Good morning, and welcome to Mercer International's Third Quarter 2013 Earnings Conference Call. On the call today is Jimmy Lee, President and Chief Executive Officer of Mercer International; and David Gandossi, Executive Vice President, Chief Financial Officer and Secretary. I will now hand the call over to David Gandossi.

Thank you, Lisa. Good morning, everyone. As usual, we will begin with formal remarks, after which we'll take your questions. Please note that in this morning's conference call, we will make forward-looking statements according to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. I'd like to call your attention to the risks related to these statements, which are more fully described in our press release and with the company's filings with the Securities and Exchange Commission. I'll start by covering some of the key financial aspects of the quarter, and then I'll pass the call over to Jimmy. In Q3, we achieved EBITDA of EUR 24.8 million, or USD 32.9 million, up almost EUR 11 million relative to Q2. The improved results were driven by higher energy sales volumes, improved European pricing, lower major maintenance costs and the reversal of a wastewater fee accrual at Rosenthal. However, offsetting these positive effects were the negative impact of the strengthening euro and restructuring costs incurred at our Celgar mill. The mills had a strong production quarter in Q3 despite Celgar experiencing some unplanned downtime. Our finished goods inventories were up approximately 12,000 tonnes at Stendal, as Stendal built their inventory in anticipation of its fourth quarter shut. Overall, pulp prices remained relatively flat in the quarter, with actually highlights -- which actually highlights the strengths of the markets since prices have traditionally weakened during the slow summer months. List price ended the quarter at USD 880 per tonne in Europe and USD 695 per tonne in China. We were encouraged by recent NBSK pricing momentum with price increases announced for October and November. As you will have seen in the press release, we reported a net loss of EUR 2.2 million for the quarter, or a loss…

Thanks, David. Good morning, everyone. Overall, our third quarter results were solid, driven primarily by lower maintenance -- major maintenance costs and improved electricity sales volumes and despite incurring EUR 2.9 million of restructuring charges at Celgar. Our energy sales volumes were positively impacted by Stendal's Blue Mill turbine, which began its ramp-up phase in September and contributed a modest amount of incremental energy this quarter. We're also encouraged by how well the NBSK markets stood up in the historically slow summer months and by recent NBSK pricing momentum. In the third quarter, steady demand kept average NBSK list prices essentially flat across all markets. The NBSK markets also benefited from the third quarter closure of Celgar's high cost to NBSK mill. In Europe, the quarterly average list price rose marginally to USD 867 per tonne, while the Chinese quarterly average list price was down slightly to USD 685 per tonne. September NBSK producer inventories were at 27 days, down 1 day from August. At these inventory levels, the NBSK market is considered to be below balance and historically led to price increases. September hardwood pulp inventories are also down 7 days from August to 42 days. We believe the NBSK inventory levels highlight the strength of the NBSK market as well as the recent price announcements. Pulp prices went up USD 20 in all markets in October, and producers have recently announced another USD 20 per tonne increase in all markets effective November 1, bringing the list price to $920 in Europe, $740 in China and $990 in the U.S. We estimate that there are over 3 million tonnes of incremental tissue capacity coming online in China between 2013 and 2014, with approximately 1 million of these tonnes scheduled for the fourth quarter of 2013. In addition, there are…

[Operator Instructions] First question comes from Bill Hoffman from RBC Capital Markets.

Jimmy, can you talk a little bit about what your capital plans are for 2014, kind of what you're thinking about strategically as well?

Yes, I mean, in terms of our, of course, spending on capital projects next year, they will continue to be very limited to what we call very fast payback type of investment or investments that really are critical to, I guess, the continued efficiency gains that we're looking for. And on a rough kind of number basis, you're looking somewhere between around the EUR 6 million to EUR 8 million per facility, max. But, of course, as we move through the year, some of those projects may be adjusted or accelerated depending on market conditions.

And then just -- we keep asking this question, we're sort of watching and waiting with all the capacity coming on in the hardwood side of the equation. Just I wonder if you can just give us some thoughts on any change in view right now or about the upper potential of the softwood markets just because the hardwood markets will become pretty flushed with supply.

Well, I know that a lot of the analysts and the commentaries certainly coming out of many of the observers of the pulp markets has been negative because, of course, of the significant capacity increase on the hardwood side coming in the next couple of years or so. However, my view, based on more factual evidences to date, that realistically capacity has not shown to be correlated with price movements. That seems to be the case from historic numbers. So just because you have capacity increases doesn't necessarily mean pulp prices will actually drop. The other thing that, of course, is not quite correlated is that there is any relationship between hardwood and softwood movement. There has been a fairly long period of time where the gap between hard and softwood prices have been fairly wide for a fairly reasonably long period of time. And, of course, what has typically closed these type of gaps has been weakness in terms of the economic activity or essentially lumpiness in terms of closures of paper capacity, which, of course, then release some incremental excess supply of softwood, and it takes a little bit of time, of course, to adjust for that. So I don't think necessarily that just because we have significant capacity increases coming up in hardwood, that I would view prices for NBSK necessarily having to follow. And, in fact, there could be fairly wide price gap between the 2 for a much longer period than many people may be expecting. We'll have to see.

Yes. And then just regards to the Chinese customers that are building all the additional tissue capacity, any change in behavior there from them being concerned about being able to source sufficient softwood?

No. As far as I know, the capacity increases that have been announced and expected to come, I have not heard of any deviation from the plan. In fact, other than further significant potential increases in tissue production within the Asia as well as even in the Middle East markets, I haven't really seen any retrenchment, certainly, on the tissue side. We haven't seen any real change in behavior in terms of the buying pattern of the tissue customers. Of course, what you're seeing in China is issues related to high inventory of finished products, but that's really more on the publication [ph] of the printing and writing grades. And, of course, that has limited many of the buyers from building up raw material inventories until such time they can reduce finished product inventories, and I think that has been more the driver of what we're seeing in terms of the demand dynamics rather than really one of oversupply or over-inventory of the raw material. I think, in fact, certainly the customers that I'm aware of are pretty much sitting on fairly low levels of raw material inventory because of this credit issue, clearly.

And your next question comes from the line of Richard Kus from Jefferies.

Can you talk a little bit about the situation you guys are seeing with regards to discounts? I know that they had been at some pretty high levels now with the strength that you guys noted in pulp markets. Have you seen those come down a little bit?

No, I think discounts are pretty much about the same as what they were. What you're really seeing is discounts about the same but prices moving up. I think what is more an impact really is the currency movements of the last few months, which, of course, has impacted euro as well as Canadian dollar type of pricing movements. But the discounts have essentially been pretty much the same wide levels.

Yes. Understood, understood. And do you see any opportunity for those to tighten up given the markets currently?

I think what I would prefer clearly would be more kind of a transparency and really go to the net pricing rather than this strange pattern of having list price and then this -- why the discounting. And historically, we're seeing discounts become more and more larger, which, of course, has been the pattern of -- over the last few years. And rather than essentially assume that people are not aware, I think it will be better to go with this net pricing picture rather than continue to have this gap, which seems to not really reverse but really continue to just get bigger and bigger.

Okay. And then can you talk a little bit -- maybe a little tough for you, but the extent that your customers have the ability to shift their furnish between softwood and hardwood, do you guys think they're running more softwood right now? More hardwood at this point? And is there any further ability to switch if all that hardwood capacity comes on line and you end up with lower pricing?

Well, it all depends on the type of paper they're producing. Clearly, of course, the percentage of hard and softwood will always influence the quality issue, especially in terms of the hygienic grades in terms of softness and strength. So I think from maybe the direct hygiene grades, really it's one of the type of quality that they're producing in terms of softness and strength combination, and I think that's probably a little bit more difficult. In terms of the basic printing and writing grades, depending on the level of speciality, that can range, clearly, to, to pretty much almost all hardwood with very little softwood to one which is more difficult. This is really the very low damage type of products that require a lot of strength. So I cannot give you kind of a broad generalization. It really depends on the type of products they are making. But I can tell you that it does, overall, influence productivity because even if you're going to use more hardwood, it just means that you have to run the machines slower, clearly. And, of course, on a production volume basis, depending on what their cost profile is, of course you'll have an impact in terms of their efficiency and productivity levels and ultimately influencing other costs. So it isn't those types of simple thing of saying, well, I'd buy something which is cheaper and then I'd produce it and I'll save money. It's very difficult to know exactly what the influence will be, and it will be different for each of these paper makers as well as each individual plant depending on their age of the facilities.

Okay, that's great.

And if I may just add a little something to that, Richard. I mean, there has been substitution occurring for decades. And then as we saw in 2010 and '11, we felt we saw the end of it, as evidenced by a differential of around $200-plus between softwood and hardwood pulp, and it was there for an extended period of time. There really haven't been any massive shifts since then. We ended up back at parity. But I think for the last several months, we've been running with softwood being $80, $90 more than hardwood. So if there is substitution, it's just on the fringes and the margin. and we're already seeing -- our feeling is we're starting to see the extent that -- kind of really not more much more to come.

And your next question comes from the line of Andrew Shapiro from Lawndale Capital.

So while you contributed $20 million from the parent company down into Stendal and you showed your ownership in that joint venture rising, did your JV partner contribute anything at all and add monies? And why or why not?

No, he did not, and he -- I can't answer why not other than it was clear he certainly was not going to, period.

Okay. And so your -- and the ownership interest rose to what level again?

83%.

Okay. You're converting to the U.S. dollar starting this current quarter. Will you be providing retroactively quarterly data adjusted for the currency switch in bulk? Or will it only come out incrementally each quarter for us?

All of our reporting will have its typical historical comparatives, and it will all be in U.S. dollars.

So basically, it will drip out quarter by quarter? You won't be able to or won't provide a kind of a catch-up release?

No. When we release the K, you'll have all of the previous periods that are typically in the K converted to U.S. dollars.

Right, but that's on an annual basis, right?

Yes. And then the quarterlies, we'll have the prior period quarterlies compared to them. There won't be an omnibus every period of every reporting for the last 5 years of quarterly release. That would not be a normal thing to do.

Okay. And, well, I'm trying to understand what uniquely happened year-over-year in the Restricted Group and/or in Stendal to create the inconsistency that your year-over-year gains you had in operating income and EBITDA in the Restricted Group, but Stendal year-over-year the EBITDA and operating income numbers were down year-over-year. Can you explain a little bit the inconsistency? I would think either they would be both up or they would both be down.

Andy, there's just -- there's too many variables to do it effectively on this call. I mean, if you're comparing quarter-over-quarter annually massive shifts in pulp pricing and mix, you've got 7% increases in fiber costs; Restricted Group has beneficial fiber costs on the Celgar side, which is the bigger of its 2 mills, versus Stendal, which is a large mill in the European wood market. Timing of maintenance shuts, the restructuring upsets, things like that. I mean, I'm just not prepared to give you anything.

Can you give us a call offline and maybe we can just walk through it? I just want to reconcile that please, on that. And then Blue Mill's done. You've got the Celgar cost reductions in the works. You've got improved pricing. So it seems to me we have a period, at least, of substantially enhanced cash flows. So what I'm following up, I think it was Mr. Hoffman's question, what's next on the horizon either in CapEx or is it going to be in terms of any major project that has a decent return? Or is the priority in cash now is going to be multiple periods of a decent tranche or debt paydown?

I think, as Jimmy mentioned, we've targeted for next year between EUR 6 million and EUR 8 million per mill. And as we see how things develop, we may pull back a little or let out the club a bit. We do continue to have debt reduction as a priority, particularly on the Stendal side, and it's happening. We're making good progress, so we'll see.

Okay. But your EUR 6 million to EUR 8 million is -- that's kind of been typical per plant though, hasn't it?

Well, I mean, we just spent EUR 40 million on Stendal.

Yes, right.

So your...

No, no. I'm asking, what's the next big project?

Yes, we don't have...

We don't really have any significant projects at the mills coming forward that we have envisioned. I think what we have is EUR 6 million to kind of EUR 8 million range is really full of smaller, very occluded-type [ph] of projects or projects that build on in terms of additional efficiency gains for the future.

So we have, at least on the horizon, a few -- probably a few straight quarters of a decent chunk of debt paydown targeted then?

Well, we're optimistic about our future, Andy. And if that were to occur, then yes, that's what we'd...

Right, yes. Well, I mean, look, we know Blue Mill is going to give you a bunch of incremental energy cash flow, you've got an incremental production out of Stendal, the near-term visibility on pricing is favorable and you have just put in place some substantial annual Celgar cost cuts. So it would just seem that in the near term, there's a decent amount of cash flow generation than one might be...

Yes, I mean, one has to look at a lot of the factors that come into this play, Andy. I mean, if you look at the pricing, clearly it's very favorable. If you look at in terms of cost development, certainly it looks favorable, again especially at the Celgar moving forward once the restructuring is over. All of those are favorable. Now on the negative side, of course, which we have no crystal ball as to what the impact in terms of the euro or U.S. dollar nor the Canadian exchange rates are going to be one day from now or even certainly not a quarter from now, so these are things that have a big influence in terms of our cash generation. So yes, based on what we know, we look very good. But if you've got a crystal ball and you can tell me currencies are going to behave x, then I can tell you the results. But unfortunately, we don't have that right now, so all I can say, yes, it looks very good based on what we know. And yes, if all of those occur, we will build again very healthy cash flows. And, of course, as we've pointed out, our priority is really to reduce costs. And, of course, debt is a big component of that because we have, in relative terms, expensive debt.

Very expensive. Last question is for the coming quarter, what are the planned road shows and conferences?

Yes, so Jimmy and I are -- got a non-deal road show next week. We're attending the CIBC conference later in the -- in January. And we're contemplating on West Coast tour in November, possibly with an organization that conducts those kind of road shows. So we'll be possibly even in your neighborhood, Andy, in which case we'll be...

Oh, yes, I think you may have called us. We'd love -- we'll have you come and see us. That'll be great.

And your next question comes from the line of Bruce Klein from Crédit Suisse. Bruce Klein - Crédit Suisse AG, Research Division: I was wondering, you mentioned China and tissue additions. But what sort of just sort of end market demand and sort of inventory do you think is going on right now with their pulp inventory?

In terms of tissue guys or... Bruce Klein - Crédit Suisse AG, Research Division: No, no. Separate, just in terms of what their demand appetite is these days and how their, you think, their inventory sits for NBSK right now.

Yes, I think generally, if I look at the kind of overview of pretty much all of our customers, I think their inventory levels are not that high. In fact, probably they're much lower than where they would want to be. I think there has been several kind of, let's say, strategies as a result of the expected Russian production coming on. As you know, it took much longer. They've had a lot more production difficulties. And so I think that caught a lot of people off guard. Also, I don't -- I think there was a significant degree of skepticism, especially on the Tofte mill. So that kind of caught a few of the buyers by surprise. So I don't think that people were building inventory because they felt that supply was going to be limited. I think people were probably reducing the purchasing because of credit as well as anticipation of new supply coming on. So we know that -- essentially that the China situation is really the -- is influenced not just by the credit but also the end finished products. And certain paper grades, as I said, certainly are sitting on a lot of finished good inventory. And until they can release those, clearly they're going to limit their purchases of the raw materials as best they could. I think the tissue guys, probably they're expecting that the combination of the Russian and the continued reasonably good market, that they had -- there was no urgency in terms of raw material purchases. So there's no particular reason why any of these guys essentially would have built up any significant levels of inventory. And therefore, we believe with the capacities that are scheduled to come on stream from the end of this year and throughout next year in China, especially on the tissue, they will have to build up inventory for their ramp-ups. So I am very optimistic, as a result of those activities, that we will see continued strength. The other positive side is that the de-integration as well as the closure of papers as such in Europe certainly has now reached a level where you're not going to see any significant retrenchment because demand is down. And it's not getting worse, it's pretty much as bad as it's going to get. So all in all, I guess we're through the worst of the markets, and we're optimistic that we're building now momentum. Unfortunately, it's a lot weaker momentum than otherwise. That's because, of course, customers have their own issues, and the fight is a lot harder.

And your next question comes from Mark Kennedy from CIBC.

Jimmy and David, I just want to come back to this issue in terms of the spread between NBSK and BEK. So it's just starting to crack sort of that $100 a tonne level based on sort of the November 1 list price here, $990, on NBSK, and I'd just like to get your sense. Is there a spread here where you start to become uncomfortable? Or would you be comfortable if that spread went back, say, to a $200 a tonne premium?

Well, I mean, the spreads are going to get to what it will. And I think it's not a question of our comfort level, I guess it's a question of supply and demand fundamentals. And as I said, as far as I'm concerned, there has been really no correlation between the 2 movements, nor has there been correlation between hardwood capacity increases and pulp prices as a whole. So it's easy to point to capacity, and it's an easy way to say, well, this is going to create a problem and it should reduce prices. But if you look at the actual statistics and all of the historic data, nothing seems to indicate that's really the case. So I'm not saying that psychologically, there isn't a feeling of there, that influences clearly the buyers' mentality as well as other people's mentality. But the fact of the matter is the supply and demand situation certainly is healthy for softwood. Capacity side is very limited. We see capacity on the customer side further expanding, especially in the area that uses a lot more softwood than the other paper grades. So based on those factors, everything indicates that things are aligned for positive momentum. And I cannot tell you that oh, all of a sudden, just because there's $200 gap, you're not going to produce tissue paper which is going to be substandard, just because of $200. You're going to basically swallow the increase. Yes, you're going to try to limit the cost by reducing a little bit less, but you're going to have to be very careful that the quality is not going to be substandard. So these are the issues. It isn't just the cost that's going to drive our customers, it's really what the quality spectrum that they're really playing with and if their customers themselves are demanding in that regard. So yes, I am a lot more optimistic. I think that the gap can be quite as wide as $200-plus and for a much extended period of time.

Okay. Well, that's helpful, Jimmy. And then just one question. As you look into 2014, just your thoughts sort of on your fiber costs in Germany. Did you sort of see them just sort of staying at present levels? Or do you think there's more cost pressure coming there yet?

No, I mean, what we've been able to do is, of course, every time we have these localized price increase pressures, is, of course, to increase our imports. And the fact of the matter is that fiber cost increase in terms of price is not really the impact of actually wood prices but really reflecting the fact that we have to, of course, source the wood from further distances. So it's really that incremental increase in the logistics which has influenced our price only because the general wood availability in Germany has been constrained, as you know, because of the adverse winter conditions as well as the unexpected flooding. And that took away almost, if you take the winter and the flood, maybe 4 months out of 12. And this, clearly, is going to impact wood availability because it's-- you already shortened the period of harvesting, you also have increased the level of other end users like wood pellet because, of course, they saw their demand side increase because of the extended winter condition and, therefore, they have to rebuild inventory, too. And we, because we had no access to wood, we had to rebuild. So I think the rebuilding of the inventory has now reached levels where it's more normal. So there isn't any of that kind of demand surge. And at the same time, we've been able to address the wood shortage by imports. And this essentially cured the problem. Yes, there may be, as we've said, maybe a little bit more marginal increases because, again, we're going into the seasonal weaker period of harvesting. But all in all, we've seen the maximum impact, we have dealt with it with imports and we will continue to deal with it if the event continues like this through additional importation of wood. And therefore, next year, we do have a strategy and try to, one, deal with these unexpected hiccups really, which create these very large disturbances. And what we have typically seen is these price increases tends to then stabilize and then ultimately go back to where we kind of started, albeit maybe a little bit higher than the levels we were at in the past, but our focus is driving that kind of flat pricing, the stable pricing, more down to traditional levels rather than the elevated levels we've seen in the last 3, 4 years.

And your next question comes from the line of Mark Friedman from Gates Capital.

It's actually Jeff [ph]. I have a couple of questions. The $20 million that went into Stendal, what was the split between equity and loan?

Jeff, it's all equity. In Germany, we have the concept of registered capital and unregistered capital. So the increased ownership percentage is really the result of a negotiation with our minority partner as to what that level would be. The number was a predefined number. So the split was about -- roughly, if USD 20 million is EUR 15 million, about half of it went in as registered capital and half of it went in as unregistered capital. It's kind of like a voting and un-voting concept.

But the $20 million was all for equity?

It all went in as equity, yes.

So you're valuing it at $230 million before you put the money in or something like that?

It's not a...

It's not a value question.

It's not a function of valuation in this case. There's too many other issues associated with having a minority partner that it's just -- it's not an indication of value. It's an indication of how far we could go in terms diluting him.

Okay. The second question is, you had a reversal of wastewater fee accruals at Rosenthal in the third quarter. How much was it?

That was EUR 6.6 million.

EUR 6.6 million?

Yes. So the history on that, Jeffrey, is that this happens on both of the German mills. Now we accrue a wastewater charge every month, and this carries on for 3 years. And the way the system works is if you can design a capital project that allows you to reduce your wastewater emission levels, permit levels, then you can avoid having to pay the wastewater fee and effectively offsetting the wastewater fee with the capital that you spend. So in Rosenthal's case, we were successful this quarter in convincing the authorities that the project that we've just completed met all of those hurdles and, therefore, avoided having to pay with the wastewater fee in the quarter. We've done that, I think, 4 times now for Rosenthal. So it's like a government grant in a lot of ways.

So that showed up as just a reduction in your costs for the quarter?

That's -- no, it comes through the earnings.

Right, okay. And then the third question is the Project Blue Mill. I know it just started, but can you remind us again what financial effect you expect that to have?

Yes, so it produces about 30,000 extra tonnes of production over 1 year, primarily through effective debottlenecking in the winter conditions. So black liquor penetration, precooking and chip screening, that kind of thing. And also, it's about a 46-megawatt turbine we put in there. The steam coming to it today is generating, I guess, 109,000 megawatt hours of power, which will translate into about EUR 7.5 million of EBITDA. And on the pulp side, it depends on what you assume -- where you assume you are in the cycle. If you take a mid-volume cycle of EUR 150 per tonne, that's another call it EUR 5.5 million. So all in, somewhere between EUR 11 million and EUR 14 million of annual benefit depending where you are in the cycle.

Right. So that's at the EBITDA level, right?

That's at the EBITDA level, yes.

Okay. And then can you talk about the recent price announcements and, I guess, how they're going? You had 1 -- you've had 2 in a row here. Is that -- does that mean the first one was realized? Or can you give us some help there?

Yes, I think the -- everything in September, October is fine. A little early to tell on November, but I think we're certainly -- the industry producers are all expecting November to go. I don't see why it shouldn't. I mean, the statistics are -- at 27 days, or having stayed at the 28-day period level for 3 to 4 months, we didn't lose $0.01 of price in the summer, which is a traditional slow period. So, I mean, it's -- the market statistically is snug. So we should be continuing to push price increases.

[Operator Instructions] Your next question comes from the line of Paul Quinn from RBC Capital Markets.

Just following up on the very strong statistics that we're seeing. Do you see any disconnect at all between the strength of the statistics and what you experience in the marketplace? I mean, you describe it as below balance level from a softwood side, but I'm having a heck of a time trying to reconcile the 7-day drop on the hardwood side.

I've got a theory.

Excellent.

It's a fragmented industry with a lot of small producers and a bunch of producers that sell through agents, and I just think there's too many guys that don't get it. That's my theory.

Well, I mean, if you look at the statistics, I mean, clearly, the summer months are weaker, so one would expect, of course, certainly inventory levels on the hardwood side to come down. It came down surprisingly more than what one would have expected, but I think that could be a combination of seasonal as well as better kind of credit conditions certainly in China, as well as the shipping kind of movements because, as you know, it's very difficult, with the large volumes of hardwood shipments that are being made from Brazil these days, really to get the right kind of numbers because, of course, it can be a lot lumpier than what traditionally it would have been. In terms of the softwood inventory levels, I think clearly the inventory levels staying constant through the summer, that's a real positive. It's -- typically, we end up with a build in inventory. And, of course, the continued reduction coming out of the inventory again sends a very strong signal that the balance between supply and demand is very healthy. Now it's been very difficult to get price increases mainly because, of course, all of our end users are under their own constraints, and, therefore, every price increase has been a fight. Now the increases we've announced, $20 each, clearly are not the type of increases that we traditionally make in the industry when we have such supply and demand type of balances. Typically, you would have seen $50-plus increases in very short order. I think the producers of softwood pulp have become quite gun shy in the last few years. So clearly, it's reflecting good markets, probably gun-shy producers in the sense of the increase that we're announcing and continued ongoing movement, albeit smaller kind of paced than we otherwise would have seen in the past.

Great, all fair points. Maybe you can -- when you talked about tissue earlier on and the amount of capacity coming in, in China, maybe you could just sort of give us an update as to what percentage of your tonnes goes to that end user and then how the rest is split between printing and writing paper and other grades.

Yes, I mean, generally, on a kind of broad basis, about half of our customers are in the hygiene kind of grade and the specialty, and the other ones would be essentially printing and writing, mainly the clearly the coated and other grades.

Okay. And then any -- just a quick update on geographic split, end markets. What percentage of your sales are China now versus Europe and North America?

For Celgar, primarily it's all -- 80-plus percent, as you know, is to China. So essentially pretty much all of the sales activity out of Celgar would be to the China market and the rest of Asia. In terms of our German facilities, Rosenthal doesn't ship anything into Asia. In fact, it's only within the European -- Western and Eastern European area that it ships. Stendal, depending on the exchange rate and the market conditions, may ship anywhere between around slightly between 10% and maybe 15% of its sales. Recently, it's been far less than that. So typically, it could be anywhere between 30,000, 40,000 tonnes to over 100-something-thousand tonnes. But we would say this year it's going to be significantly lower than prior years.

Okay. And then just lastly, just on the M&A front, anything you're seeing out there? I mean, it sounds like your outlook is bullish in kind of a muted way. But are you seeing any interest in acquiring something at these pricing levels?

Well, I mean, our profile, as you know, in terms of the type of asset that we're looking for, we've always kind of indicated they're difficult to find because we're looking for very -- more modern type of competitive assets with the right kind of location. And so clearly, there isn't really that many around. And certainly, we're not aggressively looking in terms of any opportunities. I think what we're focused really is in terms of organic growth, improving our costs and as well as, of course, improving our earnings stream from really more non-pulp commodity type of sectors so that we even out more of the cyclical earnings type of profile.

So is it fair to say, I mean, you're going after the bigger machines just because they have that energy potential? But I think your -- would it be fair to say your experience on some of the bigger German mills have led to higher costs so that, that hurt you on the pulp side?

No. I mean, on the German side, I mean, we always had much higher wood costs and yet we've been able to overcome those limitations through other kind of efficiency gains and I think, of course, the major benefit or cost competitiveness of the logistics side of the business to the end markets. We're not necessarily looking for large, modern machines. I think what we're looking for is a combination of wood availability, logistics to the end markets, potential for other type of by-product streams that could command good prices. And these are the factors. I don't think it's just limited to modern machines per se. There's a lot more to it because -- just because you produce pulp cheaply, if your logistics is very poor from the end market, then you're not going to be as competitive.

And your next call is from -- sorry, your next question comes from the line of George Berman from J.P. Turner and Company.

Are you there, George?

We seem to have a little feedback in the line. It looks like -- well, on the cusp of another nice one in earnings, I have one question. What prompted you to start reporting in dollar terms rather than euros?

George, we've -- we felt for some time that we would like to move to the U.S. dollar, the -- with the volatility of the currencies. Looking back, what kept us away was the risk that -- the impact that a large swing could have on our equity. And I guess we're at a point now where we feel we've put enough meat on the bones that we don't really see that as a risk going forward. And the benefits of reporting in U.S. dollars are quite significant in terms of our comparability to our peers, making us look a little more normal in the U.S. capital markets and so on, so.

Yes, what we found is that a lot of our investors and people who certainly would be interested in us sometimes, of course, get confused because our competitors or our peers essentially report, in most cases, in U.S. dollars. So when they see the euro, of course, which is significantly stronger, of course they can get easily kind of confused. When they just see it, they think it's U.S. dollars, and, of course, that's not the case. So it's just to make things a lot easier in terms of how they can look at our numbers and compare it to our peer groups'.

Yes, I think that was a very wise decision. I absolutely concur. Next question is the current debt on the Restricted Group. When is that able to be refinanced without too much of a penalty?

Well, we've got our first call on those bonds in December of next year at a 104 75. So as you approach that level, that signals the maximum premium you will have to pay on any [indiscernible].

That's right around the corner, yes.

Yes. Well, another year.

Yes.

Yes. Let's hope rate stayed this low so that we can really get some profit there.

Yes.

I think that will make a big difference in the per share earnings number as well.

Yes.

Yes.

And we have no further questions in queue. I'll turn the call back to the presenters for closing remarks.

Okay. Well, I thank everyone for coming to today's earnings call. And we all, of course, are optimistic. Hopefully, it'll translate to much better markets. And again, thank you very much.

This concludes today's conference call. You may now disconnect.