the submission of a tender for a
new power supply agreement; the securement of new purchase orders; expectations
surrounding and resulting from the final determination in MOFCOM's anti-dumping
investigation; benefits that may accrue to the Company as a result of certain
acquisitions, dispositions, capital expenditure programs, equipment upgrades and
maintenance shut-downs; and the anticipated benefits, cost, timing and
completion dates for projects. Assumptions underlying the Company's expectations
regarding forward-looking statements or information contained in this news
release include, among others: that the Company will be able to effectively
market its products; the ability of the Company to realize significant
cost-savings from production improvements, cost reduction initiatives and the
cogeneration facility at the Fortress Specialty Cellulose mill; that current
depressed dissolving pulp prices are indicative of unusual market conditions and
are not sustainable in the long term; that the supply of dissolving pulp will
decrease significantly and lead to a price increase in the short to medium term;

that the swing mill strategy at the Fortress Specialty Cellulose mill will
maximize margins in response to changing market conditions; that the duty
imposed by MOFCOM, if unchanged, may result in the supply of dissolving pulp
decreasing significantly with a corresponding price increase in the short to
medium term; that the adverse impact of any dumping tariff will be limited to
the short-term; that the Landqart mill will continue operating on a consistent
and regular basis in order to produce and deliver on its banknote orders; that
the Landqart mill will secure new orders; the general stability of the economic,
political and regulatory environments within the countries where the Company
conducts operations; the ability of the Company to obtain financing (if
necessary) on acceptable terms; that interest and foreign exchange rates will
not vary materially from current levels; and that our equipment will operate at
expected levels. Persons reading this news release are cautioned that
forward-looking statements or information are only predictions, and that the
Company's actual future results or performance are subject to certain risks and
uncertainties including, without limitation: those relating to potential
disruptions to production and delivery, in respect of the delivery of power at
the cogeneration facility, including as a result of equipment failures, labour
issues, the complex integration of processes and equipment and other factors;
labour relations; failure to meet regulatory requirements; changes in the
market; potential downturns in economic conditions; fluctuations in the price
and supply of required materials; fluctuations in the market price for products
sold; foreign exchange fluctuations; trade restrictions or import duties imposed
by foreign governments, including the imposition of a final anti-dumping tariff
on dissolving pulp exports into China; availability of financing (as necessary);
dependence on major customers; and other risk factors detailed in our filings
with Canadian securities regulatory authorities. These risks, as well as others,
could cause actual results and events to vary significantly. The Company does
not undertake any obligation to release publicly any revisions for updating any
voluntary forward-looking statements, except as required by applicable
securities law.


FOR FURTHER INFORMATION PLEASE CONTACT: 
Fortress Paper Ltd.
Mr. Chadwick Wasilenkoff
Chief Executive Officer
604-904-2328
[e-mail]