Fortress Paper's subsidiary, Fortress Bioenergy Ltd. ("FBEL"), as borrower, has entered into a credit agreement with IAM Infrastructure Private Debt Fund LP ("IAM"), as lender, in relation to a $40 million secured loan (the "IAM Loan") which matures 14 years from the date of advance, and is repayable in monthly payments of principal and interest over the term.
FBEL is the owner and operator of the electricity cogeneration facility located at the Fortress Specialty Cellulose Inc. ("FSC") mill in Thurso, Québec. The IAM Loan is secured against all of the assets of FBEL. The IAM Loan is also guaranteed by the Company's wholly owned subsidiary, FSC, and Fortress Paper.
Investissement Québec ("IQ"), acting on behalf of the government of Québec, has agreed to subordinate its security rights in relation to its outstanding loan with FBEL and FSC in favour of the IAM Loan. In consideration of such subordination, the Company has agreed with IQ to match the interest rate payable on $40 million principal amount of the outstanding IQ loan to that payable pursuant to the IAM Loan. All principal payments on the IQ loan made by the Company will be applied firstly to the higher interest bearing principal amount outstanding.
The Company intends to use the proceeds of the IAM Loan to repay convertible debentures issued by Fortress Paper and for general corporate purposes.
Fortress Paper operates internationally in two distinct business segments: dissolving pulp and security paper products.
