Since Muddy Waters, LLC published its initial Strong Sell report on ONP on June 28, 2010, in which we charge that ONP is a fraud, ONP has been engaged in a rushed effort to cover up evidence that would prove our allegations to be true. ONP is creating more problems for itself through its attempt to refute the allegations. It has switched the type of machine it is ordering (without disclosure) in order to try to meet the 360,000 ton benchmark it set. Our checks indicate that ONP is overpaying by approximately $13 – 14 million for the new machine.
ONP is purchasing an entirely different machine from the one it claimed as recently as July 7, 2010 to be purchasing (see footnote  below). In an attempt to refute our allegation that the 5.6 meter corrugating paper machine that ONP intends to purchase is not capable of producing nearly 360,000 tons per year, ONP has changed the type of machine it is ordering. The new machine produces kraft paper, which ONP does not claim to currently produce nor sell (see footnote  below). Kraft paper is thicker than corrugating medium by a factor of about two times. In this way, ONP will increase the nominal tonnage of its output – but it will be a different kind of paper than corrugating medium. Investors should be highly alarmed that ONP is making this change without apparent business justification.
For the complete report, including a transcript of our conversation with the manufacturer of the machine, go to the following link: