Re: TMB.to,
I didn't like them selling the French pulp mills. I have been lobbying the management for a month to keep them. However, putting things in prospects, they did get a decent price. There was an article estimate they would get 40-80 million USD, but they got 100 million Euro, or 135 million USD. They also still have partial ownership of the mill through the shares of the acquiring company.
In addition these mills buy wood chip from the market thus margin is the lowest and they are the worst performing mills for TMB. In 2009, they were idled for most of the time. There is reason for it.
Remember TMB.to has a book value of almost 10 dollar and most people believe they will have trouble paying the loan due early 2012. The sale should put the doubt to rest.
I believe both TMB and MERC are extremely undervalued at the current level. In China toilet paper price jumped 30-50%. Recently paper makers started to add pulp surcharge to pass the increase to consumers. In the US Kimberly Clark is planning to reduce number of toilet paper per roll. What can the consumer do? Stop using toilet paper? It looks to me the high pulp price is here to stay, at least to 2012-2013 when the new pulp expansion is coming on line. In the mean time these pulp makers will make a killing. I still like TMB more even with the sale. It is most undervalued pulp maker I can find.
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