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How Fortress Paper became a TSX star Add to ...

As a rambunctious newcomer, Wasilenkoff was somewhat stymied by the stodginess of the banknote business. He wanted to quickly expand via acquisition but couldn't persuade anyone to sell. Instead, he decided to retool the mill at Landqart to quintuple the mill's production capacity. The plan is underpinned by the mill's proprietary Durasafe technology, which attracted Wasilenkoff in the first place. A polymer core lengthens the life of the bills and allows for the introduction of transparent windows to discourage counterfeiting.

While Ciotola was running the mills in Europe, Wasilenkoff searched for new business. His focus turned to China, the world's biggest printer of money. He cold-called the Chinese authorities and continued building a relationship over the next five years, trying to sell them on Durasafe.

Before Fortress was founded, he had attempted business in China but was too aggressive, too Western, and was rebuffed. He retreated to better learn the customs, like the practice of quietly rapping one's knuckles on the table-an ancient sign of respect. Wasilenkoff brought this learning to his delicate push of Durasafe in China, and says he's now finally coming close to finalizing a technology licensing deal for a new series of the yuan.

"It's an extraordinarily strange company," says Whittall, the director. "There's no rhyme or reason between a wallpaper mill and a banknote mill. And now we have a dissolving pulp mill."

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Wasilenkoff had been angling to get into dissolving pulp since he started Fortress. He saw something in the commodity others didn't. World cotton production was in decline, Wasilenkoff's research indicated, and he knew that rayon, made from dissolving pulp, was the go-to substitute. His delving convinced him dissolving pulp was undervalued, but it wasn't until 2009 that he spotted the in.

He made a pitch to his board (on which he serves as chairman). Presented in late 2009 with a five-page plan to buy and renovate a closed-down mill in Quebec, the board said no. "I remember some of the board members, their eyes rolling back, saying, 'We're going to buy a rusty old pulp mill in Canada? What are you thinking?'" says Wasilenkoff.

Spurred by the rejection, Wasilenkoff reapplied himself to the idea. The bankrupt mill in the town of Thurso, on the Ottawa River, had once turned hardwood pulp into high-end products like photographic paper, a business done in by digital cameras. Wasilenkoff figured he needed $150 million to retool the mill and build a green-energy biomass operation that would not only power the mill but also sell excess juice to Hydro-Québec.

But the plan needed more. So Wasilenkoff drafted a veteran Quebec forestry executive, Pierre Monahan, to liaise with the Quebec government, which was keen to see the mill survive. With the board now backing a more detailed plan, Wasilenkoff wrested the mill away from Fraser Papers, which was in court protection from creditors, for a paltry $1.2 million. With Monahan's help, he persuaded the provincial government to loan Fortress $102 million on the cheap through Investissement Québec, the province's economic development agency. Fortress also drummed up $15 million from Fonds de solidarité FTQ, a labour-sponsored fund that invests to drive economic growth in the province.

Joel Lusman, an Old Greenwich, Connecticut, hedge fund manager who has piled money into Fortress, calls the deal one of the best he's ever seen. "It's a very, very fine line between self-confidence and arrogance," says Lusman. And on that line, he finds that Wasilenkoff "is perfectly balanced."

Wasilenkoff believes there will be chronic shortages of dissolving pulp. Within months of the Quebec mill starting operations in the fall, he hopes to have pulled off as many as four more similar deals in North America and Europe. If he's successful, most of Fortress's profits could derive from dissolving pulp, transforming the company. "I'm pretty confident that by the end of this year, we're going to be the largest dissolving-pulp company in the world," says Wasilenkoff. "From nothing to the biggest, in a year and a half."

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