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Resolute Forest Product (RFP); market cap $400m

Resolute Forest Product (RFP) Leader in the forest products industry: 1) Market pulp 2) Tissue 3) Wood products 4) Newsprint 5) Specialty papers

Resolute Forest Product (RFP) Overview 1/3 Market pulp  -Third largest pulp producer in North America - packaging, specialty paper products, diapers 2) Tissue Recycled and virgin paper products, ranging from premium, value and economy grades New acquisition (Atlas for $155m) will manufacture premium and ultra-premium tissue product -This is the segment that the company hopes will drive profitability by selling premium products

Resolute Forest Product (RFP) Overview 2/3 3) Wood products -Where it makes most of its bottom line; - Sells into housing market - Supplies wood residue for its other segments, fuels to produce renewable electricity and steam.

Resolute Forest Product (RFP) Overview 3/3 4) Newsprint -Newspaper publishers worldwide -To commercial printers in North America; inserts and flyers -Head winds 5) Specialty papers Largest producer of uncoated mechanical papers in North America Third largest producer of coated mechanical in North America Used in books, retail inserts, direct mail, coupons, magazines, catalogues - Head winds

RFP: MCAP: $400m Share: ~$4.50 Net debt: ~$761m EV: ~$1.1B

Risks?

Risks? No competitive advantage Strong competition Dependant on price on the market Supply and demand Internet Capital intensive Debt (due 2023) Operational leverage (high fixed costs)

Advantages

Advantages Geographic location Established customer relations

Valuation for each segment 1) Market pulp 2) Tissue 3) Wood products, 4) Newsprint 5) Specialty papers

Valuation for each segment most conservative estimates Market pulp New additions coming to the market Put 5x on EBIT; say $215m 2) Tissue Acquired Atlas for $150m Target of $8 million to $12 million in annual EBITDA in 2017; say 6x on $43m, $50m 3) Wood products, Consistent earner say 6x on $43m, $414m

Valuation for each segment "In the paper segments, we expect that previously announced capacity reductions in the first quarter will support stable market dynamics, particularly in newsprint" 4) Newsprint valued at ? Valued on 4x EBIT, $4m, say $16m? 5) Specialty papers EBIT of $11m, 5x valued at $50m?

Valuation for each segment 1) Market pulp $215m 2) Tissue $50m 3) Wood products, $415m 4) Newsprint $16m 5) Specialty papers $50m Total: $750m; very conservatively with tiny multiples

Guidance -Capex for 2017 $185m vs $250m 2016 (change $65m) Pensions will become a source of funds of $127m between 2017-2020 +$1b in deferred tax assets

5yr average of $1.2B mcap vs $400m

Who owns the stock?

Fair Value: -$8-10 per share (~100% upside) - +$800m market cap

LDVIC 4.76% vs S&P500 10.62% (Change -5.86%)