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Once the primary supplier of glossy paper to the likes of Time magazine, Verso Paper Corp. filed for bankruptcy reorganization Tuesday, seeking protection from creditors for a business that has been clobbered by market shifts and changing consumer habits.
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In a written statement, Verso said the filing is intended to allow it to restructure its debt, and the bankruptcy will “have virtually no impact on the day-to-day operations of the company.” President and CEO David J. Paterson said the decision was difficult but made easier by strong support from creditors.
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Like many paper companies, Verso Paper faces formidable challenges, both within its own corporate structure and the global industry as a whole. To stem the loss of revenue, it sold off its unprofitable Bucksport mill in 2014, eliminating 500 jobs. The move was part of a complicated $1.4 billion deal that involved the acquisition and then sale of the former NewPage mill in Rumford in January of last year. That mill is now owned by Canada-based Catalyst Paper.
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Verso seeks creditor approval for a bankruptcy plan that would provide its creditors with equity shares in lieu of repaying the company’s debt, according to a release from the company. Verso is an affiliate of Apollo Global Management, a private equity firm based in New York City that purchased the papermaker from Memphis-based International Paper in 2006 for $1.4 billion.
Maine pulp and paper industry analyst Lloyd Irland said it’s unlikely that the creditors would be interested in being repaid with shares of Verso, a “penny stock” that no longer is traded on a major exchange.
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Verso’s woes are reflected in other paper industry transitions. Unable to recover from a devastating boiler explosion in November 2013, the bankrupt Lincoln Paper and Tissue mill was purchased after a November 2015 auction. Wisconsin-based Expera Specialty Solutions intends to shutter its Old Town facility, once a major producer of pulp for mills across the country. Demolition of the Bucksport mill for scrap started in December.
The industry, which employed 18,000 in Maine at its peak in the 1960s, now employs just over 6,000.
