Strategic & Financial Arguments(TM)

for the pulp and paper industry worldwide

July 2016

Participating as industry experts in pulp and paper financing and M & A deals around the world for over two decades, we continue to see the same mistakes made over and over. This newsletter is designed to help you avoid costly mistakes we have seen others make. We will be giving you one or two points each month to help improve your performance.

Brexit and any "sons" or "daughters" of Brexit will not make any difference to the pulp and paper industry.

As I expected, none of you got too excited about Brexit and its impact on the pulp and paper industry. Good job.

The reality is this--the pulp and paper industry was global long before there was an EU or any of the trade treaties, past, present or future, in the news today. Pulp and paper was likely the first global industry in the modern era (I am ignoring tea, coffee, bananas, and spices).

Of far more interest to our industry is the currency in which transactions are denominated. It likely does not make a difference which currency is used, as long as it is a relatively stable one.

We buy machinery and special expertise services from around the world. We sell pulp and paper (especially pulp) around the world. The most volatile component in our business is waste paper, its volatility created by players who jump in and out of the markets. Our second most volatile component is energy, whose volatility is created by politicians.

As I have stated elsewhere, when it comes to energy, a mill should never dismantle a working energy asset. Mothball it and preserve it--for in a short period of time, you can be sure the politicians will bring it back in favor. This has been going on for nearly fifty years.

In the meantime, don't worry about Brexit. Our industry won't notice it.

If you have a casual question or a major deal, call me on my personal cell phone - 404-822-3412 or email me at jthompson@taii.com. We are here to help.

Sincerely,

Jim Thompson, CEO
Talo Analytic International, Inc.

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