PORTLAND, Maine — Verso Paper shareholders are scheduled to vote July 30 on proposals key to its acquisition of NewPage, the country’s largest coated paper producer.
The $1.4 billion purchase would create the largest single paper company in Maine, employing about one-third, or 2,300, of Maine’s paper millworkers at Verso’s mills in Bucksport and Jay and NewPage’s Rumford mill.
Both coated paper producers have faced challenges in recent years from a reduction in print advertising, increasing adoption of electronic readers and competition from paper mills abroad.
Memphis-based Verso issued notice this week about the vote on six proposals, four of which directly relate to terms of the NewPage acquisition. The company’s board of directors recommended approval of those proposals, including issuance of Verso common stock to NewPage shareholders.
Verso President and CEO Dave Paterson said earlier this month more than half the company’s bondholders agreed to the exchange offer.
Shareholders will also be asked to vote on exchange offers to its bondholders, converting the Verso debt held into stock in the new company. The exchange offer advanced merger talks from February, when NewPage’s board of directors said it would not approve the deal without it.
Credit rating agency Moody’s held a negative outlook on Verso’s credit since the announcement of the deal and downgraded its ratings in June over a variety of the company’s credit and bonds. Moody’s also raised a rating assessing the probability Verso would not be able to pay some of its debts.
An evaluation by consultants at Murray, Devine & Co. projected the company would remain solvent after the proposed merger and, after five years, would be able to further reduce its debt to about $1.4 billion from $2.5 billion, expected at the merger’s closing.
The combined company would have annual sales of around $4.5 billion with manufacturing facilities in 11 states.