JAY, Maine — Verso Corp. announced Monday that it is looking at restructuring options, including sale of the Androscoggin paper mill in Jay.
It's the latest blow in a tumultuous year in which Verso completed the $1.4 billion purchase of its larger competitor, NewPage, was delisted from the New York Stock Exchange and forced to make major reductions in pulp and paper production.
The news accompanied a disappointing third-quarter earnings statement in which the company said that based on current projections and cash flows for the remainder of 2015 and 2016, "we believe there is substantial doubt about our ability to continue as a growing concern in the absence of a restructuring of our balance sheet."
Company spokeswoman Kathi Rowzi says Verso is now exploring potential restructuring alternatives, which may include Chapter 11 bankruptcy and the sale of the Androscoggin Mill along with three others outside of Maine.
"Basically, the mills that are being considered for potential sale we think have exceptional manufacturing capabilities and talented people that Verso believes will be attractive to perspective buyers," she says.
Because of the NewPage acquisition, Verso's net sales for the third quarter actually increased $432 million compared to the third quarter of 2014, but when adjusted to include the effect of the NewPage acquisition and the sale last year of the Bucksport mill, sales have continued to decline. Rowzi says a combination of three external factors are affecting the bottom line.
"The first would be our impending debt obligations," she says. "The second would be a steep drop in demand for our coated paper products. It's been rather unprecedented over the last couple of years but particularly this year through the third quarter and also a big increase in imports as a result of the strong U.S. dollar."
"No surprise. Not at all a surprise," says Gov. Paul LePage.
He says members of his administration are already on the hunt for potential buyers, and that the handwriting has been on the wall since Verso closed the Bucksport mill last year.
"What it tells me is if there's going to be a paper industry in the state of Maine that the owners of paper mills need to be concerned about buying land so they can have some level of self sufficiency," he says.
In other words, they have wood and pulp to feed their operations. Also needed, LePage says, are technological upgrades to keep Maine's mills competitive.
In August, Verso announced the elimination of 300 jobs at the mill in Jay as part of a strategy to reduce production.
Jay Town Manager Shiloh LaFreniere says town officials remain hopeful that Verso's restructuring will give the company the flexibility it needs to keep operating.
"As always we're still committed to working with them and we're going to support their efforts whether it's restructuring or sale of the mill," she says.
Rowzi says following the announced layoffs that are currently underway the Androscoggin Mill will have about 550 remaining employees.
