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Management Side
Fortress Paper Provides Operational Update on its Landqart Mill

VANCOUVER (News release) -- Fortress Paper Ltd. announces that its wholly-owned subsidiary, Landqart AG, has received notices from one of its significant international customers cancelling that portion of purchase orders which were scheduled for production and delivery by the Landqart Mill in the fourth quarter of 2017 and in fiscal 2018.

The cancelled purchase orders represent approximately 16% of the budgeted order book at the Landqart Mill for fiscal 2017 and 30% for fiscal 2018. Despite other suppliers experiencing similar cancellations, Landqart continues to have dialogue with the customer to potentially reinstate all or a portion of the cancelled orders over an extended period of time within fiscal 2018. There are no assurances that any reinstatement will be forthcoming.

Management is seeking to fill the production void caused by the cancellations and is deploying various strategies, including: (a) pulling forward existing purchase orders, (b) seeking new orders from existing and new customers, and (c) requesting special one-time supplemental orders from existing customers for immediate production. It is expected that revenues will be negatively impacted in the fourth quarter of 2017 as the decline in anticipated production volume is unlikely to be replaced in its entirety in the short term. Given the relatively long sales cycle for banknote papers, the reduced banknote production in the fourth quarter will also have an impact on revenues and results in the first quarter of 2018. Management is working diligently to replenish the majority of the order book in a timely manner. However, there is no assurance that such efforts will be successful, in which case the Landqart Mill may be required to take market downtime on certain aspects of its operations. Other strategies are also being evaluated in order to mitigate the financial impact and potential legal remedies are being assessed.

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