A battle for control of the board of Verso Corp. is playing out just as the Ohio-based company is in the process of selling its Androscoggin Mill in Jay to a Pennsylvania paper company.

Verso is seeking to replace the leadership of its board of directors to ward off the election a competing slate of nominees chosen by a group of investors that Verso says is waging a proxy war for control of the company.

The corporate maneuvering does not appear to pose a threat to the Jay mill’s pending sale, as both sides of the dispute have indicated their support for the $400 million transaction, which includes the sale of a Verso-owned mill in Wisconsin. But it does reveal a mounting battle for control of the $1.8 billion paper company by a faction that was critical of Verso’s investment in its Maine mill.

Verso announced the sale agreement for the two mills in November. It’s unclear whether the proposed sale would affect the 500 workers at the Androscoggin Mill, which has been producing paper in the area since 1885 through multiple ownership changes.

The buyer, Pixelle Specialty Solutions, is a privately held company based in Spring Grove, Pennsylvania, that manufactures and supplies specialty paper products. The planned sale, which also would include a Verso-owned mill in Stevens Point, Wisconsin, has been approved by the Verso board and is expected to close early next year, contingent upon a shareholder vote and regulatory approval.

On Tuesday, Verso issued a news release saying it intends to nominate a new board chairman at its annual shareholder meeting scheduled for Jan. 21. If elected by shareholders, the nominee, paper industry veteran Robert Beckler, would replace the company’s existing co-chairmen Alan Carr and Gene Davis, both of whom have agreed not to seek re-election, it said.


Verso said it plans to announce an additional nominee by Dec. 17 for a new director to replace the other co-chairman. It said the proposed change in leadership is in response to a competing slate of nominees for the board chosen by a group of large investors that collectively owns about 9 percent of the company’s outstanding shares.

The investor group consists of private equity firms Atlas Holdings of Connecticut, Blue Wolf Capital Partners of New York, Iapetus Capital of San Diego and their respective affiliates.

“We believe that (the investor group) spurned bidders that have made several attempts to own or control the company, have chosen to pursue a proxy fight in order to further their continued efforts to obtain control of the company and its prospects,” Carr and Davis said in a prepared joint statement. “In order to mitigate the waste of time, expense and distraction to the company, each of us has determined to withdraw our name for consideration of re-election.”

In Verso’s third quarter earnings report, the company reported a $46 million net loss for the first three quarters of 2019, compared with a net income of $85 million for the same period in 2018.

The investor group issued an open letter to the Verso board on Dec. 3 in which it criticized the company for investing in a project to increase capacity at the Androscoggin Mill in 2018 after other U.S. and global competitors already had made similar investments.

“The resulting increase in domestic and global capacity, which was not terribly difficult to forecast, suggests that the timing of the board’s decision to pursue this project was particularly poor,” the letter said. “We believe that this market is now oversupplied both domestically and globally, with additional capacity coming online over the next couple of years.”

The investor group also urged the company to make a commitment to return the bulk of proceeds from the pending sale to investors prior to the upcoming shareholder vote on the sale in January, saying it does not want Verso to “squander” sale proceeds by investing in other capital projects.

In February 2018, Verso announced plans to upgrade a previously shuttered pulp line and paper machine at the Androscoggin Mill in Jay, bringing back an estimated 120 jobs and enabling the company to restart its equipment for the manufacture of packaging products. Local officials said at the time that the upgrade project was fantastic news for the town.

The paper machine and associated pulping capacity was temporarily idled in January 2017 and shut down in July of that year as a result of declining demand for the graphic paper products formerly produced on the machine.

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