Verso Corp., the papermaker that employs more than 560 at its mill in Jay, has emerged from bankruptcy.
The Tennessee-based company filed for Chapter 11 protection in January to clear $2.4 billion in debt. On Friday, it filed documents with the Securities and Exchange Commission to implement its reorganization plan and issue 34.4 million shares of new stock.
“Verso emerges from bankruptcy as a much stronger company with significantly reduced debt and a unified capital structure that position us to fully realize and leverage the benefits of our prior operational improvements, explore opportunities for strategic growth, successfully compete in the global marketplace, and deliver on our corporate mission to create value for all of our stakeholders,” Verso President and Chief Executive Officer David J. Paterson said in a statement Friday. Paterson previously announced he will step down from his position once a replacement is found.
“This does create a better corporate environment where we can control our own destiny and not be burdened by so much debt,” said William Cohen, a longtime spokesman for the Jay mill who is now its communications and public affairs consultant.
Cohen said he spoke Friday with Everett O’Neill, the mill’s manager. O’Neill said the bankruptcy news was welcome, according to Cohen, but the focus of the mill’s workforce has been on making it successful ever since an August 2015 downsizing shut down two machines and cut 300 jobs from the workforce.
“Corporately, today’s news means something, but it doesn’t change the day-to-day operations at Andro,” said Cohen, referring to the Androscoggin Mill in Jay. “Since the reorganization, the sense among a majority of the workers is that we have to stay focused and we’ve got to make this a success.”
OFFICIALS PLEASED
But the news was met with relief by town officials, who have been watching the ups and downs of Jay’s largest taxpayer with concern.
“We are very pleased to hear the news that Verso has successfully emerged from bankruptcy and that the process has put them in a stronger position,” Town Manager Shiloh LaFrenier told the Morning Sentinel. “We look forward to their future success and are pleased to have the opportunity to continue working with them in the town of Jay.”
While complex, the bankruptcy plan’s centerpiece is to issue shares of stock to creditors in lieu of cash repayment. The new common stock will be issued to creditors that were owed money by Verso and its NewPage subsidiary before the bankruptcy. As part of Friday’s filing, the company said it has taken the necessary steps to have its shares once again listed on the New York Stock Exchange under the ticker VRS. Trading will begin Monday. Verso’s stock was delisted in September because its share price fell below the required $1 minimum.
The paper company is one of several that operate a mill in Maine and have been clobbered by a decrease in demand for printed material and increased foreign competition. Last month, Cascades Inc. announced it was closing its de-inking pulp plant in Auburn effective Friday because of reduced demand, putting 45 people out of work. In May, the Madison Paper Industries mill was shuttered, leaving 215 workers without jobs. Maine’s paper industry has lost more than 2,345 jobs in the past five years.
Verso said in early June that part of its strategy for emerging from bankruptcy protection includes changing the mix of paper it produces. The company didn’t specify which mills it plans to reconfigure to follow that strategy, but in Jay, nearly half of the production currently is coated paper used primarily in catalogs and magazines, although several new types of specialty papers have recently started to be produced at the mill.
Kathi Rowzie, vice president of communications and public affairs for Verso, said the announcement means business as usual at the mill in Jay.
“There’s no direct effect on operations at the Androscoggin Mill” as a result of the bankruptcy action, Rowzie said. The company also said it has no plans to close or sell any of its seven operating mills.
Cohen said he doesn’t know of any impending changes in the Jay mill’s product line, whose strength is its lightweight coated paper.
“Capturing more of that market would be good for Andro,” he said.
STOCK SHARES ISSUED
In the bankruptcy filing, two Maine companies were listed among Verso’s 30 largest creditors. Catalyst Paper Operations Inc. of Rumford was owed $2.2 million and Hartt Transportation Systems Inc. of Bangor was owed $1.2 million. The master list of creditors filed by Verso included the names of 30,785 businesses and individuals to whom the company owed money.
Verso has issued new shares of common stock to the holders of its previously outstanding debt. There is no majority stockholder, and no single entity owned more than 10 percent of Verso’s outstanding shares at the time of emergence, according to the company.
Verso’s restructuring included $595 million in exit financing to support ongoing operations and capital investment, a mix of loans led by Wells Fargo Bank and Barclays Bank PLC.
As part of the bankruptcy proceedings, a new board of directors was installed Friday. Paterson is expected to remain chairman of the board and the other five directors are independent from Verso’s major shareholders.
Business Editor Carol Coultas and Morning Sentinel Staff Writer Rachel Ohm contributed to this report.
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