JAY – Verso Corporation filed for bankruptcy today with the United States Bankruptcy Court in the District of Delaware. In a statement released this morning, the company said that the filing was designed to “position Verso for long-term success.”
“Verso expects today’s announcement will have virtually no impact on the day-to-day operations of the company,” the company said in the release.
Verso Corporation has been publicly referring to the potential filing as early as November 2015, when it said that its projections led to “substantial doubt about our ability to continue as a going concern for the next 12 months.”
Locally, the company has dramatically scaled back production at the Androscoggin mill, shutting down two machines and laying off 300 of its 863 workers. It also sold a subsidiary energy company to Eagle Creek Renewable Energy LLC, including four hydroelectric generation facilities in Livermore Falls, Livermore and Jay, for $62 million.
“While filing for Chapter 11 protection was a difficult decision, we are pleased that we enter this process with strong creditor support,” said Verso President and CEO David Paterson as part of the statement released Tuesday. “We have worked together with a broad spectrum of financial creditors to develop a restructuring plan to eliminate $2.4 billion of our outstanding debt and to exit the Chapter 11 process in a short timeframe.”
According to the company, the expected agreement will result in holders of Verso’s debt receiving equity in the company in exchange for their claims. The company also expects to finalize a $600 million debtor-in-possession financing package that will provide “significant operational flexibility to successfully reorganize.”
“Since Verso acquired NewPage Holdings Inc. in January 2015,” Paterson said, “a confluence of external factors, including an accelerated and unprecedented decline in demand for our products, a significant increase in foreign imports resulting from a strong U.S. dollar relative to foreign currencies, and Verso’s impending financial obligations made it apparent that action was needed.”
Paterson stressed that the company anticipated the filing having “no impact” on daily operations.
“Verso intends to operate our business as usual with an unwavering focus on running our facilities safely and efficiently, delivering the high quality products and services our customers have come to expect from us, maintaining valued relationships with our suppliers, protecting the environment, and being a good neighbor in the communities where we operate,” he said.
In a document directed toward employees and “frequently asked questions,” the company said that “most employees should see no change in their day to day jobs as a result of the filings.” However, the document also noted that Verso would “continue to review its operations” to ensure that its “supply of products is balanced with customers’ demand for them.”
“The company’s long-term success depends on its ability to properly align its supply with customer demand,” the FAQ noted.
The company has created a webpage addressing the filing, which can be found here.
Shocked, who could have seen this coming??
here comes the pink slips
Hopefully the town/state will try to have a hand in this process because they will be left assuming the responsibility for any environmental remediation that will need to be done when the mill eventually shuts down (this mill will go down before SAPPI Skowhegan and mills located closer to the Midwest). It’s important to realize that the parties involved in the bankruptcy now are there to look after their financial interests and no more. They will try to keep the mill(s) running as long as they can in order to wring out what they can of any financial assets and cash flow that remain. During that time employees and other affected parties can/will benefit if they are mindful of what is happening.
How on earth does a bankruptcy filing equate to long term success OR business as usual?
I wonder if Bernie thinks we should still raise taxes on these employers
Some additional reading regarding their other mills…
http://www.wisconsinrapidstribune.com/story/news/local/2016/01/26/verso-corp-files-bankruptcy/79335694/
The paper mill days are over. Jay and Livermore will probably become ghost towns once the place locks its doors, and hundreds of otherwise uneducated and inexperienced workers will unemployed. If you thought Maine was impoverished before, just wait. Hopefully the state economy can find a way to adapt.
Sound like the beginning of the end. Just saying!!!!!!!!!!!!
Yeppers, it works by putting the creditors on hold so that the officers of the company can concentrate on making business decisions rather than spending resources on satisfying creditors first. Then the parties involved work out a payment system that does not jeopardize the company’s existence. Such a payment system might mean payment terms extended beyond the original agreement or a “pennies-on-the-dollar” payment that creditors agree to rather than getting nothing. Basically, bankruptcy of this particular kind, debt restructuring, buys time. See
Well, See … the Wikipedia entry on bankruptcy, since BD seems to forbid links here.
take it from someone who has worked in that mill for 30 years, I have seen it all in that mill, Verso don’t care about there people or the town of jay. Verso will move on and wont even look back at this place, they will move on to the next company and suck them dry too, its all how much money they can put into the stock holders bank account. best thing I did is leave that sink hole. good luck to all other that WILL loose there jobs and you will, don’t let your boss tell you that everything will be ok, he or she has a big fat bank account too.. and good luck town of jay……
There is really not a way out of this for Verso that does not involve some innovative restructuring of their operations and that will not happen. The bankruptcy is just a delaying tactic and a way to not pay the debts they accumulated in building and running the company as they have. I don’t know who ultimately holds this debt but I’m will to guess that there are many small investors and perhaps pension investment plans that hold some of this debt along with the anonymous “fat cats” we always hear about. Their money will be gone.
It is in the best interest of the Company and their management, not the debt holders, to keep running as long as possible. The only benefit to the public, and it’s not a small one, is that the employees continue to collect a paycheck instead of unemployment longer and the state keeps from paying those unemployment costs for a while.
I hope that the town and the state are using this period of “buying time” to get their plans in place.
I would like to start off by saying that I am not in denial and we all know “eventually” the mill will close just like “eventually” we are all going to die. However, I am not telling you to go buy your coffin and prepare for your funeral. Unless you are God or a psychic you have no idea when this will happen. How about we look at the positive instead of the negative by saying the company is trying to restructure its debt to stay afloat. The only facts we have right now is that this company is still supporting 500 families in this community, so instead of speculating that pink slips are coming, how about being supportive for the families and workers. This is exactly what is wrong with this state. Most look at the glass half empty instead of slightly over half full. With that being said, let’s support the families and think positive for a change and hope for the best instead of thriving on the negative.
Positive, you have obviously never worked at the Verso Mill in Jay. The people at the mill can clearly see a train wreck coming. The company has run the mill into the ground and is liquidating the assets. The bankruptcy is just another way for the greedy company to not pay there bills before they leave town permanently.
Mountain man..what mountain are you stranded on?
You may be right but guess what….you may be wrong.
You act AS IF you know.
Are you the CEO of Verso…doubt it.
Are you the Lord…No.
Then YOU are only spreading your rumor.
Are you saying only people who work at Verso know?
Then if you are right…why is there still ANYONE there?
Fact……they don’t know.
But chapter 11 is exactly as described by the previous comments…temporary protection so they CAN MAKE IT.
You and your cynical buddies may end up being right on this particular one…but as of right now you guys are only being negative nannies because you really have no idea.
But being negative is who you are so I’m sure you will keep rattling.
If you are wrong….I couldn’t be happier for these workers and their families.
Otherwise…positive is right spot on.
@ positive, it’s hard to be happy for the 500 families the mill is currently still supporting when they just let 300 people and their families go.
THE SKY IS FALLING!!!! THE SKY IS FALLING!!!!
If you ask these negative CHICKEN LITTLES they will say they are realistic…not negative.
They love the drama .
Well…negativity never moved any mountains.
Keep the faith and even IF the mill closes…it’ll be all right.
And that a proven fact.
I know this company it was there plan the day they bought it. Thiis miil is history.
@negative…I agree completely and I am not saying “be happy” we all feel for those recently laid off! Been there and done that! All I am saying is let’s hope for the best and not thrive on the NEGATIVE and try to be POSITIVE! @ mountain man….I know a lot more then you think Mr. negative mountain man. Fact…I have direct ties to this mill for the last 10 years, so before you go making accusations get your facts straight because you are wrong! There is so much you don’t know, so unless you have facts keep on being negative! Sounds like your glass is almost empty! Fact…Verso mill in Jay was least profitable out of the 8 mills in 2015. Verso mill is expected to be the 3rd most profitable by the end of 2016. Hmmmmm…that’s hard to do if you close it down? I strongly encourage you to Google it, read it and get your facts straight!