ESCANABA - Employees at Escanaba's NewPage are being told that "it's business as usual" at the local paper mill in light of Monday's announcement that Verso Paper Corp. is buying out NewPage Holdings.
"There are no plans to close any NewPage or Verso mills as part of the transaction," commented Escanaba's NewPage spokesperson Jackie Pride following Monday's joint announcement by company officials.
Employees at the Escanaba mill were informed Monday morning about Verso's agreement to purchase NewPage's eight mills for $1.4 billion. Shortly after, media were informed of the acquisition between the two parties.
Jenny Lancour | Daily Press
A NewPage banner is displayed outside the Escanaba mill Monday.
The combination of the two paper companies is expected to improve business by making the mills more competitive in the worldwide industry, said Pride, adding that "it's business as usual" at the local mill.
"There are no plans for a hiring freeze. We're still hiring mill trainees through Michigan Works, " she said.
Pride explained the "transaction" - as company officials are describing the deal - should strengthen Verso's competitive edge in the declining paper industry.
Supply and demand haven't been the same since the paper industry has experienced less demand for its product due to increased consumer use of electronics, including the Internet, said Pride.
Verso's acquisition of NewPage was unanimously approved by both companies' boards and is expected to be finalized during the second half of the year, subject to regulatory approvals, said Pride. An integrated planning team will be organized to pull the operations together, she explained.
The combined business will include 11 plants in six states with anticipated sales of $4.5 billion, said Verso President and CEO David J. Paterson, who will lead the company.
"The combination of Verso and NewPage will create a stronger business that is better positioned to serve our customers and compete in a competitive global marketplace," stated Paterson in a joint news release with NewPage.
NewPage President and CEO George F. Martin stated, "We believe this agreement with Verso represents the best way forward for our stakeholders. A combined Verso and NewPage will be able to achieve greater efficiencies which will enable it to serve clients with a high level of product quality and innovation."
The $1.4 billion agreement will include the refinancing of NewPage's $500 million loan debt, $250 million in cash to shareholders, and $650 million of new Verso first lien notes to be issued at closing.
NewPage will also receive Verso shares representing between 20-25 percent of the outstanding stock prior to closing. The agreement also includes a NewPage director joining Verso's board.
The transaction is anticipated to result in at least $175 million in pre-tax cost savings within the first 18 months after the deal in finalized.
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Jenny Lancour, (906) 786-2021, ext. 143, firstname.lastname@example.org