Wausau Paper

History

• Founded in 1899
• Grew to become a leading paper company in the US
• 1910-1966 - Expansion and Diversification
• 1980's - divestiture of specialty paper products business
• 2004 - plants merged

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Michael C Burandt

• Chairman of the board and Interim CEO
• Held various senior executive roles recently at Georgia-Pacific
• Starboard Value LP (15% shareholder) appointed him in 2014

Board of Directors

• Londa Dewey - Director
• Gary Feels
• Watts Humphrey Jr
• Charles Hodges
• John Kvocka
• George Murphy

Mission

• Mission - to be the leading provider of environmentally sensitive paper-based brands and solutions to the markets we serve

Resources & Capabilities

• Industry Experience
• Sustainable Manufacturing Expertise
• Recycled Raw Material Conversion

Away From Home 'AFH' Market

• 1/3 of tissue market is 'AFH'
• Products purchased by building owners, institutions, janitorial services, from distributors
• Increasingly, hospitals, schools, and government institutions are specifying recycled content (EPA guidelines)

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Competitive Analysis

Major Competitors

• Georgia-Pacific
• Kimberly-Clark
• SCA

Georgia-Pacific

• Founded in 1927
• Quilted Northern, Brawny, Dixie, Angelsoft
• 28% N.A. AFH Market Share
• Series of acquisitions (similar to WP) up until 2001
• Privately Held since 2005

Kimberly-Clark

• 20% N.A. AFH Market Share
• Founded in Neenah, WI - 42,500 Employees Today
• Stock doubled in last 5 years
• Kleenex, Huggies, Scott, Cottonelle

Svenska Cellulosa Aktiebolaget (SCA)

• 20% N.A. AFH Market Share
• 50% Products under Retailer name (private label), 50% Owned Brands
• Significant growth in emerging markets (Latin America, Russia)
• Not traded on US stock exchange
• Worlds 3rd largest supplier of tissue (after acquisition of some parts of GP tissue)

5 Year Growth Rate

Dividend / Yield

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Global Outlook

• 8% of shipments to Canada
• FPAC employs 235,000 already, 12% GDP, $58 billion
• Not in a position for JV, purchase of existing producer in far away countries
• Potential market in Latin America (close proximitey to existing market)

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Strategic Goals

Increase EBITDA to $26 Million by 2016

Alternatives

• Introduce new complimentary products in AFH market
• Stock repurchase program
• Acquisition (Public / Private)
• Fluff Pulp conversion

Risk Critique

• Lack of capital for fluff pulp investment
• Acquisition would be difficult given need for equity market cap needs (2-3x)
• Stock repurchase unlikely given $200 million in debt remaining even after purchase

Summary of Financial Assessment

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Conclusion

• Questionable future
• High market rate for access to capital
• Weak player in low growth market
• Focus on AFH is with good intentions
• 2-3 years to turn things around

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