Project Genesis | Atlantic Corporation | ACE Consulting Group | “A service we provide with excellence“ |

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Executive Summary
The purpose of this report is to assess the viability of the acquisition of Royal Paper Corporation’s (Royal) Monticello mill and box plants by Atlantic Corporation (Atlantic). This will be conducted through the evaluation and analysis of whether this project is profitable and also if this is a sound strategic move.

In making our final decision, we have undertaken extensive qualitative and quantitative analysis. Such factors we have taken into consideration are the future trend of linerboard prices, the
Hence if Atlantic acquired Royal’s Monticello mill and 16 box plants, it is likely that this synergy could do better than the industry average by boosting its linerboard production and being a dominant competitor in the forest product industry.

Valuation Analysis of Linerboard Mill and Box Plants
What prices should Atlantic pay to acquire the linerboard and box mill operations from Royal after 1993?

Year | Free Cash Flows to Firm ($ millions) | | Year | Free Cash Flows to Firm ($ millions) | 1984 | 12.770 | | 1992 | 78.583 | 1985 | 10.216 | | 1993 | 83.038 | 1986 | 24.964 | | 1994 | 89.032 | 1987 | 60.964 | | 1995 | 93.397 | 1988 | 65.820 | | 1996 | 97.979 | 1989 | 69.505 | | 1997 | 102.791 | 1990 | 73.372 | | 1998 | 107.843 | 1991 | 75.063 | | | |

* How reasonable are the assumptions on which the cash flows are based?

In order to calculate the value of the linerboard and box mill operations, the growth rate of 5% from 1984 onwards is based on the historical growth from the projections of Operating Profit Before Depreciation and Taxes for the Monticello Mill and the Box plants from 1983 – 1993 provided. We support this growth projection also due to the positive outlook of the linerboard product industry. Although the assumptions we make to forecast our Free Cash Flows