White Birch: Is It a Soap Opera or a Newsprint Company?

"I'm not necessarily a Peter Brant admirer, who after all did steal my wife. But he doesn't deserve this hypocritical hatchet job."

-- Nadav Manham 

This is a story about an ex-supermodel, a messy and well-publicized divorce, a possible goof by The New York Times, and a major newsprint company that may -- or may not -- be on the verge of bankruptcy.

Rarely does a paper mogul's personal and business life become the subject of a gossipy, in-depth piece in The New York Times, as happened yesterday with Peter Brant, owner of White Birch Paper. But, then, rarely does a paper mogul hang out with the likes of Andy Warhol and Donald Trump and go through a messy and well-publicized divorce from a former Victoria's Secret model.

"The tone of the article is 'What an idiot this rich guy is,'" summarizes Manham, an investment advisor and regular contributor to Seeking Alpha. He concludes the column with that priceless steal-my-wife line quoted above.

"It's a little ironic to read an article about a rich scion of wealth who spends too much money and sees his wealth evaporate -- in a newspaper owned by a company owned by . . . well let's just say that people in glass headquarters should not throw stones," he says.

Besides its muckraking dive into the lifestyles and divorces of the rich and famous, the Times article reports on rumors that privately held White Birch, North America's #2 newsprint producer, is on the verge of bankruptcy.

"White Birch’s own prospects are difficult to divine; as a private company, the particulars are known only to the principals and a handful of debt holders," writes The Times' David Segal. But then he cites a report that White Birch missed an interest payment a few months ago and is renegotiating its debt.

Segal doesn't mention that U.S. newsprint prices have risen more than 20% in the past month and seem to be headed higher. Or that the weak dollar and Chinese fiber shortages are putting U.S. mills in the position of being low-cost suppliers to some growing export markets. Those trends beg a question: If White Birch survived 2009's record decreases in U.S. newsprint prices, why would it go under now that things are looking up? (Update: A more knowledgeable analyst, Verle Sutton of Reel Time Report, has responded to my article by writing that some kind of financial reorganization for White Birch seems almost inevitable.)

Manham criticizes Segal for presenting White Birch's acquisitions as "some kind of ego-fueled all-in bet" on the newsprint industry. Manham says instead that such consolidation "was the least-bad way to effect the capacity reductions that the industry needed and to improve per-unit competitiveness against new foreign competition."

"The strategy kind of worked," he writes, because North American newsprint prices have held up fairly well given huge declines in demand.