Memphis, Tennessee-based Verso Corp. has announced the voluntary filing of Chapter 11 bankruptcy petitions with the United States Bankruptcy Court in the District of Delaware. The company, which operates mills that produce printing and specialty papers and pulp, says the accompanying debt restructuring is “necessary to strengthen the company’s balance sheet and to position Verso for long-term success.”
The company also says it expects the filings “will have virtually no impact on the day-to-day operations of the company,” which includes the operation of seven mills: two in Michigan, two in Wisconsin and one each in Maine, Maryland and Minnesota. The company also owns an idled mill in Kentucky.
“While filing for Chapter 11 protection was a difficult decision, we are pleased that we enter this process with strong creditor support,” says Verso President and CEO David J. Paterson. “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,” he adds.
Verso says it expects to soon finalize a debtor-in-possession (DIP) financing package totaling up to $600 million “that will provide the company with significant operational flexibility to successfully reorganize [and] provide Verso with sufficient liquidity to support its ongoing operations for the foreseeable future during the Chapter 11 process.”
Paterson cites several reasons that prompted the need for the filing, commenting, “Since Verso acquired NewPage Holdings Inc. in January 2015, 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.”
The acquisition of NewPage by Verso resulted in a significant increase in Verso’s mill portfolio and capacity, but it took several years to complete after one failed attempt and the imposition of anti-monopoly conditions by the United States Department of Justice.